Rent-to-own condos offer a potential housing option if you want to lease a specific unit before committing to buying it. This option can be less costly up front and offers low maintenance, plus the potential for amenities such as a community gym or pool.
But rent-to-own condo agreements are not widely available and may not be a good fit for you. The contracts are often complex, more expensive than buying in the long run, and have low success rates.
If you're interested in this housing option, our guide helps you weigh the most important things to consider first.
» LEARN: How rent-to-own homes work
1. Your housing choices may be limited
Only 6% of home purchases are rent-to-own agreements, and rent-to-own condos are even rarer.
Many rent-to-own companies, including Divvy Homes, don't offer condos as an eligible property type because they don't want to own the condo if the customer doesn't end up buying, explains Marjorie Scholtz, CEO of Verbhouse.
"Condos often don't rise as much in value as single-family homes, which discourages rent-to-own companies from including them in their portfolios," she says.
Other complexities include condo building limitations on rentals, and mortgage lender restrictions. It's best to consult with a real estate agent for more market-specific advice, and to help you weigh your housing options. Get free advice from a fully licensed concierge with Clever Real Estate!
2. They may be cheaper than traditional rent-to-own homes
One key advantage to condos is affordability. According to the National Association of Realtors, the average sales price for a condo is $323,500, compared with $378,700 for a single-family home.
Condos are often smaller and require less maintenance than single-family homes, too. Plus, the condo's homeowner's association (HOA) typically handles exterior, roof, and lawn maintenance, saving you a ton of time on upkeep.
On the other hand, condos are not likely to appreciate in value as much as traditional homes, so keep this in mind before deciding on a property type.
3. Condos may offer more amenities
Condo complexes often feature extra perks, including:
- Communal pool
- Garage parking
- On-site dog park
- Lounge or coffee bar
- Dry cleaning
- Office space
However, more perks usually lead to higher HOA fees.
You may also be subject to dozens of community rules and restrictions when you agree to live in a condo complex, including restrictions on pets, guests, and noise.
4. You might pay HOA fees as a renter
Normally, condo owners pay monthly HOA or regime fees, while renters just pay rent. The seller might agree to cover HOA fees during the rental term, but it’s not guaranteed. The rules vary by rent-to-own company and contract.
- Verbhouse pays all or most of a customer's HOA fees. It's deducted from repairs and maintenance reserves, which is already built into a customer's monthly payment, according to Scholtz.
- Divvy Homes and Trio Homes pass the entire cost of HOA fees onto you, and Trio also charges a one-time $325 fee.
Carefully review the rent-to-own agreement to determine who's legally the owner during the lease period, and who's responsible for HOA fees. And remember that even if your landlord agrees to cover the fees, you still need to abide by the HOA’s rules.
5. You may have other options
While the up-front cost of buying a condo or single-family home now is steeper, you'll probably save money over the long term and avoid the risks of rent-to-own agreements.
In any case, talk to a real estate professional or financial adviser to set realistic expectations.
Clever will match you with an experienced local buyer's agent to help you find the best rent-to-own condo options in your area and make the process smooth and stress-free. Get matched with an agent today!