Rent to Own Sheds: How Does It Work and Is It Right for You? (2023)

Recently you may have noticed that some of the vacant lots around your home have become a sales floor for brand new sheds. These sheds range from small to large and from cheap to very expensive. What sets them apart from a shed you’d buy at a big box store is that these shed distributors offer competitive financing, often featuring longer-term rent-to-own contracts.

A rent-to-own shed works for you if you have a bad credit score and cannot afford to pay cash or credit on the shed. Renting-to-own does not require a credit check, and if you pay your monthly rent, it improves your credit score.

Below, we’ll look at all your options when considering purchasing or renting a shed, including rent-to-own programs, leasing, and purchasing a shed outright.

How Does Rent to Own Sheds Program Work?

Rent-to-own (RTO) shed programs are an alternative to simply renting a shed. These programs offer an option to purchase the shed after the RTO agreement has expired after the shed has been paid for in full.

These programs are desirable for several reasons. First, for those who really need a shed but have poor credit, a rent-to-own agreement does not require a credit check. Since they are not technically contracts or leases, the shed industry can offer these “agreements” without checking credit.

Renting a shed to own is not the same as financing. Financing a shed involves a set term, interest rate, and amortization period. When you finance, you share your personal information such as SSN, income, and employment information to get financing approval from a bank or other type of lender.

But with an RTO agreement, you do not usually share any of your personal information with the lender – usually, the shed dealer or their bank – and all that is required is an address and your name. Depending on which RTO program you choose, the dealer may ask about your employer and how long you’ve worked there, along with some history about your residence. However, this will vary between dealers.

One of the knocks on renting-to-own programs is that the month-to-month payments are typically much higher than just renting a shed or financing it. This is how shed dealers make money. They buy the shed outright from a supplier, then offer RTO programs and charge interest in the form of a much higher monthly payment.

Shed dealers can do this because RTO agreements can last up to 6 months, making the payments seem low. In reality, they’ve inflated the price significantly and stretched the rental program period to the point that makes RTO programs look like a great deal.

The process of renting-a-shed to own is straightforward. Dealers make it very easy for a potential buyer to walk onto the lot and buy a shed as easily and quickly as possible. Let’s take a look at the steps required to acquire a shed via a rent-to-own (RTO) program:

1. Find a Shed RTO Dealer

Not all shed dealers will offer these programs, as there is an inherent risk for them since an individual opting into one of these programs can simply opt-out at any moment. When this happens, the dealer has to retrieve the shed, which will result in a loss for the dealer. Why?

It is much harder to sell or rent-to-own a used shed. When dealers offer a shed through these programs, they anticipate the renter eventually becomes the shed owner. They don’t make money on the shed until far into the RTO agreement.

2. Choose the Shed You Want

This is the fun part. Choose the shed you want. If you think you’ll have this shed forever, then make sure you choose something larger than what you think you’ll need if you have space. Shed companies will deliver your shed, so you are not saddled with trying to strap a shed to your utility trailer.

Naturally, the bigger the shed, the greater the cost month to month. What you’ll find is that dealers will stretch the agreement length for larger sheds to make the monthly agreement costs similar to that of smaller sheds. This allows them to move larger sheds faster and make more money.

3. Sign an RTO Agreement

Once you’ve chosen a shed to rent/buy, you sign a rent-to-own agreement with the dealer or their bank. This is where RTO agreements differ depending on who you buy from.

Since you are not financing, the details you share with the dealer and their bank are typically simpler. For example, you give your name, an address where the shed will go, and some other basic personal information – and that’s it.

As an RTO agreement has no bearing on your credit, you can compare signing an RTO agreement to simply renting a shed for a month. At the end of the month, you can either rent it again for another month, or the shed company will take the shed back. You do this over and over until the shed is paid for and you own it.

4. Make a Deposit

After you sign an agreement, you’ll probably have to put down money beyond one month’s rent to secure the shed – a deposit. The amount depends on the type of shed and how long the agreement will last.

Typical deposits are the first two months’ rent or 10% of the purchase price plus the first month’s rent. Dealers may require larger deposits for those who agree to a longer-term agreement – say, 60 months. This is necessary as the dealer carries a much greater risk for longer-term agreements, so to cover themselves, they increase the deposit amount.

