With the housing crisis plaguing the nation, the cost of buying a home just gets more expensive. In the first quarter of 2021, over 2 million Americans were on a forbearance program.
But all hope is not lost! You can consider rent to own apartments which is a great way to eventually buy a property.
But what are the pros and cons of rent to own? How does one go about buying vs renting an apartment?
Here’s what you need to know:
An Alternative Method of Affording an Apartment
Rent to own homes serve as an alternative method to buying a home for a cheaper price. With the rent to own process, you pay an upfront fee. This is known as the option fee.
It’s a nonrefundable fee that guarantees that you have the right to buy within a particular time period following the end of your rental agreement.
The rental fee that you pay goes toward the cost of your home. This is often a cheaper option than having to pay the whole fee upfront or having to take on a mortgage.
This is often a pro for many renters. But one con is that if you choose not to buy the home, you won’t get the option fee back as discussed previously. The option fee can be rather expensive so it might be a strain on your finances.
You Have More Responsibilities
One of the reasons why many Americans prefer to rent is because it carries fewer responsibilities than owning a home.
But this isn’t always the case when you opt for a rent to own agreement. You might have added responsibilities that are often reserved for the homeowner.
For example, you might have to pay costs to renovate the home or repair any issues. Property tax is often paid by the homeowner. But any other associated taxes might have to get paid by you.
With apartments, you’ll likely have to handle these responsibilities for yourself. For example, you might have to find a handyman to assist you rather than ask your landlord to provide one.
This might be seen as a major con to many. But for some, this is a pro as it gives you a taste of what it’ll be like to actually own your home.
You have to decide whether the trade-offs are worth it for you. You’re under no commitment to buy the apartment if you don’t want to. But you also have more requirements than a standard tenant.
Consider Rent to Own Apartments
Now you can consider rent to own apartments if you aren’t in a position to buy a property upfront.
It has many pros and cons and you’ll have to consider what trade-offs are worth your investment. The option fee locks in your right to buy the property. But it’s nonrefundable if you decide not to buy the apartment.
You will have more responsibilities than a traditional tenant. For some this is stressful, but for others, this offers the experience of owning an apartment. You can find more articles about real estate on our website.