How to Rent-to-Own in Iowa

Rent-to-own can be a viable option for owners as well as buyers of real estate. Another term used for rent-to-own is lease option. The option allows owners to make an income on their property if they are having a hard time selling it. Renters who seek to buy a home in the future can rent the property and purchase it at a predetermined price. A percentage of the rent goes toward a down payment if the renter decides to complete the sale.

Instructions

Instructions

1. Research the rent and sale prices for homes in the part of Iowa in which you want to live. Consult Iowa real estate property websites, town registries and local newspaper listings. Property owners provide the rental rates, which are subject to negotiation until a contract is signed.

2. Select the properties of interest to you. Gather information about them -- addresses, owners' name, number of rooms, amenities, square footage and rental costs. Contact owners.

3. Review the terms and conditions of the contract for the house you select. Evaluate the monthly rent, the option fee and any terms made by the seller.

4. Check the register of deeds online or the local town register. Confirm that the property owner is the legitimate owner. Review the deed for any liens or encumbrances.

5. Communicate with the property owner about future renovations and property improvements. Note that permanent fixtures and additions such as washer and dryer, light fixtures, pools and decks are all owned by the property owner.

6. Negotiate the terms of the rent-to-own contract. Review your personal finances and discuss the options that will fit your budget.

7. Obtain the funds for your first down payment. Note that rental payments for lease options are typically higher than market rental rates for the property.

8. Sign the rent-to-own contract. Collect keys and move into the property.

Tips & Warnings

• Review contracts and agreements with your lawyer.

• Sign documents with a third party present, preferably a notary public.

• Select a property that is affordable and meets your budget.

• Be sure of the type of lease option contract you are signing. A rent-to-own agreement gives you the choice to purchase the home. A lease purchase agreement requires you to buy the home.

References

• HUD.GOV: Tarp for Main Street Act Of 2009; William Apgar; 2009
• SmartMoney: Negotiating Rent Gets Tougher
• State of Iowa: Iowa Tax / Fee Descriptions and Rates

Resources

• Iowa Professional Licensing Bureau: Real Estate Salespersons and Brokers Professional Licensing
• State of Iowa: "Rent-to-Own" -- Know the Costs!