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rent to own

Tuscany NW, Calgary Alberta

A family quite often cannot afford the home they want at the moment. They then remain in rented accommodation or have to share. Property owners have a related problem, when they find a keen buyer in that situation. In these instances, an own to rent arrangement can close the gap in a way that benefits both parties.


How Rent to Own Works in Principle


Rent to own is convenient to buyers without the required credit history to qualify for the mortgage they need. Being a sitting tenant with an option to purchase at a fixed price, allows them time to grow their down payment and improve their credit record.

Seniors wanting to downsize to smaller accommodation may find this arrangement useful of they have spare capital. They can vacate their home to a rent to buy tenant with a vested interest in the property. The process proceeds as follows:

# The seller advertises their property in the rent to own category for a duration

# The terms are an option deposit, plus a rental at a higher rate for the area

# Applicants undergo screening for credit rating and employment record

# The chosen one moves in after contracting, and paying the option deposit, and rent

# A small portion of the rent goes towards the home purchase price

# If the tenant decides not buy, they lose the option deposit and rent credits.


How Both Parties Could Gain and Lose from this Arrangement


The rent to own tenant has an opportunity to trial the house without a major investment. However, there is no guarantee they will be able to afford it in the future, and they could end up losing their rent credits and option deposit.

The seller’s property commands a higher rental and the option deposit is already paid. The price is fixed and the tenant is responsible for maintenance and repairs. However, the price is set in a rising market. Moreover, the tenant can walk away while the owner is bound to the agreement.


The Ultimate Success Depends on the Character of the Parties


A rent to own arrangement depends on the intention of the parties. The tenant must make sure the seller is the property owner, and that their option deposit and rental credits are secure. The property owner must make sure the applicant is of good character, and will care for the property is if it were their own.

Speak to Stonegate Equity if you wish to sell or purchase a property on this basis. We usually require a 4% to 5% down payment, and slightly higher rent a portion of which goes to rent credits. We hold all funds in our care in designated trust accounts, so your money is secure with us.

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