How Do Rent To Own Homes Work In Katy?

One of the first questions we get from potential tenant buyers of our local Katy TX rent to own homes / lease option homes is “how do rent to own homes work in Katy?”

With a flooded real estate market, especially since the bubble burst of the mid-2000’s, rent-to-own homes have become a popular option for people who are deciding whether to purchase or rent a home.

Renting to own offers advantages to both buyers and sellers.

Rent to own

Key Points In this Article:

  • In Texas the Rent to Own Agreement is typically a lease agreement with an addendum to explain the option to buy.
  • The actual purchase contract would be a separate contract completed before the end of the option period.
  • There is typically an upfront fee paid to have this option
  • Home Investors like J&A have used Rent to own agreements to help sellers who are in financial distress get to a point they are stable and repurchase their home back from J&A

For the seller, they have steady income to make steady mortgage payments, while the buyer has a period, typically a year or two to organize his or her finances and secure financing to buy the house.

We have also seen this option be really helpful to sellers who are facing foreclosure but are not in a position to move at the moment. J&A Home Buyers has purchased their house then set up a rent to own contract with that seller to give them a year or two to figure out their finances all while never leaving their house.

The Local Rent To Own House Process

Renting a home to own a house is a relatively straightforward process, though many people are confused.

A common misconception is that the renter can live in the home and pay rent over a period of 15, 20, or 30 years, then own the home. It’s slightly more complicated than that.

But here are the basic elements of a rent to own agreement. 

• The buyer and seller draw up an agreement, covering all terms of a rent-to-own agreement. This agreement is often attached to the lease agreement. Texas Real Estate Commission (TREC) offers a standard lease agreement however the option is typically another document added to this lease as an addendum.

• This contract will state the monthly rent, and a set period of time.

• The renter will have the option to purchase the home at an agreed upon price at the expiration of the agreed upon time period. The actual purchase will typically be another contract that is filled out if the buyer does in fact wish to move forward with the purchase at the end of their option period. We recommend using the Texas One to Four contract for the actual purchase as this is widely recognized and used in Texas.

There are two scenarios where this may be a great way to go:

  1. You are an end buyer looking for a house but you don’t have all of the cash needed for a purchase right now or you may have a condition holding you back from obtaining a loan. You may find a new property that is willing to accept a rent to own contract and obtain a house this way.
  2. You are already a home owner and you are facing financial hardship and are at risk of foreclosure. In this case we have purchased houses and immediately filled out a lease contract with the seller that has a rent to own contract. By doing this we were able to pay off all of their debt to the bank and keep the house from foreclosure. In some cases the seller actually gets some cash from the sale and they can use that to make rent payments for a year or two then at the end of their option the original seller has the option to re-purchase their property.

How Does The Monthly Rent Work With A Katy Rent To Own House?

Really it depends on the location of the house (there may be different laws that dictate what you can do in different states) and any new federal guidelines that may come out that may limit what the property owner of the rent to own house may do.

But the standard guidelines of a rent to own house are pretty simple.

  1. You agree on a rental rate and a future purchase price upon the end of the rental lease sometime in the future (usually 1-2 years).
  2. You first pay an upfront payment to move in and secure the contract and the terms with the option to buy. The “option fee” or “move in amount” may in some cases act as a percentage of the down payment on the home, should the renter decide to purchase at the end of the term. This may or may not be the case depending on when and where you’re reading the article (based on laws). Connect with us directly for the local Katy TX Rent to Own laws.
  3. You pay the monthly rent payment. This is no different from paying rent in any normal rental situation.
  4. At the end of the rent to own agreement (usually 1 – 3 years) you decide if you want to purchase the home for the price you agreed on initially in your rent to own agreement. If you want to buy the home, great!  We can assist you in getting qualified for a conventional loan to buy the home.  If you don’t want to buy the home, no biggie. You’re not required to buy the home at the end of a rent to own agreement in Katy… the choice is fully yours.

So, for the question of “how do rent to own homes work in Katy“… well that’s the basic process.

While there are lots of benefits of renting to own a home here locally… every housing option has pros and cons.

Just do your research, talk with reputable and experienced companies like J&A Home Buyers who can walk you through the local Katy rent to own house process… and make the smart financial decision for you and your family.

How to use Rent To Own to escape Foreclosure?

We have worked with many different sellers who have faced all sorts of really challenging life circumstances and put them in a financial bind. If they just had more time they could keep the home they love and move past this moment in life.

J&A Home Buyers has used a creative approach to solving this problem by purchasing the house with a lease agreement in place to keep the seller in the home. That lease agreement then has a rent to own option on the contract which allows the seller to purchase the home back typically in a couple of years. In this scenario the buyer pays off all debts and restructures with a new loan while they technically own the property and the seller relinquishes ownership there is a pre-agreed option to sell the home back to the original seller for a set price at a specific time.

Talk With Us About The Katy Rent To Own Process at 281-219-8822 or
fill out the form here to get in touch! >>

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