It’s interesting how we look at renting, especially based on where we are in our lives. For example, if you are 20 and looking for your first place to live, an apartment is idea. However, if you are 40 and looking for a place to live, renting an apartment may not be the ideal option.

The Difference Between Renting and Rent to Own

The reason for this comes down to simple investing, if you are paying rent, you will always have to pay rent. However, if you own a property, you only have to cover the costs, which can be abundant, but still usually far cheaper than renting.

Benefits Of Renting

Renting works better for those who have limited financial options or need to wait for the market to become more reasonable. If you are making it paycheck to paycheck, renting becomes a much more appealing option. When you rent, you are responsible for making your payments. If the water heater breaks, the air conditioning is blowing hot or something else, those repair or replacement costs may be the responsibility of the owner.

Additionally, unlike with owning a property, renters have the flexibility of changing where they live every couple of years if they wish. While moving is a lot of work, this flexibility may make it easier for the renter to select areas based on where they work, prefer to live or something else and allow them to live in nicer areas, areas they would not be able to afford to live in if they wanted to buy.

Benefits Of Rent-To-Own

In rent-to-own situations, the script is flipped a bit, especially when it comes to the renter. For example, while you are paying rent, you are actually building equity into the property you will eventually own. Also, because you are not borrowing money to purchase the home, you do not have to worry about interest rates, mortgage insurance or other expenses that homeownes have to cover. These expenses can cost any homeowner $10,000 a year or more. Avoiding those costs and still being able to purchase the property is a game changer for many who have low credit scores or cannot afford the full 20% down payment.

What Is Your Situation?

The key thing to ask yourself when you are considering renting a property or joining a RTO agreement is to consider your own situation. This is where the challenges are different for everyone as each person has a unique situation. For example, if someone has over $100,000 to put as a down payment on a home and they also have a strong credit score, a rent to own situation may only benefit them in that they do not have to pay the interest on a loan and may be able to use some of that down payment money to make upgrades on the property.

For people who are struggling to get a head financially, especially because of high costs of rent and high interest rates as well, the option of renting to own is not only more reliable, but allows them to still purchase a property and invest in that propety rather than having to just rent.