How to Find Rent-to-Own Homes Near Me (2023 Guide) (2023)

3 ways to find rent-to-own homes | Tips for finding the right properties | Why trust us

If you're considering buying a home but are not quite ready to make a commitment, you may want to consider looking for rent-to-own homes. It allows you to rent a property while gradually working toward qualifying for a mortgage to buy it later on.

But rent-to-own homes only make up a small percentage of the real estate market and are not as widely available as traditional rentals. Finding legitimate, affordable rent-to-own home listings near you can prove to be quite difficult if you don'tknow where to look.

🏡 Looking for a rent-to-own home but don't know where to start? Clever Real Estate can connect you with a top-rated local buyer's agent who will assist you in finding the best rent-to-own listings in your area. You may even qualify for cash back from Clever after closing. Take the first steps towards homeownership today! Learn more.

How to find legitimate rent-to-own homes near me

Finding a rent-to-own home can be challenging, as the number of available listings varies quite a bit depending on your location and local market conditions.

We recommend starting your search by contacting a real estate agent to ensure your home fits your needs. Still, you’ve likely got a few options in help finding a rent-to-own home. Here are your top options.

Hire a real estate estate agent experienced with rent-to-own

Realtors have access to the multiple listing service (MLS) and can help connect you with landlords and rent-to-own companies to view homes in-person. Experienced, connected realtors may also have access to listings that are "coming soon," soyou may be able to view potential options that are not advertised, giving you a leg up over other buyers.

Good agents will provide support as you search for and compare your options. They can walk you through each contract's terms and conditions, show you homes in person, and help you understand any potential risks with each home.

📜 Consult a pro

Rent-to-own agreements are complicated, so you might want to avoid the DIY approach — especially if you're not ready to negotiate with homeowners. You could end up overpaying or agreeing to unfavorable rental terms (or worse, getting scammedby a deceitful landlord or company). Before signing any rent-to-own agreement, have a trained professional look it over.

A realtor specializing in purchase agreements or a real estate attorney can provide valuable insight and guidance on the contract terms and conditions of the contract, and an attorney may help you negotiate changes or additions to the agreement to betterprotect your interests.

Contract items that an attorney might review include:

  • The home's future purchase price, and how the landlord or company arrived at the price

  • Monthly rent payments, which should be based on fair market rent for similar properties in the area

  • Up-front costs, such as an option fee

  • What happens if you can't make rent payments or decide not to buy the home

  • Pet restrictions and costs: how many are allowed, breed restrictions, and potential fees

(Video) Rent to Own House: How Does It Work? | FIRST TIME home buyer guide

How to find a rent-to-own realtor

Finding the right realtor to help you search for a rent-to-own property can be difficult. But the process is much easier when using an agent matching service like Clever Real Estate or Ideal Agent.

Work with a rent-to-own company

Many rent-to-own companies purchase properties and then lease them back to tenants, with the option to buy later. This can be a good option for people who want to live in a specific house but don't qualify for a mortgage right away.

The biggest rent-to-own companies right now are Divvy Homes, Home Partners of America, and Dream America. Each offers different services and rent-to-own terms. For example, Divvy Homes uses three-year rental terms before the tenant can buy the home, whileHome Partners of America uses five-year terms. Before agreeing to rent and buy a home, do some homework on each company to find the one that best fits your needs.

(Video) 10 Best Places to Get Rent-to-Rent Properties in 2022

Here are a few key considerations when comparing rent-to-own companies.

Available markets

Some rent-to-own companies only operate in certain regions, so make sure to check if the company serves your area before reaching out to them. You can usually find a company's list of available markets on its website in the frequently asked questions(FAQ) section.

Minimum qualifications

Rent-to-own companies have varying, sometimes strict, requirements for qualifying. Factors such as your credit score and income are usually taken into consideration.

How to Find Rent-to-Own Homes Near Me (2023 Guide) (1)

Careful: while some companies are more lenient and accept applicants with low credit scores, that's not necessarily the best option unless you have a solid plan for improving your credit while you rent.

Eligible properties

Rent-to-own companies often only allow you to choose a renovated or move-in-ready home and don't allow fixer-uppers. Additionally, your options may be limited to single-family homes and townhouses, and may not include condos, duplexes, or multi-family properties.

