Rent to Own Programs

Rent to Own Programs and Financing Options

One of the most flexible strategies for purchasing a house is renting to own or leasing with an option to buy. How does rent to own work? The process is much like it sounds. A homeowner or investor rents a property to a tenant or tenants, giving the tenant the option to buy that home after a set time period at a set price.

Some homeowners use this process to sell their home and move on, even if it involves the risk of taking rent for a period of time, only to have the tenant refuse the option. If you are looking for a home but your credit isn’t so good, and you don’t have enough for a conventional down payment, you might think about renting to own. It helps you get into your home sooner and use rent credit to build your down payment while your credit grows.

If you are an investor, the process of selling a house this way is like marketing a “covered call.” The tenant pays you a premium up front for the option to buy the property, known as the deposit. At the point of expiration, that deposit goes toward the down payment, along with rent that you have decided to credit.

Amansad Financial Services provides private lending solutions to those currently living in their home within an urban center but cannot refinance. We only provide Residential Lease Option (Lease-To-Own) refinances.

Amansad Financial also provides Seller Finance Purchasing which is a far greater alternative to Rent-to-Own that is commonly overlooked by many renters looking to purchase.

Just how does rent to own really work?

The house lists as a “rent to own”. The rent is probably at the higher end of the area rentals. The option deposit is generally up to 2 percent of the value of the property. This deposit is non-refundable and goes toward the purchase price.

The landlord screens you for credit, employment and possibility of actually buying the house when the option term is up.

The tenant occupies the property, the landlord takes the rent and the deposit for the option. In addition to the option agreement, both parties sign a lease as well.

Some of the rent goes toward the purchase price. The exact amount of this rent credit is up to the landlord.

If the tenant decides not to purchase the house at the end of the period, he loses the option deposit and any rent credit.

Why is this a good idea?

If you’re the homeowner/investor:

You get a higher rent, usually.

You get an option deposit and a security deposit up front.

The tenant is more likely to treat the house like it is his or her own.

You get a guaranteed price on the house if the tenant takes advantage of the option.

In a way, it’s like getting your mortgage taken care of ahead of time. You actually can make more money than you would by just selling the house, because you get the rent on top of the selling price. The amount of the rent credit you grant is up to you.

If you’re the tenant/purchaser:

You get to make a dry run on the neighborhood and the house. If they seem a lot less attractive than you thought at first, you get to walk away.

If your credit is poor, you can build credit while the option term proceeds, building your down payment with rent credits.

Why is this a bad idea?

If you’re the homeowner/investor:

If the market is trending upward, you may have guaranteed a price that is below what the market will yield at the end of the option period.

It is a hassle to screen possible tenants at first, unless you hire a property management company, which represents another expense.

The tenant can walk away, losing only the deposit, but if he keeps to it, you can’t make any changes.

If you’re the tenant/purchaser:

You are paying high rent just for the “option” to buy the property. You lose the deposit if you don’t buy the house.

There is no guarantee that a lender will give you funding at the end of the term. You might want to buy the house, but without a loan, you will lose your deposit.

How can Amansad Financial help?

Amansad Financial offers Rent to Own Programs for those currently living in your home within an urban center but cannot refinance. Amansad has a fresh approach that allows us to structure our Rent to Owns different than most companies. We have connections to funding sources and affiliate companies to ensure the contract is structures and adheres to Canadian Mortgage Insurer guidelines.

We require more than 10% as an option consideration. Why? We want to ensure that there is an adequate down payment on maturity to withstand market fluctuations and provide more lender availability. We “do not” state the option consideration is non-refundable. Why? Many Rent to Own companies make this mistake and why many Rent to Own our unsuccessful. Stating a option consideration is non-refundable can potenially void you contract and make it impossible to qualify…even if you credit supports.

Because of some bad apples in the Rent to Own market, Mortgage Insurers (CMHC, Genworth, Canada Guaranty) have made it more difficult for those bad apples become predators to unsuspecting tenant-buyers. We “do not” carry an inventory of homes. Our tenant buyers live in the inventory as existing homeowners that are unable to refinance but requrie an alternative refinance option.

Amansad Financial Services can fully assess your credit profile to determine if staying in your home, or selling with a fresh start is best.

Contact Amansad Financial Today! or Pre-Qualify using the link below:

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