The homeownership rate in Des Moines, Iowa, stands at 60%, according to the latest data compiled by the U.S. Census Bureau. It shows the vast majority of residents in Iowa's most populous city want to be homeowners. You don't want to be left behind.
Unfortunately, it costs a fortune to buy a home. An article from the Des Moines Register states that the median price of a home here reached $300,000 in 2024. The high cost of purchasing a home keeps many willing buyers out of the market, but don't give up yet. Have you heard about rent-to-own homes?
That's right. You can pay rent towards homeownership, but there's more to it than meets the eye. Flip on for the finer details.
How Rent-to-Own Agreements Work
You might think that renting to own means paying a certain amount of money every month until the purchase price of the property is met. Well, you have a rough idea of how these agreements work, but there are key issues that must be addressed.
There are two main types of rent-to-own contracts:
- Lease option contract
- Lease purchase contract.
A lease option contract gives you the freedom to choose whether to buy or walk away at the end of the lease term. A lease purchase contract obligates you to buy.
Regardless of the contract you opt for, you must pay an option fee, which is non-refundable and can range from 1-10% of the home's purchase price.
Another aspect of the rent-to-own arrangement is the monthly payments. They're typically higher than the average rent for a comparable property in the area. The additional amount (known as rent credits) goes toward the home's purchase price.
With this in mind, you can see how rent-to-own isn't just a simple aspect of paying rent toward homeownership. You're, in effect, paying the regular rent, plus an additional cost, which is what you're paying for the home.
Rent-to-Own Advantages
This unique path to homeownership provides certain advantages over the traditional mortgage method.
It provides a viable solution to people who, for reasons such as bad credit, cannot get a competitively-priced mortgage. As long as you can raise the option fee and afford the monthly payments, your journey to homeownership will be well underway.
The purchase price of the home is locked in at the onset of the contract. If the property's value appreciates, you'll build equity in the home.
For those who may have the luxury of walking away from a rent-to-own agreement, this option gives you an enviable opportunity to have a taste of a property. If you don't like it, you can move without incurring any additional costs.
Rent-to-Own Homes Are Ideal for Property Investment
Rent-to-own homes give you a path to homeownership in Des Moines. If you don't like alternative financing options like home loans, renting to own could just be the right path for you.
Buying a home is a complex process, and it's recommended to have the right advisors on your team. PMI Central Iowa is ready to help you find the property of your dreams. As a full-service real estate asset management company that's part of an experienced national franchise, you can bank on our realty services.
Call us at 515 750 0142 to speak to one of our experts.
