How Do Rent To Own Sheds Work? - The Complete Guide
Rent-To-Own (RTO)? What does that mean, exactly? What all does a rent-to-own shed entail? Are there hidden fees or strings attached? Will I miss my self-storage unit? Is a rent-to-own shed worth it?
These are smart questions and they deserve fair and straightforward answers. We'll do our best to answer all your questions in this guide to understanding how a rent-to-own shed works.
- What Is A Rent-To-Own Shed?
- How Rent-To-Own Sheds Work: In A Nutshell
- FAQs About How Rent-To-Own Sheds Work
- Is Rent-To-Own the Same as Financing?
- Does a Rent-To-Own Shed Affect My Credit Score?
- How Much is a Rent-To-Own Shed?
- Can Rent-To-Own Sheds Be Paid Off Early?
- Can I Live in a Rent-To-Own Shed?
- Can I Keep Animals In a Rent-To-Own Shed?
- What Happens if I Change My Mind About My Rent-To-Own Shed?
- Can I Buy a Used Rent-To-Own Shed?
- Is A Rent-To-Own Shed Ever A Bad Idea?
- Are Rent-To-Own Sheds More Expensive?
- Rent-To-Own Sheds Compared to Self Storage
- The Full Rent-To-Own Process: Step-by-Step
- What Fuels Your Search for a Rent-To-Own Shed?
- A Trusted Shed Company Makes All the Difference
What Is A Rent-To-Own Shed?
If you've got this far and you're still not quite sure what a rent-to-own (RTO) shed is, we'll clear that up right now. In order to understand the how (rent-to-own works), it is helpful to first ask the what (is a rent-to-own shed).
A rent-to-own shed is a storage building that is leased on a monthly basis with part of the rental fee going toward leasing services and the rest toward the base price of the building, accruing until full ownership at the end of the rental term.
Basically, the rent-to-own agreement provides monthly payments in order to pay off the desired shed. Once the original price of the shed is paid off through these monthly payments, the shed is fully owned by the renter/buyer.
How Rent-To-Own Sheds Work: In A Nutshell
Put simply, a rent-to-own shed works by creating a contract for a homeowner (lessee) to lease a storage building for a specified period of time (usually 24, 36, 48, or 60 months) at a set monthly rate, with ownership of the building transferred to the lessee upon completion of the rental period. During the rental period, part of the monthly fee covers leasing services and the rest is applied to the cost of the building.
That's a real brief overview! Now we'll dive further into the specifics of exactly how a rent-to-own shed works by answering some common questions about the rent-to-own process.
FAQs About How Rent-To-Own Sheds Work
We get a lot of questions about our rent-to-own sheds and the rent-to-own process in general. Here are some of the most common things folks want to know about rent-to-own sheds:
Is Rent-To-Own the Same as Financing?
No, rent-to-own is an alternative to traditional financing. The main difference between financing and rent-to-own is this: financing is a loan with credit implications; rent-to-own is a lease agreement.
With traditional financing, you are required to file a credit application which will then be reviewed by the lender who will either grant or deny the loan. If you default on a loan or even return the property (in this case, your shed) early without fulfilling the full terms of the loan, your credit score will (almost always) be affected negatively.
With a rent-to-own contract you are not required to fill out a credit application. If you choose not to complete the full rent-to-own payment period for your shed, you can return the building at no cost to you (assuming you are up-to-date on all payments.) Otherwise, once you fulfill all your monthly payments the shed is yours, no strings attached!
Does a Rent-To-Own Shed Affect My Credit Score?
No, a rent-to-own shed does not affect your credit score. Rent-to-own agreements do not require a credit check because they are not loans. If you decide to end the rent-to-own agreement early and return the building, there will be no negative effects to your credit score.
More recently, some credit bureaus have begun tracking renter credit (separate from traditional credit reports.) While still very uncommon for rent-to-own sheds, this newer type of rental credit score could eventually allow rent-to-own customers to build a good credit reputation by faithfully meeting their monthly shed payment requirements.
How Much is a Rent-To-Own Shed?
The short answer is, "It depends." The cost of a rent-to-own shed is based on two things: 1) the starting price of the building and 2) the length of the rent-to-own agreement.
To understand your monthly rent-to-own shed costs, it is important to know that there are terms within which you are required to pay off your shed. Most companies offer rent-to-own terms in 24, 36, 48, and 60-month periods.
