The Good.
Is your credit history not great? Did you just move to Canada? No downpayment? A Rent to own might just be the solution for you to start building equity into the property you live in. With that said though you must NOT get involved in a lease 2 purchase contract emotionally.  Just you because you want to own a house more then anything, DON’T justify the purchase.  Consider some important things to keep in mind:
– Can you really afford to own this home? Don’t think right now. Think long term (maintenance, property taxes, insurance, etc.) Count your costs! And here are some awesome Calculators to help you do that
– Is the purchase price fair? Are you justifying an extra 10-40,000$ above the appraisal value because you think this is your only change to own a home? NONSENSE. Talk to your mortgage broker for financial advice. They won’t charge you for this because they know they will make money from the lender once you initiate your mortgage.
– Rely on a person who you can really trust. Sure there are “certified” rent2own companies out there who represent a membership with some ethical board. But do you know them? Ask a professional close to you who understands financing if this is for you.
Rent To Own properties are coming back big since 2012 onward. Especially in the greater Kelowna and Okanagan Area. House prices are high, and people simply don’t have a down payment. With the right advise, and the right tools, it may be a perfect fit for you to finally own a home because you simply can not get the downpayment you need. And while building equity you finally can re-establish your credit!

The Bad
It was mentioned earlier, but you need to be careful when investing in a rent to own. What some “sellers” will try to do is up the asking price for the property well past the appraised value (for example a house listed for 425,000: the seller will try to sell for 460,000) to you. This in a way makes it “worth it” in the eyes of the seller. In the market we are dealing with right now, this is unnecessary for the buyer to get involved with. SHOP around, get your realtor to do some research and find the perfect fit for you. ASK the right questions, ASK for the appraisal of the property. You have the right to know what you are investing in.

Rent2owns have been labelled to be sketchy and a scheme. And rightly so, many people get involved with a “middle man” or mediator to do all the work between the Buyer and Seller. Now although it may be necessary to pay your realtor or broker a finders fee (probably anywhere from $250-1000) to get the documentation sorted out and point you in the right direction. DO NOT give your financial information or funds to anyone who is not certified to carry them. Mortgage Brokers owe a fiduciary duty to their client to look out for their best interests, and can be fined or imprisoned if proven otherwise. Realtors owe a standard or care as well. So when dealing with a lease to own contract, deal with the right people. And DO NOT allow your equitable funds (the additional money you pay in rent each month that will go to your down payment) be carried or held by a broker or realtor. Set this up through a notary or lawyer through a trust account.

With proper research and professional advice from someone you trust, a rent to own might be a good situation for you to invest in if perhaps you can’t get the money for a down payment, or maybe you need some time to rebuild your credit rating.