Rent-to-own real estate might sound like a great deal - start making rent payments now and have it all go toward the purchase price of your new house. What advocates often don't tell you is that many rent-to-own tenants never wind up owning their homes but instead lose their hefty options considerations (also known as a down payment). If you want to learn the real truth about the down side of rent-to-own real estate, keep reading.

Your Entire Rent Doesn't All Go Toward the House

A common misconception about rent-to-own arrangements is thinking that your entire monthly rent payment will go toward the purchase price of the house. That would the imply the owner of the home isn't charging you interest or earning interest on your options consideration.

You Have to Pay Money Up Front

Many rent-to-own schemes offer no-credit, no-money-down houses, but it's simply not true. Most rent-to-own arrangements require what's called an "options consideration." This is typically between 1 and 5 percent of the final sale price of the home.

Your "Down Payment" Doesn't Entitle You to A Piece of the Property

It's a common misconception that your options consideration is a down payment, but that simply isn't so. A down payment implies you're putting money down on a house in exchange for a piece of its equity. An options consideration does go toward the final purchase price of a house, but if you don't wind up buying the house, you will lose the funds.

Many Renters Never Own

Rent-to-own is great for people who have almost good enough credit or just want to get into a house, but don't have sufficient fund for a down payment. Unfortunately, rent-to-own arrangements are typically marketed to renters with bad credit, low incomes and little hope of ever obtaining the financing needed to purchase the home before the option deadline.

Scams do Exist

Rent-to-own scams exist. If a rent-to-own agent is asking you for up front money, a finder's fee or money to "fix your credit," you should walk away. Also, to protect yourself from poor deals, always hire an attorney to review a rent-to-own contract before you sign it.

Yes, an attorney will cost you a few hundred dollars, but his or her services could be saving you thousands and your own possibilities for future home ownership.

Finding a home that you can rent with a future option to buy it can be a great opportunity for individuals or families that do not yet have sufficient funds to purchase a home outright. However, caution is important when considering this option.

More info on your stop foreclosure information search:

Get Free Foreclosure Advice and Free Refinance Quotes
Get your free on-line foreclosure refinance quote and free advice from foreclosure mitigation specialist in minutes. Compare real offers from top national subprime and hard money lenders... more...

Commercial Real Estate Investments - Why They Are Better Than Its Residential Alternatives
Many real estate investors leave commercial real estate opportunities aside. The sheer thought of empty office buildings and old warehouses with faded 'For Sale' signs on dark and deserted industry parks is often more than enough to scare them off. Commercial real estate investment is often ... more...

Lease Purchase Houses Metro Detroit - What You Need To Know
If you are looking for lease purchase houses Metro Detroit, you are not alone. Many Metro Detroit homes for sale by owners and agents advertise a lease option or 'rent to own?, but not all of these plans are the same. They are becoming increasingly popular, but you may find that you do not qualify ... more...

The Top 6 Types of Real Estate Investments
What Kind of Real Estate Investor Are You? When you enter the exciting world of real estate investing, you'll soon learn there are many different types of deals you can get involved in and a number of ways to profit. People get rich from doing all types of deals, so you can find the type of deal ... more...

Building Your Marketing Plan
Your marketing must be persistent and consistent to be successful. When all else is said and done, if nobody knows what you do your investing career will be a difficult one. You can know how to do every type of real estate transaction possible but if buyers and sellers aren't calling you will not ... more...