When purchasing a rent-to-own shed, you will choose one of these payment periods which will determine your monthly payment amount. Shorter rent-to-own shed payment periods have a higher monthly payment amount, but a lower overall cost-to-own.
Here are some examples from the sheds at Gold Star Buildings that show how rent-to-own shed costs change based on building price and the length of the rent-to-own agreement:
|One-Time Payment Price||36-Month Rent-To-Own||48-Month Rent-To-Own|
|10 x 12 Barn Shed||$2050||$94.91/mo||$80.58/mo|
|10 x 20 Cottage Shed||$3419||$158.29/mo||$134.39/mo|
|12 x 30 Garage Shed||$6469||$299.49/mo||$254.28/mo|
Can Rent-To-Own Sheds Be Paid Off Early?
Yes! One fantastic piece of how rent-to-own sheds work is this…In most cases, you can pay the remainder of the price of your shed as soon as you want. You are not bound to the monthly payments of your chosen rent-to-own term, to ride it out to the end. At any point during your rent-to-own payment agreement, you may finish paying the whole price of your shed and become the exclusive owner immediately after that final transaction.
Keep in mind that, since part of each monthly rent-to-own payment goes toward leasing services, only a percentage of past payments will count toward the overall purchase price of the building. That percentage will usually be stated in the rent-to-own shed contract/agreement.
Some rent-to-own companies charge an early purchase fee if you want to pay off the remainder of your building price early. (Gold Star Buildings and our rent-to-own partner, Scotts RTO, do NOT charge such a fee.) Be sure to review the details of your rent-to-own contract, prior to signing, to see what options are available for early purchase. Here's a sample copy of our rent-to-own contract.
Can I Live in a Rent-To-Own Shed?
No, not during the rent-to-own payment period. You may have heard a lot of about tiny houses, she sheds, and man cave sheds. Perhaps these ideas have piqued your interest, but before you start planning on remodeling your rent-to-own shed, listen up!
In addition to explicitly forbidding the use of a rent-to-own building as a dwelling, most rent-to-own contracts also specify that, for the duration of the rent-to-own agreement period:
- No alterations may be made to the rent-to-own shed, such as adding shelving or other accessories.
- Nothing may be fastened to the rent-to-own shed, including signs, equipment, etc.
- The rent-to-own shed may not be affixed or attached to the property in any way, such as fastening it to a foundation.
Once the rent-to-own agreement is completed and you are the full owner of the shed, you're free to live in your shed and make any alterations you want (assuming your local municipality allows it.) In fact, many shed companies (including Gold Star Buildings) offer prefab cabin sheds that are perfect for converting to living space.
Can I Keep Animals In a Rent-To-Own Shed?
No. Most rent-to-own agreements specify that the building is not to be used for housing animals during the rent-to-own period.
Here again, you do not receive ownership of your rent-to-own shed until you have paid the last dollar agreed upon in your original contract. Once you are the owner of the shed, you are free to convert it into animal housing.
What Happens if I Change My Mind About My Rent-To-Own Shed?
Don't worry. Like we already mentioned, there are no strings attached. If at anytime you decide you no longer want your shed, you are not bound to fulfill the remainder of the rent-to-own payment agreement.
If all payments are up-to-date at the time of your decision to discontinue the rent-to-own contract, then you are no longer required to continue monthly payments. Simply notify your rent-to-own company that you wish to end the agreement and the rent-to-own shed will be picked up from your home or property at no cost to you.
Can I Buy a Used Rent-To-Own Shed?
Yes! If your budget is walking the fine line between the rent-to-own route or immediate purchase of your shed, a used rent-to-own shed might solve your budget’s tension once and for all!
When someone prematurely ends a rent-to-own agreement on a shed, the building is repossessed. Often these sheds will end up back on the sales lot at a discounted price. Usually, these sheds are marked as, “used, “pre-owned”, or “repo”. If you're a superstar for catching good deals, keep your eyes out for any sheds tagged with those words. You might find the perfect fit for your desired storage shed and your budget.
Here at Gold Star Buildings, we occasionally have used buildings in our inventory. They typically don't stay on the sales lot very long, but we welcome folks to contact us to see what used buildings are in stock at any given time.
Is A Rent-To-Own Shed Ever A Bad Idea?
It depends. If you plan to own your shed or storage building long-term, up-front payment will give you the lowest cost-to-ownership of any payment option. Whenever possible, we recommend that our customers pay for their building with cash or check. In fact, even putting your shed purchase on a credit card (if possible) is often cheaper overall than buying with rent-to-own payments. (This assumes you make monthly payments on your card of a similar amount to a monthly rent-to-own payment.)
