Year after year, lands, houses, mobile homes, vehicles, and even appliances increase in value. Almost everything does on a regular basis. Sad to say, our incomes are not doing the same, which is why most people turn to the rent-to-own option in acquiring things. Such schemes are very popular in many industries, including real estate, automobile dealers, and retailers. So, how do rent-to-own homes, rent-to-own cars, rent-to-own appliances, or other offers work? It’s simple. To become the rightful owner of a particular rent-to-own property, you have to make a lease purchase, sign a property lease agreement document or a rent-to-own form, and complete payment after a certain period of time. Speaking of leasing agreements, we have plenty of rent-to-own contract examples that you can check out. You can also learn more about them by continuing to read our article below.
A rent-to-own contract is a document that defines the arrangement between a lessor and lessee with additional options to fully purchase a rental property. The iPropertyManagement revealed last February that this year marks the highest number of renters compared to the past fifty years. In their 2017 statistics, the number of housing units that are occupied by renters in the United States reached forty-three millions. Moreover, Chris Salviati’s National Rent Report for Apartment List showed that Mesa, Arizona holds the fastest-growing rent growth rate. It is currently running on a 4.1% growth rate. With these facts on hand, it is important to prepare rent-to-own contracts ahead. Not just that, you might also want to get a hold of other rental or lease documents, like tenant lease agreements, real estate lease agreements, medical office lease agreements, or end of lease letters to tenants.
Before, most people find it more convenient to just buy properties rather than renting. But due to economic fluctuations, it turned the other way around. Here are the reasons why:
1. Today, home properties’ prices increased rapidly along with the mortgage rates, making it obvious that renting will be a better option to put a roof above your head.
2. In terms of monthly maintenance, owned homes increased their costs by fourteen percent. This was affirmed by Realtor.com. Rental properties, on the other hand, only grew by four percent.
3. For personal finance essentials, reinvestment of rental reserves is currently surpassing reliance on home equity.
When writing a rent-to-own contract, you have to bear in mind that it is a legal document. One minor mistake or insufficiency in its details will make the process document a subject for disputes. Lucky for you, we have prepared our thorough outline of steps on how to create such paperwork. Here’s how.
Start your contract by providing the most basic information that every contract needs. These include the contract title, execution date, and participants’ information. When presenting the participants’ names, you have to indicate whether they are the lessor or lessee. Also include both of their contact information, like address, phone number, and email address.
After presenting all the pieces of basic information, state what your contract is about. In your case, this will be all about renting and, eventually, owning the leased property. Aside from being part of the standard document flow, it also serves as a good introduction for your proceeding legal statements.
Whether this is a room rental agreement, house rental agreement, or others, you have to cite the rental terms and details. The terms should include clear promises on areas like payment schedules, contract termination letters, rental termination notice letters, and more. The details, meanwhile, must consist of the rental property item type, classification, and rental rates.
Since this document is for rent-to-own transactions, then you have to include an option to purchase. Clearly, you don’t want to force your tenants to buy your rental property. It’s called rental property for a purpose anyway. However, in case they want to invest in it, then this section is where they can get the complete details and sign to justify the purchase. It’s more like a purchase approval form, but in a form of a contract clause.
Once the offering of options to purchases has been completed, proceed in enumerating the obligations. This is the part where the landlord to tenant agreement is highlighted. A good example of this goes like, “The Tenant Should Inspect the House and Order an Appraisal.”
In cases when disputes arise, a dispute resolution clause has to be ready for review. This section must be made in accordance with the dispute resolution policies of the landlord.
According to Abodo, the average rent price in the United States may vary depending on the apartment type. A one-bedroom apartment’s median cost is USD 1,078, while two-bedroom apartments cost USD 1,343.
As per the Association of Progressive Rental Organization’s (APRO) report, there are 9,200 stores in all states of America, with the inclusion of Mexico and Canada.
The APRO industry’s 2020 report says that the worth of the rent-to-own industry market is USD 8.5 billion.
“The ache for home lives in all of us, the safe place where we can go as we are and not be questioned.” This quote by the American poet Maya Angelou amplifies the very fact that shelters are one of humanity’s basic necessities. Because they are constantly in-demand, their value increases, making it un-affordable for people with adequate financial resources in the future. Fortunately, rent-to-own was designed. Through the business idea, people were given the chance to obtain their dreamed home, not instantly but surely. And just like any other deal, it comes with a contract to seal things right.