Housing prices plummeted in 2007 through 2009, however since that time housing has stabilized, and in many communities they are now at or above their previous highs. Additionally, while housing prices have been on an unaccustomed roller coaster, the one thing that has consistently risen over time, and has risen far exceeding household income is the rent in which the Wall Street Journal recently demonstrated in a graphic that rental prices have increased 35.5% since 2005, whereas household income has only increased in that same period 18.1%. The economy has been in an economic malaise over the last decade, and home ownership has plummeted from 68.9% of the population in 2005 to 63.4% in the second quarter of 2015 as reported by CNBC.
Still, the American dream of owning a home, is a dream that dies hard, so that those with questionable credit and those with questionable earning power, are certainly desiring the attainment of that dream, no matter how realistic that dream is or not. This means, that there is a market for hucksters to take advantage of those that want to believe that somehow they can still buy their dream home, and hence that is why you will see signs and advertisements for "rent to own" properties.
Like many things that sound too good to be true, rent to own is definitely a perfect example of something that sounds like a dream come true, but is in reality, it is just a hustle, to which you the consumer, will end up in most circumstances, not only on the losing end, but having spent even more of your own money that you couldn't afford to sacrifice having been suckered.
The most basic problem that the prospective future home buyer has is that any lease or rental agreement is a written document, to which, the writer or controller of such, is the actual landlord and/or owner. This means that the document is written in such a way that it has numerous provisions, terms and conditions, to which all of these favor the landlord and none of them favor the tenant or prospective buyer. In a rent to own contract, there may be many odious provisions, of which all should be carefully paid attention to, but none more important than the conditions of the option to buy, as well as the actual price of the home, itself.
In most rent to own contracts, the future purchase price of the home is set ahead of time, to which, undoubtedly, the seller of such, is confident that the price of the home being sold at that particular time and that particular price, is beneficial to the owner, and not so much to the proposed buyer. That is to say, the landlord sets the home selling price and if you as the buyer do not do your due diligence to determine whether this price is fair within that market, you are probably paying a premium to the real value of the home. Additionally, each month, you as the rent to own buyer, have to come up with additional money beyond the actual rent, as a payment of your fee for the option of buying the home upon the conditions of the contract. Undoubtedly, if you are late, fail to make full payments, or fail to adhere to certain under conditions, you will forfeit all of that option money paid to the landlord, and have ownership of nothing. Additionally, if for some reason, despite making all those option payments on time you are unable to come up with the necessary means to secure a mortgage under your own name you will also forfeit your option fee, because you have failed to adhere to your contractual obligations to purchase the home by a certain fixed date.
In summary, the rent to own gig is a scam, because the chances of you, the proposed buyer, coming out ahead, are exceedingly slim, to which in reality it is heads the landlord wins, and tails the proposed buyer loses.