Rent-to-own (also known as lease-to-own or lease-option) is a type of agreement in which a tenant rents a property for a specific period of time, with the option to purchase the property at the end of the rental period. The tenant typically pays a higher rent than market value, with a portion of the rent going towards the purchase price of the property. The tenant also pays an option fee, which gives them the right to purchase the property at a later date.
During the rental period, the tenant is responsible for maintaining and improving the property as if they were the owner. They are also typically responsible for obtaining financing to purchase the property at the end of the rental period.
At the end of the rental period, the tenant has the option to purchase the property at a pre-agreed price. If the tenant chooses to exercise this option, they will typically need to obtain financing and complete a purchase and sales agreement. If the tenant chooses not to exercise the option, they will simply end the rental agreement and vacate the property.
Rent-to-own can be a good option for people who are not yet able to purchase a home but want to get into the housing market and start building equity. It can also be beneficial for sellers who are having trouble selling their property, as it allows them to generate rental income while they wait for the market to improve.
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