Contributor, Benzinga
March 1, 2022

Renting to own is an excellent path to home ownership that many people either assume is not possible or do not understand. Yes, you can rent a property or you can buy it, but there is a gray area in the middle where you can rent until you complete the purchase of the property.

Review the tips below to learn how rent-to-own contracts work, how they can benefit you or how you might arrange for such a plan as a landlord. Don’t discount this option because it’s not traditional — it works.

What is Rent to Own?

A rent-to-own contract is a bit different from a traditional home sale or rental property. This sort of arrangement combines renting and owning into a single contract that benefits both the owner and the tenant or buyer.

What is a rent-to-own contract? In short, the tenant is agreeing to rent the home at an agreed-upon rate for a specific period of time until they can obtain financing, save for a down payment or fix their credit. This is completely different from buying a home outright as the buyer must compete with other buyers, make the best offer and hope they are accepted.

In a rent-to-own arrangement, the buyer/tenant knows the home is essentially “promised” to them as long as they fulfill their end of the contract. 

Are Rent to Own Contracts Common?

Rent to own contracts are not necessarily common because most home or property owners want to sell and get out of the property as quickly as possible. However, many may be interested in this type of arrangement because it practically guarantees them a buyer and continued rental income.

Why Rent to Own?

You should rent to own when you know that you want to remain in a particular home or you believe a home is worth the wait.

For example, you are thinking of buying a home and you drive by a lovely house with your spouse that would be perfect for you, but it will be off the market in a few months when you are finally ready to buy. 

A rent-to-own plan can last even longer if you need more time to repair your credit, secure financing or save for a down payment. 

Property owners should consider a rent-to-own plan if they have found it difficult to sell the property or they wish to sell to a particular individual. Moreover, marketing the property with the potential to rent to own will attract more prospective renters. 

Preparing to Rent to Own

As you prepare to fulfill a rent-to-own contract, you must:

  • Repair or refresh your credit
  • Save for a down payment
  • Plan for a scheduled closing date

As you plan to build your credit, you can use credit builder loans to add positive items to your profile. Plus, you can use financial trackers to determine how long it will take to pay off certain debts. Moreover, you may want to take out cash advances to finish saving for a down payment. 

Make a list of all the things you must do to complete the tasks above, follow that plan and use financial services platforms like MoneyLion when you need help.

Who Benefits Most From a Rent-to-Own Plan?

Anyone can benefit from a rent-to-own arrangement. The property owner can sell the property at a profit, but they can collect rent payments in the interim.

Tenants benefit because they can plan to purchase the space without vying against other buyers on the marketplace. Additionally, tenants can avoid random showings as the owner attempts to market the property. The process is simple for both parties, and it ultimately saves both parties money and time.

About MoneyLion

MoneyLion is a digital financial platform that helps “the 99% feel 100%” about their finances. Using a wide range of services, MoneyLion helps people just like you take control of their finances and plan for the future. 

Services from MoneyLion help you keep track of your money and do more with it, including services like:

  • Mobile banking
  • Investment accounts
  • Credit building loans
  • Cash advances
  • Crypto accounts
  • Financial planning and tracking tools

Frequently Asked Questions


Can any landlord offer a rent-to-own plan?


Technically, yes. The landlord has the right to sell the property to anyone they want, but not all landlords may be amenable to a rent-to-own plan, especially if they see the property as an income-generating asset. 


How long do rent-to-own contracts last?


A rent-to-own contract can be written for any duration you or the landlord prefers. Other stipulations must be reviewed, and both parties must agree to how long the home or space will be rented before it is officially bought or the tenant can obtain financing and complete the purchase.