Rent-to-Own (RTO)

A 36–60 month contract that converts a park-owned home renter into a homeowner once the principal is paid down.

Rent-to-own is a financing structure widely used in mobile home parks to convert non-financeable buyers into long-term residents and home owners. The operator typically owns a home (POH inventory) and offers it on a contract that lasts 36 to 60 months. Each month the resident pays lot rent plus home rent, with a portion of the home rent applied as principal toward eventual ownership. At the end of the term the resident owns the home outright and converts to a tenant-owned-home arrangement, paying only lot rent. RTO contracts must be carefully structured to avoid triggering Truth-in-Lending Act requirements applicable to consumer loans. RTO has become the dominant infill conversion tool for parks in markets where dealer financing is scarce.

Related Terms

Infill

The process of bringing in new homes to fill vacant lots, expanding revenue without acquiring new land.
Park-Owned Home (POH)

A mobile home owned by the park operator and rented to a resident, who also pays lot rent.
Tenant-Owned Home (TOH)

A mobile home owned by the resident, who pays only lot rent to the park operator.

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