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If you are looking at a rent to own home in Michigan, you are certainly not alone these days. Because of the poor state of the Michigan economy this is becoming an increasingly popular option, for both sellers and buyers.

In fact, one of the most popular areas for doing a rent to own home in Michigan is in Grand Rapids.

Rent to own is also sometimes referred to as a lease purchase or a lease option....because the tenant-buyer is leasing the home but has an option to purchase the house at an agreed upon price -- or, in the case of the lease purchase, must buy the home.

Lease Purchase Home in Michigan

There are many reasons why someone would want to lease purchase a home in Michigan. Many individuals or couples can afford to make monthly home payments because of a steady income but either do not have enough to put down for a typical down payment or cannot get a traditional loan from a bank due to bruised credit.

Therefore, if you decide on a rent to own home in Michigan, you can get into a nice house with a small payment -- often referred to as option consideration -- and you can even do so with damaged credit, believe it or not.

How do we know this? Because as real estate investors we do lease options and part of what we do is help potential home owners improve their credit score.

This credit repair fits perfectly with people looking to rent to own because it allows us to get people into properties they want to own, which, in turn, helps them improve their credit further because they are now making consistent home payments that are reflected on their credit records.

In addition, during the time the tenant-buyers are in the home, we can often assist that person or couple in helping them improve their credit so that by the time they are ready to exercise their option and buy the property, they will have the credit score they need to obtain a conventional loan from a bank.

In short, we help people who are sick of throwing away money from renting.

Rent to Own Home in Michigan - Buyer Side Pros

Besides being able to get a home with subpar credit and without needing a lot of money for a down payment, there are other advantages for buyers of a rent to own home in Michigan.

For example, when you opt for a lease purchase home in Michigan, you feel like you are a home owner because you know you can exercise your option and buy the house you're living in.

Also, rent to own deals entail something called "rent credits" that the tenant-buyer pays each month and which are applied to the down payment of the house when the option is exercised. This gives the tenant-buyer the feeling that they are making payments for eventual true ownership of the property.

Another advantage for the buyers in the case of the lease option is that they get to live in the home before deciding whether they want to buy it or not. You may love the house from the moment you saw it, but after 12 or 24 months of living there you may decide that it's too small for a growing family, or that the neighborhood doesn't fit your lifestyle requirements, and then you can pass on exercising your option.

On the other hand, if you do a lease purchase home in Michigan then you are obligated to buy when the option term ends. It will depend on negotiating with the seller before signing the terms of the contract.

One last potential pro for the buyer when living in a rent to own home in Michigan is that if the economy turns around and the property appreciates while you are living in it, you may have a good sized gain by the time you have to decide whether to exercise your option.

Obviously, if the home does appreciate quite a bit, and you are then in a position to purchase it because of improved credit and other financial factors, then it may make good financial sense to do so.

On the other hand, if the property declines appreciably in value then you can simply choose not to exercise the option, unless you happen to love the property and do not wish to move.

Rent to Own Home in Michigan -- Seller Side Pros

Now, let's discuss the benefits for the home seller. In a slow economy, such as the one Michigan is currently facing, homes are difficult to sell. Potential buyers just don't have the sufficient savings to put down or cannot get the lender financing they need to buy your home.

But if you are desperate to sell -- maybe because you've purchased another house and are now making two mortgage payments, or because you or your spouse has lost your job, or perhaps have been transferred out of state -- you can have someone take over your monthly mortgage payments by allowing your property to become a rent to own home in Michigan.

Another big advantage is you can almost always command above market rents when you do a lease option....and can often get near FMV (fair market value) for your home when you negotiate the price for the option/purchase.

This is because your potential buyers are not in a position to get traditional bank financing to purchase a home and, therefore, many will be willing to pay closer to the market value of your property.

Another significant benefit if you decide to market your property as a lease purchase home in Michigan is that, generally speaking, the tenant-buyers will treat the home respectfully. This is simply because if they are going to buy it in the near future, they are going to care for it as if were their own.

Lastly, you as the seller also get to keep the property income tax deductions during the option period since you are still on the mortgage. Talk to your accountant about this.

Of course, once the option is exercised then the tenant-buyer becomes the owner and after that all potential tax deductions then become theirs...but you have accomplished what you set out to do: sell your home in a slow economy for a good price.

A lease purchase home in Michigan can truly be a Win/Win scenario for seller and buyer alike and that's why they are so popular nowadays.

If you are a home seller and would like our assistance, please visit our Sell Michigan page.

Dan Ho is a real estate investor in Michigan. Visit rent to own home in Michigan for more info whether you are a seller or buyer.