Rent to Own Cabins: 5 Things to Consider Beforehand
Do you feel that a commercial cabin taken on rent is a burden in terms of money you shell out each month? This is possible because the rental prices are certainly not the same what they were 10 years ago. While it seems tough to carry on with the rentals scheme, it might also not possible to buy a log or portable cabin due to lack of upfront cash or inability to take a loan due to bad credit score.
Well, regardless of whether your credit score is low or you do not have upfront cash, the rent to own cabins can be your better alternative. They seem to be like those standard home sales but are a bit different, as there is no need to pay the whole purchase price upfront. They are an alternative to the traditional loans, as they many such deals do not bother to consider the credit score or report.
Nevertheless, the rent to own cabin deals are not suitable for all. They are genuinely only for those who cannot buy a cabin right away or do not wish to shell out rent each month for a long-term usage. They are also for those who are especially financially weak now but foresee themselves in a stronger fiscal position in some time.
Comprehending Rent to Own (RTO)
RTO is a concept through which a sale takes place but the purchase happens at some undefined time in future. This means that the buyer gets a chance to buy and become the owner of the item in future.
Traditionally, the purchaser buys the item instantly after agreeing to the clauses or terms. On the other hand, in case of an RTO, both of them willingly accepts the clause of passing the ownership to the buyer in future. However, it is the buyer who decides whether the ownership should be given to her/him or not.
Meanwhile, she or he continues to pay a rental-like amount to the seller. Some portion of these amounts indicates an extra part that actually reduces the amount required for owning the item at some time in future. The same is applicable to cabins.
Rent To Own Cabins Programs Overview
A rent to own cabin is always available through an RTO program. Such a program encompasses all types of cabins such as rent to own portable cabins and rent to own log cabins. It provides the desired additional space without renting a cabin or a storage locker.
These programs are specially designed for those who do not have cash to buy a cabin of their choice upfront. So, they are planned to include the rental scheme but with utmost flexibility and ease. Once the contract is fulfilled, the buyer willingly can choose to be the owner of the cabin. This means the buyer can withdraw the contract anytime and send the cabin back to the seller.
Most RTO programs do not check the buyer’s credit score. This attracts those with low credit score. Some programs are such that they enable selling the cabin back during the term of the program in exchange for a new cabin as well as contract.
As a result, a buyer has more options to choose from in terms of appearance and functionality. For instance, the buyer can now choose a program for finished portable cabins rent to own or rent to own log cabins. These programs also give the convenience of using a cabin on their own property while paying fees just like the one off-site. Buyers can accelerate payments for reducing the pending final balance.
The Salient Features of Rent to Own Cabins
The vendors usually have multiple RTO programs on offer, which are applicable to a cabin of any size or style. The full purchase price is divided into several installments that are payable monthly over a duration of one to five years. The exact term depends on the duration of the chosen program.
At the time of contract, a buyer needs to give the down payment, which is the first payment. The sooner you pay the pending installments, the greater is the savings at the time of buying the cabin for ownership. For instance, you can end up saving up to 30% of the balance. Below are a few salient features of the rent to own portable, log, or any other type of cabin.
Fully Open to Bargain
It is true that an RTO deal kicks off with a contract but it is open to the bargains. While both seller and buyer give consent to some clauses, they can change depending on the requirements. Depending upon the priorities and criticalness of the transaction for buyer and seller, a buyer can bargain for a few amenities or features before signing the contract. For instance, he may bargain for a less monthly installment.
The Liberty to Own Later
Although the buyer pays a rental installment each month, she or he has the right to own the cabin in future. In the beginning of the rent to own cabins deal, the buyer has to give a premium, which is not more than 5-10% of the actual buying price. Still, this price is likely to vary. However, by paying it, the buyer gets the right to buy the cabin in future.
No Obligation to Buy
The buyer gets a choice to buy in future but it is not mandatory at all. This is the biggest liberty any buyer can get. At any time, the buyer can withdraw from the choice of buying the cabin. This is beneficial if the cabin is not durable or cannot resist harsh weather elements.
Agreed Upon Purchase Price
The buying price is agreed by both the parties to the contract. The buyer can buy the cabin at that price after some time, which is usually between one and five years. This is regardless of the actual price of the cabin at that time in future.
