Its all negotiable, but generally works like this:
to use round numbers, lets say rent is $1100… each month maybe $300 goes toward down payment (thus making actual rent amount of 800)…after 2 years you may be ready to finance and purchase it and there is $7200 waiting as the downpayment. The benefit comes in not just forced savings, but you begin ownership and can actually put time and money in it knowing its yours.
It also often means the rent was lower than market value to a degree during the time frame.You dont have some expenses like Insurance and taxes on your back and if you and the lady split, or times get rough, you dont have a mortgage over your head. Often times a deposit /downpayment of some amount is collected and put toward eventual purchase.
The only potential loss is if you decide not to buy you may have then payed slightly elevated rent…the bonus being you know the house very well… and if you found significant concerns, in condition,locaation, traffis, etc… its cheaper to walk than buy and repair sometimes or be discontent. Thats the jist.
For some people, we can offer possible private financing/we hold mortgage, with a good downpayment as well, and skip the whole rent to own deal.
Many people that do this want their own house, and to build credit, but are nervous or cutting it too thin to be able too, or comfortable enough, to buy now.