Rent-to-Own Townhouses: Best Options and How to Find Them

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By Steve Nicastro Updated June 3, 2024


Rent-to-own agreements offer a way to live in a townhouse while saving for your down payment and boosting your financial profile to qualify for a future mortgage. However, these agreements can be more costly than traditional rentals and sometimes risky due to potential scams.

Townhouses come with their own set of challenges, including homeowners association (HOA) fees, zoning regulations, and estate laws. These can significantly impact monthly expenses, property use, and overall investment. HOA fees, in particular, can quickly add up, while zoning regulations may restrict property modifications.

Additionally, estate laws can complicate ownership and inheritance, making it essential to fully understand these factors before committing to a rent-to-own agreement.

🏡 Looking for a rent-to-own townhouse but unsure where to start? Clever Real Estate can connect you with a top-rated local buyer's agent who will help you find the best townhouses or condos in your area. Clever can help you determine if buying outright now is an option. Plus, you may qualify for cash back from Clever after closing. Learn more.

How to compare rent-to-own townhouses

Before deciding on a rent-to-own townhouse, consider these factors:

1. Lease terms

When considering a rent-to-own townhouse, your lease will outline critical details such as monthly rent, future purchase price, and responsibilities for maintenance, repairs, and property taxes during the lease period. Townhouses, in particular, often come with unique considerations, including shared walls, HOA fees, and common area maintenance.

Understanding your finances, the local real estate market, and the specific pros and cons of the townhouse you're interested in is crucial. For example, townhouse leases might specify who handles exterior maintenance, which can vary depending on HOA agreements.

2. Rental period

A rent-to-own townhouse usually has a rental period of one to five years. The seller retains ownership until the term ends, when you can buy, continue renting, or move.

Be aware that you might need to pay a "relisting fee" if you decide not to buy. For example, Divvy Homes charges a "surrender fee" equal to 2% of the home's initial purchase price (e.g., $8,000 on a $400,000 home), along with other fees and expenses outlined in your lease and option agreement.[1]

Maintenance, taxes, and insurance responsibilities vary by contract. Opt for a longer period if you need more time to save and qualify for a mortgage, or a shorter one if you're ready to buy soon.[2]

3. Purchase price

Compare the townhouse’s future purchase price to similar properties in your area. This step will help you calculate your estimated monthly rental payment and the percentage that goes toward the eventual purchase price. It will also help you guard against overpaying for a townhouse.

You can research recently sold properties in your area, also called comparables, on free real estate websites like Zillow. For more accurate home valuations, you can seek help from a real estate agent who can perform a comparative market analysis.

Make sure to shop around!

The price of your desired home and the portion of your rent contributed toward its future down payment will vary by rent-to-own company, market, and home price. For example, for a $400,000 rent-to-own townhouse in Florida:

  • Dream America estimates a monthly rent of $4,500, with 10% ($450/month) saved for buying the house.[3]
  • Landis estimates a monthly rent of $3,191, with 17.5% saved ($558/month), and you'll need to save an estimated $27,114 to be able to buy the house.[4]
  • Remember that your actual rent price will also depend on property tax, HOA fees, and insurance costs.

Homeowners association fees and rules

Before committing to a rent-to-own townhouse, research the HOA fees and clarify who is responsible for paying them during the rental period. 

Remember that HOA fees can significantly increase the overall cost and typically rise annually. 

Ensure you're comfortable with the HOA regulations, which might include pet restrictions, noise levels, and property modifications. Understanding these rules is crucial, as they can impact your living experience and financial planning.

» MORE: Rent-to-Own Contracts: What You Need to Know

How to find rent-to-own townhouses

Search townhouse listings online

In addition to working with a realtor or going through rent-to-own companies, you can find townhouse options on popular real estate websites like or Zillow, Craigslist, or relevant Facebook groups.

⚠️ Warning: Some online listings are scams!

According to the FBI's Internet Crime Complaint Center, rental property scams have surged by 64% over the last three years.[5]

To protect yourself:

  • Ensure the listing includes a phone number or a link to a reputable website with detailed information about the property and its requirements.
  • Avoid listings that demand a large up-front deposit before signing a contract.
  • Be cautious of listings that refuse in-person viewings.
  • These red flags could indicate a scam. Read our guide on the 5 Signs of a Rent-to-Own Scam (and How to Avoid One) for more information.

Look into rent-to-own companies

Typically, a rent-to-own company will buy a home for you and become your landlord, and then a portion of your rent goes toward buying it back. However, only a few rent-to-own home companies allow townhouses as a housing option because they don't want to be liable for the additional restrictions of owning a townhouse.

Dream America and Landis allow fee-simple townhouses, meaning the properties must be owned outright. Dream America requires cash savings of $8,000, at least $4,000 monthly income, and a minimum credit score of 500.[3] The company also allows half of your income to go toward housing, whereas most lenders allow only 36–43%.

Meanwhile, Landis requires a minimum credit score of 550 with at least $55,000 in annual income and no foreclosures or bankruptcies within the past year.[4]

👀 At-a-glance Dream America Landis
Min. FICO score 500 550
Min. annual income $48,000 $55,000
Appraised home value $150,000–400,000 $110,000–500,000
Up-front payment 1% 2-3%
Lease length 12 months Up to 24 months
Available markets FL, GA, TX AL, FL, GA, IN, KY, NC, OH, TN
Show more

Hire a realtor

Engaging a real estate agent experienced in the rent-to-own market and townhouse properties can provide several advantages:

  • Finding and comparing agreements. An experienced realtor can help you locate and compare various rent-to-own agreements, ensuring you find the best fit for your needs.
  • Negotiating price and terms. Realtors can negotiate pricing and terms with landlords, helping you secure a favorable deal.
  • Navigating HOA. Townhouses often come with HOA agreements, which can confuse first-time buyers. A knowledgeable realtor can guide you through these agreements, explaining fees, rules, and restrictions.
  • Specialized expertise. Not all agents are familiar with the rent-to-own market, so finding a realtor with the right experience and expertise is crucial to assist you effectively.

By hiring a realtor who understands the nuances of rent-to-own and townhouse properties, you can make a more informed decision and avoid potential rent-to-own pitfalls.

Next steps

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