Usually, a price is set, which is higher than the prevailing one. This is done to persuade the vendor to ignore the benefit of getting the full amount immediately. If the value of the chosen cabin rises more steeply than estimated, it is the buyer that benefits Or else, the buyer can choose to cancel the purchase, as it might be insensible to do so.
Deals of rent to own cabins involve much money and they seem to be a bit tough when it comes to understanding them from the lucrative viewpoint. This means that such deals come with a potential risk for the buyers. There are also chances of frauds, which are schemes attracting probable buyers having a low credit score. So, it is always recommended to choose an attorney and make her or him assess the contract.
The extra that a buyer pays is non-refundable. This is because it compensates the seller for waiting to watch what the buyer shall do at the contract’s end. The vendor is bound to be the owner of the cabin but cannot do anything with it until the contract ends.
Essentially, bigger premiums come with more risk for the payer. This is because if the rent to own cabins transaction does not result in buying no matter what the reason is, the money paid is gone. The vendor can at least keep all the premium amount even if the purchase does not take place.
Decisive Maintenance Terms
It is always good to go for a well-maintained cabin, especially if it is a second-hand model. However, the question here is now who shall now be responsible for its daily care and general maintenance. The contract can have a condition that any maintenance or repair expenses below $500 shall be the responsibility of the buyer. Nevertheless, the local rules can make it differ by stating that the owner shall take care of few facilities regardless of the associated contract clauses.
5 Things to Consider before Entering into a Rent to Own Cabins Deal
With the rising popularity of rent to own deals, it has become common to see scams coming up. So, you as a buyer need to be cautious prior to entering into a contract. Several conditions exist in a contract. Thus, there are several things to consider to choose the best deal.
1. Reputation of the Vendor
Nowadays, anyone can post a site online and advertise a service. However, nobody knows who the vendor really is. So, is there any way to find that whether they are genuine and credible? Well, luckily, this can be done in many ways.
First, check out the site thoroughly, including About Us, Contact, and other such pages.
Second, know who are the people involved. Know who is the owner and search on all of them on Google. While doing so, check out their qualifications, training, and experience in what they are doing, see their track record, look for their blogs or articles, and verify their professional references. Find for how long they are into this business of RTO. Understand that any type of real estate business needs knowledge, expertise, and even experience.
Check for testimonials about the vendor.
See and cross-check if they are associated with any reputable institutions or have won accreditations.
Check out their rewards, if any.
2. Condition of the Cabin
This is a major factor that most people take for granted. How would it be if you come to know that the cabin for which you have chosen a rent to own program has not been maintained well? Doesn’t it seem miserable? Well, then do not allow this misery to enter into your RTO contract.
As a shrewd buyer, always take a tour of the cabin you wish to buy, although later. In other words, take a test drive for some time before you sign a contract. This will help in assessing the condition of the cabin, facilities, build, design, style, benefits, and limitations. This shall consequently help in taking an informed decision of whether to go for that cabin or choose another one. It is wise to document any repair or maintenance in the contract after assessing the cabin of your choice.
3. Sales Price
As per the RTO contract, only the buyer has the right or option to buy the cabin within the pre-agreed period. The buyer gets a chance to lock in the price of purchasing. You might feel that it is a great deal if the value of the cabin rises during the contract term.
However, chances are also there to end up paying a greater price than expected in case the value falls. Well, this is because a price has already been fixed. So, it is wise to agree upon a price that is beneficial to you in the long-run. This is where you might some consultation if you are not so good forecaster.
This is something that any buyer would like to go through. The most important aspects to check for are the clauses such as price, term, buying amount, monthly rental, prepayment clauses, and the exit clause that states what is to be done if the buyer does not buy the cabin at the end.
It is also essential to check for the clauses related to repairs, maintenance, and delivery charges. Further, just as a home acquisition, the cabin’s condition should be revealed by the price. Do include the photos of the cabin in the contract. Overall, the document should be professional, as it is a sign of a genuine vendor.
5. Monthly Payment
Several RTO offers have a down payment of 5% along with up to 5% premium. If you are asked anything more than it, do not hesitate to ask why. Nothing should stay hidden in this process. The monthly payment also includes property taxes and/or insurance. In short, just find out and understand how the monthly amount is computed.
Deals of rent to own cabins can be effective only when they are planned and executed properly. Many providers simply do this well, while others are just there for a big trap. It pays to ask until you get clarity and conformity. Always choose a reputable vendor.