Rent-to-own is a great option for short-term storage or any situation where the alternative is self-storage, as highlighted below. If you need storage now, but can't afford to buy a shed upfront, rent-to-own may be a good choice for you.
Are Rent-To-Own Sheds More Expensive?
It depends what you're comparing to! A rent-to-own shed always costs more than buying the same shed with a one-time payment. However, the overall cost is usually the same or less than renting a self-storage unit for the same time period.
Rent-to-Own Shed Price Compared to One-Time Payment
The extra cost of a rent-to-own shed (compared to a one-time payment) is due to the leasing services that the rent-to-own company provides during the rental period. In some states, rent-to-own companies are required to display the exact cost of leasing services as a separate item on your invoice. However, you can calculate exactly how much you will pay for leasing services on a rent-to-own shed by using the following formula:
(Monthly Rent-to-Own Payment x Length of Rental Agreement) - Cost of Shed w/One-Time Payment = Cost of Leasing Services
($131.53/mo x 48 mos.) - $3346 = $2967.44
So in this example, rent-to-own leasing services would cost $2967.44 in addition to the one-time payment price of the building.
Rent-To-Own Shed Price Compared to Self-Storage Costs
On the other hand, rent-to-own sheds are a great deal when compared to self-storage. Let's compare the cost of a rent-to-own shed in Pittsburgh, PA with the cost of a similar self-storage unit in the same area.
In the example above, a 10x16 Lofted Barn would cost a total of $6313.44 (price + leasing services) with a 48-month rent-to-own agreement.
A slightly smaller self-storage unit (10x15) in Pittsburgh usually costs between $140-$185/mo according to sparefoot.com. That means over the same 48-month period, a self-storage unit would cost about $6720-$8880. That's even more than a rent-to-own shed! Plus, after 48 months of renting a self-storage unit, you have nothing to show for it!
(Obviously, there are times when self-storage makes sense, like super-short-term storage, if your property is too small for a shed, or if you need climate-controlled storage.)
Rent-To-Own Sheds Compared to Self Storage
If you're thinking you might miss your self-storage unit, a smarty-pants response would be, “only if you will miss repeatedly running across town for your storage items.” In all seriousness, though, check out the benefits of a rent-to-own shed vs. self-storage and decide for yourself.
|Rent-To-Own Sheds||Self-Storage Units|
|Unlimited access to your storage.||Many self-storage units don't offer 24/7 access.|
|There are no business hours to work around.||You need to work around the hours of the self-storage facility, which may not coincide with your work schedule.|
|You can provide your shed with maximum security.||You entrust the security of your storage unit to someone else.|
|You won't put any miles on your car retrieving your storage items. Just burn a few calories! 😊||You will need the pay the mileage to fetch your belongings.|
|Part of the rental payment goes toward ownership of your shed!||Once your rental fees are paid, they are completely gone.|
Rent-To-Own Sheds Are An Investment; Self-Storage Is An Expense
Ideally, if your storage is going to be used often, a rent-to-own shed is better equipped to satisfy your needs. Also, consider rent-to-own if your items will require long term storage. It is helpful to think about your rent-to-own shed as a long-term investment. The inescapable fact remains, you will owe a monthly payment for either self-storage or a rent-to-own shed.
The key distinction between the two is worth considering. At the end of years of paying monthly dues, one option will allow you to walk away with a storage shed and the other leaves you with nothing. Plus, with rent-to-own, not only will you own your shed, but you will also increase the value of your property.
Ultimately, you will have to literally “count the costs” for whether you want to stay faithful to your self-storage unit or go with a rent-to-own shed. Just remember how a rent-to-own shed works when making your final decision.
The Full Rent-To-Own Process: Step-by-Step
If you're considering the purchase of a rent-to-own shed, it's helpful to know how the entire process will work. Here's a step-by-step overview of the rent-to-own shed purchasing process:
Step 1: Look At Your Budget
As discussed above, you will pay less overall if you purchase your building with a one-time payment, even if that means putting it on a credit card. However, if that isn't an option for you, now is the time to discuss in-depth with your trusted shed dealer about a rent-to-own payment plan.
These are some questions and clarifications you should discuss…
1. In how many months do you want to pay off your shed? The terms available are generally 24, 36, 48, and 60 months.
2. What are the upfront payments that I need to make? These usually include one or two month's payment(s) and may also include a security deposit and/or delivery fees. (This varies by company.)
