When looking for homes to buy, rent or rent-to-own, one must always be careful to seek out legitimate opportunities and take the appropriate steps necessary to protect yourself from potential pitfalls. Approaching rent-to-own agreements with a cautious eye is one of the keys to a successful rent-to-own agreement. With rent-to-own specifically, there are scams you should be wary of to ensure you do not fall victim and end up being ripped-off. For more information, read our article about how to identify rent-to-own scams.
Take the below precautions to save yourself from potential distress.Education is Key
It’s important not to enter a legal agreement for a rent-to-own without fully educating yourself on the different types of contracts available. It’s important to be absolutely certain you are ready to begin the rent-to-own journey, and spend some time speaking with experts in the industry first. This includes real estate attorneys who can help you understand potential agreements, as well as draft a contract that is beneficial to you.Research Thoroughly
Some scam artists try to rent or sell foreclosed homes. It’s important to do proper research in order to ensure the home you are considering renting-to-own is a legitimate property. By performing thorough research ahead of time, you can prepare yourself for any unexpected situations, as well as give the seller the opportunity to clarify anything that seems a little off to you. Some research you should undertake includes:
Many people turn to rent-to-own because of poor credit scores that leave them unable to get a mortgage loan. A rent-to-own opportunity gives you the time needed to focus on repairing your credit. At the end of your lease, you may be required to purchase the home, and in order to do so, you may need to qualify for a mortgage. It’s important to use this time wisely so you have not wasted a potential opportunity.Use Escrow:
When renting-to-own a home, you may be asked to put down a deposit. To ensure your deposit is not given to scammers, it’s a good idea to use an escrow account. An escrow account is owned by a third-party who will hold the funds until both the buyer and the seller have met their obligations to one another.