You’ve probably noticed by now how many predictions mention the rent-to-own process as one of the significant housing trends making a notable comeback.

These past few weeks we’ve been providing you with a lot of information about the returns, the advantages/disadvantages of it, plus how our business model recognizes that this approach works best to benefit both families and our PhilanthroInvestors (PI).

This time we simply want to simplify the math and show that, despite the fact that many highly successful people have gone down this path recently, these renowned economists still see it as a fantastic new option.

According to new research by Jack Caporal titled “Rent to Own: Pros, Cons, and Consumer Views,” this renaissance is capturing the attention of notables like Jay Z, Will Smith and Sequoia Capital, as well as everyday Americans.

A staggering 70% of Americans are aware of the rent-to-own procedure, according to a nationally representative study by The Motley Fool Ascent.

But that’s not all! Approximately 79% of them would even think about using this option to buy a property. This growing interest transcends age boundaries as well. Millennials seem to be the generation most interested in rent-to-own homes, with 86% of them open to the idea.

Surprisingly, the ability to start the home buying process without having good credit, a substantial down payment or the requirement to meet certain criteria to obtain a mortgage seems to be the biggest draw for potential buyers.

The rent-to-own process seems to offer a more accessible path to ownership, as it allows credit to be established through timely payment of rent. This has been our specialty since we started nine years ago!

However, all indications are that what we have been calling “our niche” is beginning to look more and more like a trend that will not go away any time soon. This suggests that Equity & Help made the right decision in deciding to support families in this housing project.

Although rent-to-own appeals to people of all ages, the reasons for doing so vary. According to research, younger generations, such as Generation X, Millennials and Generation Z, are attracted to renting because it can help them establish credit, allow them to put some of their rent toward a down payment and improve their chances of qualifying for a mortgage while renting.

Remember, E&H provides monthly reports to all credit bureaus to help them improve their credit score, supports families who require government assistance with counseling or paperwork, and we do everything in our power to prevent delinquency through strong communication.

Baby boomers, however, love it as they can live there and use the space before deciding to buy it. All of these options continue to be excellent news for our PIs, as their continued occupancy translates into monthly returns for the investor.

In terms of financial situation, the survey reveals that Americans with a net worth of less than $1 million (and the median annual income is about $56,940 according to demandsage.com) are more likely to consider the rent-to-own route because they seem to value the opportunity to buy a home that doesn’t require a strong credit history or saving immediately for a down payment.

The responsibility of home maintenance and being tied to the value of the home are the main factors that deter some people from opting for rent-to-own.

Which is understandable for those families who have no experience repairing their homes, but doesn’t end up being a deterrent for us (and our PIs) because we deliberately qualify families who are able to handle repairs and maintenance on their own, or at least know someone close to them who can. All while paying only two-thirds of what they would have to pay elsewhere for rent.

In conclusion, it is undeniable that the rent-to-own trend is growing, and we have enough experience to keep our promise to our PhilanthroInvestors of an annual NET return of 8-12%.

Whether or not a trend exists, this grows as do all good things. See you next week!

Sources:

• Federal Trade Commission (2016). “What you need to know about rent-to-own home deals.”
• The Ascent (2021). “Millennials Account for 37% of Homebuyers, Over 50% of New Mortgages.”
• The Washington Post (2020). “Rent-to-own options in housing: Move in now, buy later.”
• Zillow (2022). “Buyers: Results from the Zillow Consumer Housing Trends Report 2022.”