3. Are there any extra fees that you need to be aware of? (For instance, at Gold Star Buildings we require a $300 security deposit for 14’-wide buildings and for 60-month RTO (rent-to-own) contracts.
Step 2: Choose A Building
Whether you shop online or visit a sales lot in person, you'll need to pick out a backyard structure that meets your needs. At Gold Star Buildings, we supply western PA and eastern OH with a variety of building types including storage barns and sheds, single-car and multiple-car prefab garages, and prefab cabin shells.
Step 3: Finalize Building Details
Discuss with your shed dealer any questions, concerns, and customization needs your shed will have. The shed company will then be able to give you the final price of the shed. Most shed companies (ourselves included) will let you design a custom shed and purchase it through a rent-to-own agreement.
Step 4: Sign the Rent-To-Own Agreement
When you're ready to commit to the purchase of your shed or prefab building, you'll have a chance to review the rent-to-own agreement. Often, this agreement is with a third-party rent-to-own company that the shed company uses to provide their rent-to-own services (we use Scotts RTO.) However, some shed companies handle the rent-to-own service themselves.
Once you've reviewed the contract, your signature is required to finalize the rent-to-own agreement. (You can see a sample copy of our rent-to-own contract here.)
Step 5: Make First Payment
Once the contract is signed, you'll be required to pay one month’s rent (this can vary by company) along with the sales tax. As stated previously, this payment will be determined by the size of your shed, any special customization that your building includes, and the length of your rent-to-own agreement.
For example, an original 8x12 Lofted Barn shed from Gold Star Buildings is $2,237 (as of 2020). If you choose a 36-month RTO contract, you will owe a monthly payment of $103.56. You can browse more rent-to-own shed prices on our inventory page.
Step 6: Accept Delivery of Your New Shed
Your new shed will soon be delivered to your house! The exact time until delivery will vary depending on whether you're getting an in-stock shed on a sales lot or having a shed custom-built.
Once you make your monthly rent-to-own payments for the length of your chosen term, you'll own the entire shed. Rent free!
Did we forget anything? Oh yeah, the strings…wait! There are none! Enjoy your shed!
What Fuels Your Search for a Rent-To-Own Shed?
If you're thinking of purchasing a shed...you might be wiser than you realized! A backyard shed is one of the most reasonable, most popular, and most attractive ways to begin taking steps toward a clutter-free and more efficient life where you are the boss of your stuff!
There are many reasons out there for buying a shed, but maybe you fit into one of the following categories:
- You are fed up with your disorganized storage.
- You are gearing up to start a home-based business or office.
- You are tired of running across town to your self-storage unit.
- You are looking for a way to increase the value of your home and property.
But Your #1 Reason is Probably...Affordability!
Whatever your reason for landing on this page, your #1 reason is affordability! Rent-to-own sheds are designed to provide an easy, affordable way to own a shed. Rent-to-own sheds offer the flexibility of a self-storage unit, at a similar or lower cost, while building the value of your property!
Now that you know how a rent-to-own shed works, it's up to you to decide which type of building is right for your property and what shed company you'll buy from...
A Trusted Shed Company Makes All the Difference
It doesn't take much searching online to find horror stories of predatory rent-to-own companies and customer service gone off the rails. At the end of the day, your shed buying experience will only be as good as the company you purchase from. It probably doesn't need repeating, but always check a shed company's reviews on a third-party platform (like Google) before making a final purchasing decision.
Additionally, review the terms of your shed company's rent-to-own contract before signing. An honest company should have no problem with sending you a copy of the rent-to-own agreement for you to review ahead of time. (Here's a sample copy of Gold Star Buildings' rent-to-own agreement.)
When it comes to making deals, purchases, and investments, you deserve to be treated fairly and with open honesty. This includes not only the financial side of things but also the quality of the shed in which you are investing your hard-earned money!
At Gold Star Buildings, we are dedicated to building quality sheds, dealing honestly, and working for the complete satisfaction of our customers. We offer rent-to-own sheds in western PA and eastern OH, as well as portable garages and prefab cabin shells. If you're from the areas around of Butler, Meadville, Erie, Greenville, Sarver, Edinboro, Freeport, New Castle, Hermitage, or Pittsburgh, PA or Boardman, Warren, or Youngstown, OH, we are here to serve you!
If you're in the area, stop in and visit us at one of our dealer locations and see our rent-to-own buildings for yourself. We're happy to answer any other questions you have about how rent-to-own sheds work!