It is important to note that an RTO program never requires “first and last”. The reason is that this will make it seem like a lease agreement, which a rent-to-own program is not. A lease agreement has more stringent requirements, so RTO providers will get around this by simply requiring a deposit that covers the first months of a deal – not the first and last.

5. Make Rental Payments Each Month

If you fail to make a payment, the shed dealer or bank will come and take back your shed. You don’t gain equity as you make your rental payments, so if you neglect a monthly payment, don’t expect to get any back – you won’t.

No part of the shed is considered your own until you’ve paid for the entire building. This is leverage for the shed dealer, decreasing the likelihood that people won’t pay.

Once your term is up – and terms are anywhere from 12 to 60 months – and you’ve made your monthly payments, then the shed is yours.

Benefits of a Rent to Own a Shed

There are several instances when a rent-to-own shed makes sense. While the overall financial outlay for a person engaging in an RTO agreement is generally poor compared to other options, certain situations make an RTO a good idea. Let’s take a look below:

Saves Money vs. a Storage Unit

If you have a storage unit, then it makes lots of sense to scrap the unit and explore getting a rent-to-own shed. First, you are already making monthly payments without building towards anything. Rent is simply money you will never get back in any way.

Second, if you have a shed on your property, you won’t have to physically leave your property to store something. And finally, if you choose to hang onto your shed, you’ll eventually own it. You will never own a storage unit at a facility.

If you rent your home or have an apartment, then this option probably does not work for you. If you plan on moving homes soon, an RTO agreement still makes sense because you can stop payments when you move from your property without any penalty.

The shed dealer will then pick up the shed, and you can rest easy knowing that you at least saved time storing your stuff on site instead of at a facility without spending any more money.

No Credit Checks Required

If you have bad credit, then you know that there are so many ways in which a bad credit score can hurt you: purchasing large items, employment, etc. Luckily, if you need quick storage at your home, then nothing is stopping you from renting to own a shed.

Let’s say due to personal reasons you have to move – quickly. You’ve thrown all your stuff into a rented van and are now living in a much smaller home than you had before. What can you do? A storage unit is an option, but the nearest one is far and you’ll have to make lots of trips to get all your stuff there.

You want a big shed, but your credit is poor. Luckily for you, an RTO agreement doesn’t require a credit check. Once you’ve signed the agreement, you pay a deposit and get a shed delivered to your house.

What’s Cheaper – Renting-to-Own or Building a Shed?

Building your own shed will always be cheaper than renting-to-own for several reasons. But before we get into the specifics of why that is, understand that it is only cheaper to build your own if you are building a basic shed.

If you want a shed with a loft, fancy siding, triple glazed windows, a metal roof, and an insulated garage door, then renting-to-own a basic shed will be cheaper than building a fancy shed.

Building a 10×10 shed will cost around $2000 for materials, including cheap siding material, shingles, and double doors made out of the same material as the sheathing. It does not include windows or any other “extras”.

Renting to own a shed will cost you much more. Many popular agreements feature $100 – $150/month agreements on sheds up to 10×20. Renting-to-own a 10×10 shed costs, on average, $100 a month. Dealers are quoting this price for either 48 or 60-month terms. You may find a dealer looking to unload some sheds and get that rate for a 36-month term.

Regardless of the term, you can do the math and figure out pretty quickly that an RTO agreement will cost you double compared to building your shed. Also, these shed dealers won’t prep a site for your new shed – that’s extra, usually. Whereas if you build your own shed, you’ll prep the area before you even build, which is an additional factor that makes building your shed much cheaper.

The only time an RTO agreement makes sense versus building your own is if you don’t know how to build a shed or don’t have the time. Otherwise, get out your hammer and buy some lumber because you’ll save a ton of money compared to getting an RTO agreement for a shed.

Are Rent-to-Own Sheds Worth It?

Rent-to-own sheds are worth it only if you have bad credit and cannot secure financing to purchase a shed. Bad credit will not allow you to finance a shed. You also can’t build your own in this instance because you’ll have to pay for all the materials – a substantial up-front cost. So if your credit score is low, but you need a shed on your property, then renting-to-own a shed is your best option.

Renting to own a shed is also worth it if you are already paying for a storage unit and have bad credit. In this instance, you can rent-to-own a shed with a credit check and bring your storage unit – a shed – straight to your property, saving you time while building towards owning a shed.

When Are Rent-to-Own Sheds Not Worth It?

