5 Tips For Due Diligence If Considering Rent to Own


Rent to Own is helping families across North America get into home ownership when banks and traditional lenders are saying “no”.

Even though this method of home ownership is a fantastic way for credit-challenged homebuyers, those with down payments that are less than what is required by the banks, new immigrants, self-employed…etc— it does come with it’s concerns and risks.


So how do you protect yourself?

In a word, due diligence.

What’s crazy is that this is a simple concept, but one that many people tend to skip or fly through because they feel their need for a home is more important then their need to protect themselves.


I am a strong believer in the idea of being a homeowner and understand the value today (stability for family) and long-term value (financial stability) but do feel that these have to be supported by doing your due diligence to ensure that it is the best step for you and your family to take.

After all, the goal of a rent to own is to ultimately give families a chance to get ahead financially through the equity in the house, something they can’t get if they are still renting.


Where to begin?

The first place to start is to research rent to own. There is lots of information online and although you have to take the information with a grain of salt, researching will give you a foundation of information when you start the dialogue with a rent to own provider.

Next is to find a rent to own provider. Their website will be your first clue as to whether they are going to be a good fit for you or not. Are they professional? Provide lots of information on how they work, how they will work with you? Do they provide personal information or at the very least, have images of them so you can relate to them? It is important to remember that this is still a relationship so it is important that you can relate to the people that you will be making one of your biggest investments with.

Monthly payment. Be sure to ask LOTS of questions around how the monthly payments are calculated. It is important that the numbers make sense to you and fit your budget (comfort level). Typically, the monthly payment should cover the expenses on the property and have extra added which would be added to your down payment (forced savings) to ensure that you have a bigger down payment in order to qualify for the mortgage at the end of the rent to own term.

Future purchase price. How is this calculated? Does it make sense for the area you are purchasing in? Typically the future purchase price should be calculated based on the average appreciation for the area. If it much higher than the average, it could provide an issue for you in the future if the house does not appraise for the amount you are purchasing it for.

Finally, and although it might be ridiculous to think about, use a lawyer to review the agreements to ensure you are protected. It is a small investment to make sure you understand how the agreements work and what implications there might be in the agreements that could impact you in the future.


As someone who has been working through rent to owns, as an investment vehicle and as a rent to own provider, I can say that it can work and I have seen many people succeed — and although there are always risks to everything we do, you can minimize or eliminate your worries and concerns by taking the steps needed to complete your due diligence!