A rent to own home can give you a chance to achieve home ownership without having to meet the stringent guidelines set forth by banks and lending institutions. Many people are finding it difficult to sell their properties in the lagging economy and entering into a rent to own contract can be a way for them to get their properties sold. One question that may come up as you look at homes might be if it is a good idea to remodel a home that you are renting with the option to own? Purchasing a fixer-upper can save you money but what about the costs of remodeling? Should they be covered by you or your landlord? All of these factors need to be considered before you decide to take out your hammer and nails and do the job yourself or hire a contractor.
Typical costs for remodeling
Costs may vary depending on the area you live in and the materials used but a general idea of how much updates will cost you is good to know so that you can make an informed decision.
- Kitchens: This can be one of the most expensive rooms to remodel next to the bathroom. Depending on if you only do a cosmetic update or replace the cabinets, countertops and appliances a kitchen remodel can cost between $5,000 to $30,000 or more.
- Bathrooms: A bathroom remodel can be simple or complex. Replacing only the sink, fixtures and resurfacing the cabinets and tile can save you money. A complete remodel that includes flooring, tub and shower and new tile can be costly and time consuming. A bathroom remodel averages $5,000 and can run as high as $30,000.
- Living/Great and Bedrooms Rooms: Sometimes you can just put a fresh coat of paint on the walls and give these rooms a whole new look. This is one of the cheapest ways to brighten up a room and give it a fresh feeling. Paint runs around $12 to $15 a can and you will only need a few gallons. If you also decide to replace the flooring the cost can run up to $60 a yard depending on the materials you use.
As with any home improvement project, the cost will be determined by the quality and grade of materials you use and whether you do it yourself or hire a contractor. If you decide to hire a contractor, be sure to get several estimates and verify that the contractor is licensed.
Who pays for the remodeling?
When you look at properties to rent to own, you should be clear about who will carry the cost of the work and materials. If you are considering a property that needs extensive work this should be considered as part of the total cost of the home. You can talk to the landlord and see if you can take the cost of the remodeling work off of your rent or purchase price of the home. Very few landlords will agree to pay for a remodeling job. They may consider this a cost that you must pay for and not want to give you a discount for improving the property.
This question is one that you need to have a clear answer to before you draw up your lease agreement. While you may not get every dollar back that you put into the remodeling, you may be able to get a large percentage of it applied to rent or purchase price if you and your landlord can come to an agreement. This agreement must be stipulated and clearly laid out in your rental or purchasing contract.
Protecting your investment
Keep in mind that if you have to move and cancel your lease contract you will lose the money and time you have invested in the home. Be aware of the terms of your contract regarding late payments, grace periods and late fees. Some rent to own contracts become null and void if you miss even one payment or are consistently late. Protect your investment and know your rights and be clear on the provisions laid out in the contract that you enter into with your landlord.
Renting a property to own that is a fixer-upper can be a rewarding experience. If you like to do remodeling and are willing to put forth some time and effort you can be rewarded with a home that is up to date and tailored to your tastes. Be sure you know up front who will bear the burden of the cost, whether it will be you or your landlord. Weigh the pros and cons of remodeling a home that is not yours and how much value it will add to the home once it is in your name. If you can work out a deal with your landlord and stick to it, then remodeling a rent to own home may be a good idea.