Rent-to-own opportunities often sound like great deals that offer the best of both the renting and home-owning worlds, but although they can be a bargain for some they don’t make sense for everyone. If you’re considering renting-to-own you should know the pros and cons of what you’re getting into.

Pros

• Offers the flexibility stay and buy the property or walk away as if it were a regular rental.
• Gives you time to save up for a down payment and get approved for financing.
• You don’t need great credit right away (just once it comes time to buy).
• You can move in immediately with no need to wait for bank approval or a closing date.

Cons

• Tax advantages favor traditional buyers, not rent-to-owners.
• The seller can change their mind too and find a better deal, unless you specify otherwise in your contract.
• You usually need a large deposit, and/or the rent will be higher to cover costs.

Notes:

• Experts say you MUST hire a knowledgeable real estate attorney to make sure your contract spells out exactly who is responsible for standard property maintenance during the rental period (usually the landlord but don’t assume), who’s responsible if a major problem crops up (like a foundation issue or leaky pipes that cause water damage),  and what the terms are as far as how much of your money will go where and how long you have to purchase.
• Property values may go up or down during your rental period — they aren’t locked in until you actually buy.
• Mortgage rates also aren’t locked in until the final purchase.