Stop renting today and buy your own house. To buy a house in Perth or anywhere else your property is every individual’s dream. It is a dream that requires years of saving and patience to only give a down payment. Apart from that, all the savings and careful spending are required to keep your credit score high. In the meantime, you are also paying rent on your current home. An individual goes through all this hassle to own a house.
What if you are paying rent but a bit extra each month. That extra amount is credited for your future home. This is what the rent-to-own home phenomenon is. This is the dream they are trying to sell, but in the excitement, many fine details go unnoticed, which is crucial in decision-making. Let’s have a look at them.
Risks of Rent-to-Own Properties For the Buyers
Always sign a contract after researching all the aspects. Run-to-own contracts may look good at a glance but do some research before signing the contract. Let us look at the few points that need consideration before you jump into the rent-to-own bandwagon.
Extra Rental Cost Every Month
Nobody is kind/ good enough to keep some money from your rent for your future house. There needs to be something in return for the landlord. The primary attraction of the ‘Rent-to-own’ scheme is to pay more per month rent than a normal renter does. But the catch is that not all of that extra payment will credit towards the purchase of your new house. A lot is hiding under the fine print.
For example, the standard rent of a house is $1000, but the landlord is charging $3000 from you. Not all of that $300 amount will be saved for your future home. Out of that $300, $200 will go into savings, whereas $100 will be the payment you will be paying the landlord for saving your $200.
But then it can also be considered as a convenience fee. There will be loads of competitors during the hot seller market, but the landlord will wait for you for a year or more because of this additional money paid. This will help in fulfilling your dream of buying a house in Perth.
Locking the Deal at a Bad Point in Time
Gasoline prices keep fluctuating; the same is the case with the properties. The value of property keeps changing according to the market trends and the demand and supply. Although it mostly goes up as property is an appreciating asset, the price can fall up and down by thousands of $ within a span of a few days. This can cause an issue for people dealing in rent-to-own scenarios.
As they will be locking the house price one to five years before. In a rent-to-own contract, the buyer can set a price range, but the catch is it will be one to five years before. The calculations can go wrong in this period. What if the property prices go down due to many internal and external reasons? Then the tenant has to buy at a higher price than the market value.
Hence, if such a scenario occurs, be ready to lose the money you have credited with the landlord as no bank will mortgage a loan for an expansive house as compared to the market rate. In another world, the scenario can go in the opposite direction. There can be a rise in the property, creating a win-win situation for the tenant and a difficult one for the landlord.
Conclusion
These are just some of the risks mentioned. There are a lot more. After reading this, if you are still interested, don’t worry about the fine details and hire a professional company that can make the entire process easy for you. Companies like Stop Renting Perth are consultants, strategists, and homeowner experts to help you.
