The rent-to-own market is full of legitimate rent-to-own opportunities, just waiting for the right buyer. However, there are also some bad-eggs preying on buyers who are not educated in all aspects of the rent-to-own process. While this is not unique to the rent-to-own industry, it's important to learn how to identify potential scams so you can move straight to legitimate rent-to-own opportunities.
Here are some things to be aware of when looking at rent-to-own homes:
Too good to be true:Be wary of anyone making unbelievable claims. When your intuition tells you that an offer is too good to be true, it probably is, even if it is an organization offering the rent-to-own home rather than an individual. There are scammers (companies and individuals alike) who offer deals like no money down, low monthly rent, and more.
Odd PricingLow pricing is not your only concern – it's important to be on the lookout for unreasonably high pricing as well. Many home owners will up the price of their property to above market value. Their idea is that they can get someone to rent the home now, and worry about the cost of purchasing the home later. This kind of pricing scheme takes advantage of people in a situation where they are trying to purchase the home of their dreams. Do your research first, and look into the value of comparable homes in the area.
Additionally, many owners over price their property with the expectation that once the lease is up, the buyer will not be able to afford the home. This allows the buyer to keep any deposit and rental money gained from the property, and continually find new renters to take advantage of.
Monthly PaymentMake sure your monthly payment is reasonable, and comparable to other rentals in the area. Your rent may be a bit higher, as rent-to-own opportunities often include a rent credit toward the purchase of the home in their monthly rent. However, these payments should still not greatly exceed market rate for local rents.
Application FeesApplication fees are not new, but scammers will try to get you to fill out an application to prequalify you for the home prior to showing the home to you. Many times the scammer will pocket the fees, never to be heard from again. This is a common scam, and it's important to always request to be shown the home (with a walk through) prior to signing any applications.
Our website has an extensive list of previously vetted rent-to-own listings. Take a moment to find a rent-to-own opportunity in your local area.