Dallas Rent To Own Home
 

 

Dallas Rent To Own Homes

A Rent to Own or Lease Purchase arrangement combines the terms of purchasing a home outright and renting. There is normally a rental period where the buyer is essentially paying rent to the seller.  The monthly payment differs from a normal rental payment in that a portion each payment accumulates monthly as equity for a down payment at the time of purchase.  

These funds are known as the monthly rental credit.   At the time of purchase which generally comes within one to three years, the buyer generally has to find financing to purchase the home at the price originally negotiated price minus the accumulated monthly rental credit. 

Dallas Lease Purchase

Rent to Own Home Terms

Lease Option/Purchase Option – Normally stipulates the tenant/buyer’s right to purchase the home for a specified amount at the end of the lease period.  This stipulation usually has a fee attached referred as the Option Fee.

Option Fee – Fee paid that gives the tenant/buyer the right to purchase the home before a specified date.  The option fee is paid at the beginning to the rental period and is generally non-refundable.  In some cases the fee may be used as additional money to be paid towards the purchase price of the home.  The option fee is not to be confused with a rental security deposit.

Monthly Rental Credit – A portion of the tenant/buyer’s monthly rental payment can towards a down payment for the home at the time of purchase. This amount varies, but can be as high as 50% of the monthly payment.  It is important to note that if the purchase option is not exercised the seller retains the credit in most cases.  

Rental Period – This refers to the time period in which the tenant/buyer will rent or lease the home until they have the option to exercise the purchase option. 

Areas of Dallas
 
  • Addison
  • Allen
  • Bartonville
  • Carrolton
  • Coppell
  • Copper Canyon
  • Corinth
  • Double Oak
  • Flower Mound
  • Frisco
  • Garland
  • Hickory Creek
  • Highland Park
  • Highland Village
  • Irving
  • Lake Dallas
  • Plano
  • Richardson
  • Rockwall
  • Shady Shores
 

Advantages for Buyers

  • Buyers have time to build income and/or repair their credit
  • The buyer/tenant may walk away if they find serious problems with the home that outweigh the option fee.
  • Generally easier to qualify for than a traditional mortgage
  • Buyers are generally able to move in immediately instead of waiting for a closing.
  • If home prices are on the rise buyers can lock in a purchase price at the beginning of their rental agreement
Advantages for Sellers
  • Renters planning on owning the home generally treat the home better if they consider themselves owners.
  • If home values are falling, the purchase price is generally locked in at the beginning of the rental period.
  • If the renter backs out, the seller generally keeps the option fee and rent premiums as income
  • Gives people who do not qualify credit wise to purchase a home, increasing the number of people who my purchase

Disadvantages for Buyers

  • Buyers have to pay an up-front fee before the rental period begins and this fee is generally non-refundable
  • Repairs to the home can be the renter’s responsibility. Repair costs may be lost if there is a default later.
  • If the renter/buyer is late on the monthly payment, most agreements void the Rent Credit for that month.

Disadvantages for Sellers

  • If the Buyers back out at the end of the Rental period, the Seller is back to square one. 
  • The Seller does not have the ability to sell the home to other buyers, they are locked in to their current contract.
  • Seller must be aware of constantly changing regulations regarding rent to own and lease purchase homes..
Texas And Rent To Own Homes

While rent to own or lease purchase is a unique way to buy or sell a home, it is important to take a look at state laws regarding this matter.  With regards to Texas, check out Texas House Bill 1823.  This bill was passed on September 1, 2005 and outlines the do's and dont's of lease options. A rent to own or lease purchase agreement could be deemed as executor contract.  It is important to understand these laws before entering a contract due to strict penalties that may be enforced if there are missteps in your agreement. Always consult an attorney before purchasing or selling a home on this basis.

Questions or Comments? Email Us Info@DallasRentToOwnHome.com

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