Customer reviews

Many rent-to-own companies are newer and have not yet been thoroughly tested in the market, which can make it hard to compare them. A small number of negative reviews may not be a cause for concern, but it's worth paying attention to any recurringthemes or issues.

Contract terms

The terms of rent-to-own agreements can vary widely between companies. This includes the length of the rental period, which can range from one year to several years, as well as the type of contract (lease option vs, lease–purchase agreements).

Search online and contact a homeowner directly

If you want to do some solo research before talking to a realtor, you can also search real estate listing websites for rent-to-own properties on your own. Websites like ZeroDown, HomeFinder, Hidden Listings, and Rent to Own Labs often advertise rent-to-own home listings.

Websites like Zillow and Redfin allow you to filter your search for rent-to-own homes, while Rent-to-Own Labs and Homefinder specialize in these listings. Simply enter your criteria and contact the homeowner or company directly for more details.

Generally, yes. Websites like Rent-to-Own Labs and Homefinder allow you to easily search for RTO homes and contact sellers. These are not to be confused with rent-to-own companies like Divvy Homes, which works WITH you to rent and buy a home, as opposedto connecting you with a seller.

(Video) How to FIND “RENT TO OWN“ PROPERTIES AND HOW IT WORKS

Tips for finding legit rent-to-own properties

💻 Research the seller or rent-to-own company

Before committing to a rent-to-own home, aim to learn as much as you can about the owner or company. Here are a few steps you can take to make a more informed decision:

  1. Verify that the seller is the actual owner of the property. View the home's ownership information from its tax records on a local county or city website.

  2. Google online reviews. Check out the rent-to-own company or property manager reviews to get a better idea of their customer service. Websites like TrustPilot and the Better Business Bureau (BBB) can be helpful resources for finding and comparing customer reviews.

  3. Search for customer complaints. Similarly, it's smart to see how many BBB complaints a company has and if the complaints have been resolved.

In addition, find out why the seller is offering the home as a rent-to-own instead of selling it. For example, the homeowner might want to rent the home before selling it, or they may be having difficulty selling and think this will help. Knowing theirreasons can help you during negotiations.

» CONNECT:A Clever partner agent can help guide you with all of these tasks — find one who has direct experience working with the seller or rent-to-own company for free!

🔎 Watch out for overpriced (or underpriced) properties

Be aware of the potential for rent-to-own scams and be on the lookout for warning signs. Here are a few questions to ask yourself to help evaluate a listing's legitimacy:

  • Is the home’s listed price realistic, and is there a reason it’s significantly lower or higher than comparable properties in your area?

  • Does the cost breakdown for renting and eventually purchasing the home include high up-front fees? Are these fees justified and explained clearly?

  • What’s the home’s condition? Will it require a lot of maintenance and repairs after you move in, and will you be responsible for covering those costs?

The homeowner or rent-to-own company should be able to answer these questions clearly and promptly.

🚫 If you suspect that the rent-to-own arrangement is a scam, file a report with the police or the Federal Trade Commission.

(Video) TOP 5 Rent-to-Own programs in 2023.

Why trust us

The Clever Real Estate team spent dozens of hours researching the ins and outs of rent-to-own programs to create this comprehensive guide. We thoroughly examined agreements and consulted with industry experts to bring you the most accurate and reliable information.

It's our opinion that the best way to find a rent-to-own home is by working with an experienced real estate agent. They have the knowledge and resources to help you find the right home for you quickly and efficiently. The benefits of working witha realtor far outweigh any potential downsides (which are minimal).

Rent-to-own homes can be a good housing option for people who want to buy a home, but are unable to qualify for a mortgage. However, it's important to be aware that not all rent-to-own programs are legitimate or cost-effective. Consult with a localrealtor or a real estate attorney for more specific, localized guidance.

  • Marjorie Scholtz, the CEO of Verbhouse, a rent-to-own company that aims to provide affordable home financing options for low and middle-incomeworkers in high-cost housing markets. Marjorie is also a licensed real estate professional and previously worked as a co-founder and CEO of Stangl Advisors, helping people navigate loan modifications, short sales, and foreclosure alternatives.
  • Michelle Boyd, a housing policy expert who works with Terner Center, a nonprofit organization dedicated to making housing more affordableand fair for consumers. Boyd also works with Terner Labs, a nonprofit affiliate that leverages technology to improve housing affordability and sustainability.

