The Costs of Rent to Own Housing – For the Metro Detroit Michigan Area

Owning a home — it’s part of the American Dream!

Home ownership gives a sense of freedom, security, and permanence.

Americans dream of growing up, finding a home, and starting a family; they dream of owning their own piece of land and proudly knowing “it’s mine.” Millions of families want a nice home, a white picket fence, a place to rest after a hard day of work, and a place to raise their families.

It’s no wonder that pioneers and settlers came to America to escape the over-crowded rental slums of the Old World and to tame and claim their piece of this vast land. Even today, newcomers to America are attracted here in part because of the opportunities for a better future — which includes owning their own home.

The American Dream Is Changing…

While home ownership continues to be a high priority among many Americans, the American Dream is evolving. There’s still plenty of land and places to live, but it’s evolving for other reasons:

  • There’s the growing number of Americans with credit problems — perhaps due to debt or poor choices or difficult circumstances or even just low paying jobs.
  • There’s the growing number of banks that reject loan applications because they don’t meet the bank’s tightening loan requirements.
  • There’s a trending increase in the number of lower-paying jobs, while higher-paying jobs are vanishing or being outsourced overseas.
  • And the economy is on shaky ground, with one recession barely over and another one threatening to strike.

Although these might not be ideal circumstances, this is the reality we live with. As a result, two things are happening:

  1. House buyers are trying to find creative ways to acquire a home to live in, even if their credit isn’t at the level that a bank is looking for.
  2. House sellers are trying to find creative ways to sell their house because there aren’t as many buyers.

This creativity has led to a new opportunity for people to buy houses even when they may not be able to apply for traditional loans. And that’s how the American Dream is evolving: people still want to own homes (and can!) but there are new ways of buying those homes…

Rent to Own Housing in Metro Detroit and Other Areas

In a traditional house purchase: the buyer goes to a bank, pays a down payment, and gets a mortgage loan for the remainder of the amount owed on the house they’re buying.

In a rent to own agreement: the buyer who may not have perfect credit works directly with the house seller — to rent a house for a period of time while they build up their credit so they can quality for a mortgage loan.

This works well for everyone!

  • For the seller, it gives them access to more potential buyers.
  • More importantly, for the buyers, it creates a new way to get into a house sooner — a permanent address in the house you’re likely going to buy, a sense of ownership before you even own the house, and an opportunity to work on your credit.
  • Banks love it because it means more people can qualify for loans, too!

Just imagine: if you’re someone who wants to own a home but you can’t get a traditional bank mortgage right now, you might have thought that living in a permanent home was years away. Well it doesn’t have to be: you can get into your permanent home now, enjoy the sense of ownership right away, PLUS you’ll have a stable address (which can help to contribute to a higher credit score).

Want to see what houses we have available for rent to own in Metro Detroit? Click here and enter your information and we’ll show you what’s available.

What are the Costs of Rent to Own Housing in Metro Detroit?

In a rent to own agreement, a buyer would move into a home, paying rent, and building credit towards a down payment to ultimately purchase the home. This is a valuable option for families who may not have the necessary credit score to get a traditional mortgage.

The price varies widely, depending on a number of factors, and each rent to own arrangement will be governed by the details described in the agreement. But in general, this is what you’d be looking at…

First, you’ll pay a regular rental amount (just as you would if you were renting anywhere). This amount goes towards the rent and upkeep of the property, just like a regular rental.

Second, the costs of rent to own housing in Metro Detroit may be higher in some areas… but for a very good reason. In some cases, rent to own rental amounts may be slightly higher versus rental rates you get elsewhere, and this is influenced by a few things — such as the neighborhood the house is in, the condition of the property, the length of the rental period before purchase, etc.

As well, there’s the lease option portion of the agreement, which allows you to buy the house at the end of the rental term. This is built into the cost of rent and, in some cases, a portion of your monthly rent will be applied to a down payment on the home. (Check with the landlord because this is not always the case).

Example: You rent a house for $1,000 even though other houses in the area rent for $900. This extra $100, though, is applied to your down payment and accumulates month by month for 3 years until you are ready to purchase the house.

Important: these vary from one rent to own seller to the next, so make sure you talk to the seller about how the costs of rent to own housing in Metro Detroit when you’re looking to buy.

While it’s possible that in some cases you may pay slightly more to rent to own a home each month, the savings in the long term could be significant. This is because many sellers will set a predetermined price on the house, locking in protection against housing market fluctuations.

Example: You’ve agreed to rent-to-own a home for three years, before exercising your option to purchase. You come to an agreement with the seller on a price at the end of that term of $200,000. Let’s say that at the end of your rental term, the housing market becomes extremely competitive and surrounding homes are selling for $300,000. As a buyer, you’ll be saving $100,000 on the cost of your new home simply by renting to own and locking in the price.

Rent to own — it’s a great new way that families are getting their own piece of the American Dream even when circumstances have prevented them from doing so in the past.

Want to learn more about our rent to own program or find out what the costs for rent to own housing in Metro Detroit are? Click here now and enter your information or call us at (586) 697 0065 and we’ll be happy to walk you through our process.

Timoune

About Timoune

Christian Chabi is active in the Real Estate Marketplace in Metropolitan Detroit. He buys and sells Real Estate for his own portfolio and helps others reach their Real Estate Investment goals. In a fast-paced and dynamic industry, Christian Chabi’s approach to Real Estate investing is no-nonsense, high-energy and knowledge-based. He has studied with the best investors in the game, and is a voracious reader. He applies his knowledge with a “show me the money” frame of mind insisting that knowledge must be applicable not just theoretical. In other words, he tests all the principles he teaches with actual profit (or loss) experience. Mr. Chabi is experienced in fix and flips, as well as buy and hold, scenarios. Depending on the profitability he will do either one with confidence. Core to his philosophy is his desire and willingness to work with others. His belief is that people are more valuable than any commodity. At any given time Mr. Chabi is working in some capacity on several projects (as a Real Estate Agent, Investor or Partner). He is particularly fond of helping investors get their FIRST property. He has written several books on the subject and numerous articles. He teaches new investors to define their goals, plan their strategy and implement their Real Estate Investment Program with confidence and humility. Some of Christian’s Mantra’s are: - Ask questions until you are satisfied with the answers. - If it doesn't make profit-cents, then have the sense to walk away. - Be patient. Look for deals that have your name on them. - All deals must be win-win for all involved.
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