“Rent to Own” is one of those catch all phrases that has no real meaning. What people are referring to with the phrase rent to own is either an agreement to rent with an option to purchase or rent with the right of first refusal.
Renting with an option to purchase means that at the end of the lease you will have the option to purchase the property, at terms agreed to at the beginning of the lease, before the property can be offered to any other buyer. In this agreement both sides are hedging that the value of the property will have changed in their favor when the option is exercised. A market where prices are likely to decline is beneficial for the seller, a market where prices are likely to increase would benefit the buyer.
Renting with a right of first refusal means that if during the term of the agreement the owner chooses to sell the property, the owner must present the terms of his choosing to you before any other buyers.
Typically, the renter pays a premium for an option or a right of first refusal.
Without a written agreement for an option or right of refusal “renting to own” is just renting.
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