Steve Nicastro is a real estate professional with extensive experience in South Carolina, where he has personally helped people find and evaluate rent-to-own homes.

(Video) Rent To Own House: How Does It Work? | First Time Home Buyer

He believes that working with a seasoned buyer's agent can be extremely beneficial when searching for rent-to-own properties. An experienced agent will use their access to the MLS, industry connections, and local knowledge of rent-to-own companiesto help clients find the best housing options in their area. They can also assist with understanding and negotiating rent-to-own agreements and ensure that client's interests are protected during the process.

Brendan Rigney is a researcher and content writer at Clever Real Estate, where he writes about home buying, selling, and investing. He has a background in urban affairs and housing and also works with local governments, nonprofits, and community organizations to study and address policy issues.

Prior to joining Clever, Brendan worked as a freelance reporter, writer, and researcher for various media outlets, nonprofits, and businesses. He received his B.A. from La Salle University and his Master of Public Administration degree from DePaul University,with a focus on metropolitan affairs and policy.

FAQs

Do you need a good credit score for a rent-to-own house? ›

To qualify, you must have a good credit score and cash for a down payment. Without these, the traditional route to homeownership may not be an option.

What is the downside of rent-to-own? ›

A major disadvantage of renting to own is that renters lose their down payment and other non-refundable charges if they decide not to purchase the home. Some sellers may even take advantage of renters by making it difficult or unappealing to purchase the home — with the goal of keeping the down payment.

How do I protect myself in rent-to-own? ›

To protect yourself from a few common rent-to-own scams, ensure that property taxes have been paid to date and there are no liens on the property. You'll also need to check that the landlord actually owns the home and can legally rent to you before signing an agreement or paying any money.

Does rent-to-own help your credit? ›

Rent-to-own agreements are not reported to credit bureaus so your credit score is unaffected. Unless … if your expressed hope is to use the rent-to-own agreement period to build your credit score through on-time payments, you can ask the homeowner to report your payments to the credit bureau.

What is the lowest credit score to rent a house? ›

Most landlords are looking for a score somewhere between 600 – 650 since renters don't have the credit history of making mortgage payments to boost their credit score.

What is the minimum credit score most landlords accept? ›

“Each landlord is different, but most landlords and property managers look for a credit score above 600,” Fluegge says. FICO® and VantageScore® credit scores typically range from 300 to 850. An applicant with a higher credit score might be considered to have shown a pattern of managing their finances responsibly.

What is the biggest risk of owning a rental property? ›

Getting a tenant who cannot pay reliably is one of the biggest risks of owning rental property. Tenants who are chronic late payers can be a constant source of stress. Tracking down rent payments takes time and effort, and may cause your mortgage payments to be late, putting you in financial hot water.

What are 3 advantages of rent-to-own? ›

The Pros Of Rent-To-Own Homes
  • It allows you to save money for a down payment. Renting-to-own can be a great way to save money for a down payment and give that home a test drive to make sure you like it. ...
  • You can save on repair costs. ...
  • It offers you the option to buy or move.
Jan 13, 2023

Is it cheaper to rent or own? ›

The overall cost of homeownership tends to be higher than renting even if your mortgage payment is lower than the rent. Here are some expenses you'll be spending money on as a homeowner that you generally do not have to pay as a renter: Property taxes. Trash pickup (some landlords require renters to pay this)

Can you rent with a credit score of 500? ›

Can You Get an Apartment with a Credit Score of 500? Yes, you can rent an apartment with a credit score of 500 but you should give yourself time to look. You'll need to get creative and consider a higher security deposit, taking over a lease as a subletter, or paying more rent upfront.

What credit score do I need to rent? ›

There is no standard credit score to rent an apartment. The score you'll need will vary depending on your city and neighborhood and the policy of the apartment's landlord or property manager.

Can I rent with a 650 credit score? ›

FICO suggests that a credit score of 650 and above is generally more than enough to rent an apartment. FICO scores range from excellent to very poor: Excellent: 800-850. Very good: 740-799.

Does credit score matter renting? ›

Your credit score may not prevent you from renting a place to live, but landlords may consider it when deciding whether to approve your rental application. State and federal housing laws regulate what criteria landlords can use to reject a potential renter's application.

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