All about Rent to Own

All about Rent to Own

Why Rent to Own is the best option when looking to buy a home.

This is basically how you can buy your home with 0-downpayment. You get to customize the deal according to what works for you.

There is another method of owning a home known as Rent to Own. There are different types of Rent to Own, usually depending on different developers, landlords, or sellers. However, it all comes down to renting a house for a specific period with the intention of eventually owning it later.

This type of home ownership is customized according to your income, what works for you, or what the landlord requires.

What I usually say is that in Rent to Own, there’s no “shoe that fits all”. There are no set rules.

The most common types of this option are:

  1. Lease Option.

This is where you are allowed to buy the house once your lease agreement of tenancy expires. You are not obliged to buy the house and you can always back out to move to another house.

2. Lease Purchase.

Here, you are obligated to buy the house and this is usually bound by the contract you got into. This is the most interesting type of Rent to Own. There are no definite terms for this type of contract. It is entirely dependent on what you and the seller/landlord agree on.

There are several options that mostly apply here and I will share examples.

Ex 1. A down payment is required. It mostly ranges from 2% to 10% of the purchase price. The balance is agreed upon in the contract to be paid after a set period. This will be charged interest. The payment of the balance can even be up to 10 years. You are expected to split the balance among the agreed period and pay it as rent. The rent will be slightly higher than the normal rent rates in that area.

Ex 2. You pay rent, slightly higher than the area’s rent rates. The excess is used as credit for your down payment. This could go for a couple of years as agreed or until the down payment is achieved. You are expected and required to have raised the Purchase price after the lease is expired.

Ex 3. 0-Down payment! Interesting right? So here the number of years is mostly longer and you literally not required to pay any deposit or down payment. The interest is usually higher. You are most of the time required to pay the month’s rent and a small fee to facilitate the credit facility. Yes, it’s still credit. The rent will still be slightly higher than the normal rent rates in the area.

This could go up to 20 years. Terms of offsetting/clearing the balance during a windfall are optional according to the agreement with the seller. It is mostly better to work for you when you offset.


  1. A minimum down payment is required, unlike a mortgage.
  2. Own property without fears, challenges, or struggles of taking a loan.
  3. Avoid high-interest rates charged by banks.
  4. It is not dependent on your credit scores. This might also allow you to improve your credit ratings.
  5. You get to own a house with the initially agreed Purchase price regardless of any change in the market rates.
  6. You are still growing your equity!
  7. You get to test the neighborhood beforehand.


I know right!? As good as the deal sounds, Rent to Own still has some its Cons.

  1. Non-refundable. You are likely to lose your money if you decide to back out.
  2. You might have to cater for your own maintenance and repairs.
  3. You have to pay rent on time! Delay in this might lead to a breach of contract.

Finally, before committing to this type of investment, take your time to analyze the terms of the contract, do due diligence and research the landlord/seller.

Fine-tune all the details beforehand to avoid having any misunderstanding with the seller later.

Before signing the contract, understand the terms and their implications. It is advised to find a good property lawyer to explain and take you through the important terms in the contract.

Axis Assets has a great option of rent to own with the houses readily available. Click on Rent-to-Own Apartments to get more details and start your home ownership now!

Create the need, God will provide.

Join The Discussion

Compare listings