Renting to own a luxury home can be a good option for some buyers and sellers. Before pursuing this option, however, it is beneficial to learn more about what to expect from this type of agreement and the steps that you need to take to ensure you are satisfied with the results. With that in mind, here’s a look at a few of the things you can expect when renting to own a luxury home.
If you do decide to go with the rent-to-own option, you are likely to pay more toward rent than the going rate for comparable properties in the market. This can be beneficial, however, as the payment amount that is above market rate is later applied toward the purchase of the home. This stipulation will need to be written out clearly within in your contract. You will also need to provide documentation to the mortgage lender to demonstrate fair market rental rates and the additional amount that went toward payment on the house.
Determining the Sale Price
Generally speaking, a rent-to-own agreement will not have a set sale price. Instead, it will spell out the steps that will be taken to determine the current value of the home at the time of purchase. While it used to be common practice to use the consumer-price index to determine the cost, a number of other indicators that more directly reflect price growth in the area are now typically used in these arrangements. By including the guidelines that will be used to determine the price, both the seller and they buyer can rest assured that there will be no need for renegotiation later.
Of course, before spelling out how the purchase price will be determined, it is important to have the home inspected. This way, if there are any issues with the property, these issues can be addressed before the buyer moves into the home. Negotiations regarding who will pay for these repairs and upgrades should take place before anyone moves into the luxury home.
In a typical rental agreement, the landlord is responsible for making all repairs and completing maintenance on the property. When renting to own a luxury home, however, the seller may expect the buyer to take on a greater amount of responsibility in this area. The contract that you write up should specify the types of repairs and maintenance that the seller is responsible for addressing. Typically, the seller agrees to take on responsibility for repairs that are covered by homeowner’s insurance, but not covered by a renters insurance policy.
Getting involved in a rent-to-buy agreement can be a rewarding experience for both the buyer and seller, but it is important for both individuals to take the necessary steps to protect themselves and their finances. If you’re looking into purchasing a home, or possibly thinking of going into the rent-to-own route, contact our agents for more advice and help. Our agents can help you find the home of your dreams.
While you’re considering, take a look at our Los Angeles listing below priced from $4 Million to $8 Million
$6,195,000 : 1861 SUNSET PLAZA Drive, Los Angeles4 beds, 5 baths
$7,999,999 : 1921 BEL AIR Road, Los Angeles6 beds, 9 baths
$5,300,000 : 10800 WILSHIRE Boulevard #1503, Los Angeles3 beds, 4 baths
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$7,350,000 : 249 Homewood Road, Los Angeles4 beds, 3 baths
See all City of Los Angeles Luxury Homes For Sale.
(all data current as of 6/24/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.