Renting-to-own a shed makes less sense if you can pay for the shed outright. You’ll save money on the interest payments you’d make if you rented. Plus, renting-to-own does not mean you gain any equity in the shed – it is just a contract to own the shed after you’ve made all the payments. Therefore, it is a much better idea to purchase the shed outright if you can afford it.

If you plan to move homes in the next year or less, it does not make sense to rent-to-own a shed. If you can afford to finance or buy the shed outright, then these are better options. Why?

A new shed adds some value to your home. If you don’t own the shed, then this detracts from the value of your home. Trying to sell a home with a shed that isn’t part of the sale is harder than selling a home that comes with a nice, new shed.

Of course, if you can’t afford to buy a shed or finance, and you are moving soon, renting-to-own a shed is still a better option than a storage unit.

If you have the money to finance or pay for a shed outright, you should never engage in a rent-to-own agreement. Financing agreements will often have better rates than lease-to-own, as they are less of a risk to the dealer and financial institution than renting-to-own.

And of course, if you have the money to buy a shed with cash, then you save the most money this way because you won’t pay any interest.

Can a Rent-to-Own Shed Get Repossessed?

Yes, a rent-to-own shed can get repossessed. If you do not make your monthly payment, your shed dealer or bank will contract out to a third-party repo agent to get their shed back. In some instances, a private investigator or security company will also be used.

Remember, you do not own an RTO shed until after the agreement has finished. You have zero equity until that time, so if your shed is repossessed, you get nothing back in return.

Types of Rent-to-Own Shed

You can rent-to-own any type of shed that a shed dealer sells – an RTO shed is not limited to type, usually. Below is just a partial list of types of shed you can get with a rent-to-own agreement:

• Utility shed – your standard rectangular or square shed with double or a single door. By far the most popular and common type of shed.
• Barn-style – reminiscent of an actual barn, these sheds have gambrel roofs and are usually painted in the manner of a barn. They are desirable for the extra storage in the roof space as well as their look.
• Cabin – while not technically a shed, a cabin-style shed is typically a larger workshop or barn-style shed with a single door and, sometimes, a small porch. It will also have windows. They can be anywhere from 10×10 up to 20×10 or more.
• Portable Garage – a portable garage is a rectangular shed with a single garage door at the front. These are very handy for storing ATVs, riding lawn mowers, and other types of equipment. They are essentially larger, workshop-style sheds with a garage door.
• Playhouse – a smaller, cabin-style shed with a single door, porch, and/or other features such as small windows or a set of bunks.

Average Rent-to-Own Shed Prices

Prices start at around $3500 to $4000 for an 8×12 or 10×10 utility shed and go up from there. A 6×10 or 8×8 shed can run as low as $3000 per shed.

If you are looking for something larger, like a cabin or garage, then you are closer to $10,000. For instance, a 12×20 garage will cost around $9000 or more. A 12×20 cabin will be closer to $8000. The garage door and potentially larger floor joists for the garage make it the more expensive option.

If you were to purchase an 8×12 utility shed on a 48-month rent-to-own agreement, then you would be paying roughly $150 a month. A 36-month agreement would require a monthly payment of around $175.

How to Find Rent to Own Storage Sheds Near Me

You’ll be surprised at how many portable shed dealers are near you, even for those who live in more rural areas. For instance, a quick search of rent-to-own shed dealers in Georgia yields dozens of results. Many dealers advertise with roadside displays, meaning that you have many options.

We can even take a moderately sized city – Wichita, for example – and a search indicates there are over 10 portable shed dealers in this city alone. Nearly all will offer some form of a rent-to-own agreement.

Conclusion

Your options for obtaining a shed and getting it delivered to your house are nearly endless. Whether you buy from a local dealer or get one delivered from further afield, you’ll have no trouble finding a shed you want as nearly all shed dealers offer rent-to-own agreements.

And finally, before you enter into an RTO agreement, do the math. Compare the options between financing, purchasing, and renting a shed before you buy. Investigate how much your local storage place charges, too. If you can put some money together to purchase the shed, you’ll end up paying less than if you rent-to-own.

If you choose to rent, then remember that you don’t own the shed until the agreement is over. However, you can pay the shed off at any time, so you are never tied to the agreement if you come into some money. Whatever you choose, make sure that you always get a bigger size than you think you need – you’ll be surprised at how fast you can fill up a shed!