The Pros and Cons of Rent-to-Own Homes

As the real estate market continues to be impacted by rising interest rates, inflation, and most of all, the COVID-19 Pandemic, more and more citizens are looking for alternative ways to live. 

As a result, would-be homeowners are now seeking out rent-to-own agreements among other pathways in order to stay afloat. The good news is that rent-to-own agreements can be extremely advantageous, for the tenant specifically, but for the landlord more broadly as well.

With that said, like any contractual agreement, renting to own doesn’t come without its own disadvantages. What follows, then, will be a detail on both the pros and cons of rent-to-own homes for tenants and landlords alike.

Pros & Cons of Renting to Own for Tenants

While becoming a homeowner is a highly desirable goal, there are advantages and disadvantages of doing so. Similarly, however, there are also advantages and disadvantages of being a tenant. 

Though it will be mentioned throughout this article, the primary advantage of renting to own, specifically, is that it provides a window of opportunity to save. By having a buffer to become financially stable while leasing in the meantime, you relieve much of the stress that comes with rushing into the purchase of a home; especially in the current real estate environment, we’re living through…

With that said, while beneficial for those suited for such an agreement, rent-to-own homes don’t come without their disadvantages. Below are the primary pros and cons of being a tenant in a rent-to-own lease agreement.

The Pros of Renting to Own:

  • Can Purchase with Poor Credit/Lack of Savings
  • Provides an Opportunity to Save for Down Payment
  • Allows You to Test Drive the Home Before Purchasing
  • Build Home Equity
  • Flexibility in Living Arrangements 
  • No Overhead Expenses or Maintenance Fees  

The Cons of Renting to Own:

  • Can be More Expensive in the Long Run
  • Agreed Upon Purchase Price May be Higher than Future Housing Market Rate
  • Potential for Home to Be Unsuitable 
  • Limits Financial Progress

Signing on the dotted line is an exciting moment, however, don’t ruin it by failing to enact due diligence. Before you sign on the dotted line, then, be sure to clarify and understand all terms and conditions of the agreement; because rent-to-own contracts are so flexible, it’s up to you as the tenant to ensure that all terms and conditions meet your standards.

Pros & Cons of Renting to Own for Landlords

Rent-to-own agreements are often thought of as only beneficial for buyers, however, they can be just as, if not more beneficial for sellers of the property. Not only are the risks minimal for sellers of rent-to-own properties, but the pros far outweigh them.

Much like the situation for buyers, however, selling rent-to-own homes doesn’t come without some potential disadvantages. Below are the primary pros and cons of being a landlord/seller in a rent-to-own lease agreement.

The Pros of Selling a Rent-to-Own Home:

  • Ability to Make Large Profits on Both Rent and Sale Price
  • May Earn More on Sale than Future Market Rate Depending on Agreement
  • Overall Low-Risk Real Estate Venture

The Cons of Selling a Rent-to-Own Home:

  • May Struggle to Find a Suitable Tenant(s)
  • Contracts Are Terminable 
  • May Leave Profits on the Table During the Initial Agreement of Future Purchase Price

The list of cons may be longer than the list of pros in some circumstances for sellers, however, the overall low-risk associated with this type of contract will almost always outweigh the potential disadvantages. 

The Final Takeaway

Just as becoming a homeowner isn’t for everybody, entering into a rent-to-own agreement isn’t for everybody. For the appropriate person, however, rent-to-own agreements can be extremely beneficial.

If a rent-to-own home is of interest to you, it’s important to consult with a professional and reliable real estate team who knows the ins and outs of rent-to-own agreements. That’s where Home Owner Soon comes into play! 

To learn more, check us out at and don’t hesitate to contact us with inquiries. Our team of experienced real estate professionals is eager to help.