If you are interested in purchasing a luxury home, you may want to consider an option that is growing increasingly popular within the luxury real estate industry: rent-to-own. While following a rent-to-own plan may not be the right choice for all buyers, this option does offer some benefits to both the buyer and the seller that should be taken into consideration.
Benefiting the Buyer with the Rent-to-Own Option
For the buyer, the rent-to-own option offers many benefits. First, it provides you with the opportunity to test out the home before you make a large purchase. By spending a few months in the home before you actually make your purchase, you will be better able to determine if the house is the right fit for you and your lifestyle.
Another benefit to the rent-to-own option is the fact that it gives you a little more time to get together a larger down payment. This is particularly helpful when taking out a jumbo loan, as a larger down payment will help to keep your interest rates down.
Going with the rent-to-own option will also provide you with the extra time that you need to ensure your credit history is where you want it to be. If you recently took out another large loan or had other financial activity, it may have a temporary negative effect on your credit history. Taking a few extra months before you apply for a mortgage loan can give your credit history the time it needs to rebound a bit, thereby helping you secure a more favorable loan.
Benefiting the Seller with the Rent-to-Own Option
Allowing a buyer to use the rent-to-own option can also have benefits for the seller. For example, the seller can rest easy in knowing that mortgage payments are being paid while the buyer rents the property. Or, in some cases, the seller may even generate some extra income while the buyer rents the property for a period of time.
Setting Up the Rent-to-Own Option
The rent-to-own option can be handled in a few different ways, but most agreements allow the renter to either purchase the property after a designated amount of time or walk away from the property at the end of the rental term. Two years is the most common rental term in these types of agreements though the time can easily be lengthened or shortened if both parties are in agreement. In most cases, the renter pays a deposit of somewhere between 2 and 2.5 percent of the value of the home. The deposit is then credited toward the down payment if the renter decides to purchase the home. If the renter decides not to buy the property, the seller keeps the deposit.
To learn more about setting up the rent-to-own option, contact our team of luxury real estate experts will also be happy to help you find the perfect luxury home to suit your lifestyle and budget. Give us a call today.
And while you’re still on the look-out for your next dream home, browse through our listing below priced from $5 Million to $10 Million.
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(all data current as of 7/24/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.