BLOGBlog posted On February 07, 2025
Love the home you’re renting? Well, you might want to consider broaching this topic with your landlord: are they willing to sell? With a little time and research, you could potentially convince them to let you buy the rental unit you’re currently living in. It’s worth a shot if you’re already living in an ideal home, despite it being someone else’s property.
First Thing: Do Your Research
Before you approach your landlord, it wouldn’t hurt to do a little research on your rental first. If there’s a possibility you can convince them to sell, you want to have all your cards on the table. You might also discover that your landlord is looking to sell soon anyway, and it’s far more appealing to sell to someone they already know, especially if you’re a reliable tenant who makes their payments on time.
You’ll want to research past sales for the property as well as any active listings in the area; that way, you’ll get a rough idea of a price before you discuss this with your landlord. You should also consider getting a preapproval to see how much you can afford. This will set you up for success in any home buying decision.
Explore Your Options
This is the most straightforward option. Simply, your landlord puts the rental on the market, and you finance it with a traditional mortgage by making an offer. Either you’ll be working directly with the landlord as or through a real estate agent if they’ve already listed it for sale. It’s suggested that the best time to attempt a rental home purchase from your landlord is aligning it when the lease is nearing renewal. However, if you don’t have enough saved for a down payment yet or enough for closing costs, emergency funds, and other home loan costs, you may want to consider the next two options instead.
A lease-option agreement is an alternative option if you want to buy the home you rent but your landlord isn’t ready to sell. With this agreement, you’re under no obligation to buy the property, but you have a legal option to purchase the property at an agreed-upon price after a given period of time. This is the most flexible option; if you decide not to buy the property at the end of the lease, the agreement expires, and you can walk away without needing to pay rent or buy. With both this option and the next, lease-option agreements should always be made in writing. Never trust an oral agreement as they’re not binding.
A rent-to-own agreement happens when you and your landlord arrange it so that your rental payments will be credited towards a purchase of the home; the renter will also pay a certain amount above market rent. The appeal of this agreement is that it allows you to build equity without needing a mortgage loan. It’s also beneficial if you don’t have sufficient money saved up for a down payment yet. However, please note the risk with this arrangement. If your life circumstances change and you no longer wish to purchase the home, your landlord will get to keep all the money you’ve paid towards your down payment. These agreements don’t have the extra consumer protections that typical mortgages have either. So it’s highly suggested you explore the first two options first.
Now that you have a few options on the table, are you feeling ready to transition from a tenant to a homeowner? As mentioned previously, a preapproval is one of the first things you can do before you even approach your landlord. We’re happy to help set you up for success and get you preapproved, which will let you know how much home you can afford, and specifically, how much of your rental unit is affordable for you. The future of homeownership awaits!
Source: The Mortgage Reports, Apartment Therapy
