Home Buying in 95129>Question Details

Alwaysqualit…, Home Buyer in San Jose, CA

I'm a signal mom that wants to find a home that I can rent to own a home in the 95129 area code or near by.

Asked by Alwaysqualitysales, San Jose, CA Sat Jul 23, 2011

I'm looking for a 4 bedroom , 3 bathroom, 2 car grange , big backyard , big front yard, 2300 square feet -3,000 Square feet, with new plumbing ,and central heat and air conditioning.

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8
Hello,

One more thing I would like to add is to explore your options, if you are capable of purchasing a home in this area, you can get a renter who pays you rent, thus help with the mortgage payment.
0 votes Thank Flag Link Sat Mar 17, 2012
Dear single mom

Thanks for your question, and wish you a Happy St. Patricks Day.

There are sadly none listed on the MLS, as in 95129 homes sell and rent at a premium.

If there were any, you would be looking at for the size of 2300 - 3000 a steep monthly of
$6000+, besides the Secuirty deposit and Option fee.

It will be prudent to go buy a home than rent to own in the 95129 zip code.

Good luck.
Perry

http://www.ruthandperry.com/
0 votes Thank Flag Link Sat Mar 17, 2012
In reality, rent-to-own options are very few and far between, especially in the areas in which you are looking. Rent-to-own or lease-to-own options work best in flat markets that are typically very slow – it provides another option for a seller to sell who might not otherwise get a sale. In the current market, most sellers want to sell quickly and move on – they want to cash out and put their money to work somewhere else, usually their next home. As Don mentioned, you take a normal rent payment and then increase the monthly payment to begin to put equity into the transaction. Many prospective renters/lessees balk at these extra amounts because it typically puts things out of reach.
.
0 votes Thank Flag Link Sun Jul 24, 2011
Hello,

You have received some very detailed and good answers below. I will give a few short suggestions:

1. Get prequalified thru a lender, I find working with a broker works in your favor since they can shop multiple lenders to find you the best suited loan.
2. Find a Realtor to work with (interview with 3 or 4). A good Realtor can guide you thru the process.
3. 95129 with Cupertino schools is a highly desired area, so an option for rent to buy is hard to find, not impossible.
4. Broaden your search area, you could also look at Sunnyvale with good schools. Either case you are looking at a $1MM plus.

Once you explore further you will understand the market better and be able to make adjustments with your requirements in a home. Don't be discouraged, when you work with right people you achieve desired results. Please let me know if I could be of assistance.
0 votes Thank Flag Link Sat Jul 23, 2011
Sounds as if the agents in 95129 have given you pretty good information on what a house would cost, what your payments would be, and what income you'd need to qualify.

Let's address the whole issue of lease-options and rent-to-own. First, I'm a big advocate for lease-options, but only in the right circumstances. And while the mechanics of doing a lease-option on an expensive home are no different than doing one on a small starter home, there are far fewer opportunities. And let's crunch the lease-option numbers. Everything in a lease-option is negotiable, but here's some data.

First, you'd likely have to provide an up-front option fee. It might only be a token fee--$1,000 or so. However, more likely, it'd be 2%-4% of the value of the house. So, in many cases, you'd be looking at an option fee of maybe $24,000-$48,000. Let's be very generous and say pick a bottom-end number: $25,000.

Now you'll have the monthly payment. Lease-options often are priced somewhat higher than the comparable rent. I don't know what a $1.2 million home in 95129 would rent for. Where I live, it would be approximately $6,000. Put a bit on top of that for the lease-option portion and you might have a rental payment of $6,500, with some portion of that (say $1,000) credited toward the purchase price.

Could you afford an upfront option fee of $25,000 and monthly payments of $6,500? (And we're really being conservative here. The numbers could be more like $45,000 and monthly payments of $8,000.)

Then, at some point, you'd want to exercise your option. Three years is a reasonable period. At that point, you'd have $36,000 in option credits plus the $25,000 option fee. So you'd have a total of $61,000 to offset the purchase price. If you'd agreed on a purchase price of $1.3 million (only a shade over the $1.2 million the property is worth today), you'd have to come up with $199,000 as a down payment and then get a mortgage for $1,040,000. In 3 years, interest rates probably will be slightly higher. Let's say they're 6% for jumbo loans. Your monthly payments would be $6,235--principle and interest, no taxes in there. I don't know what your taxes are there, but where I am it'd be maybe another $1,000 a month.

I doubt those numbers are doable for you.

I did write a blog on how to find lease options. It's at http://bit.ly/findaleaseoption They are out there, though--as I said above--more commonly found in moderately-priced houses.

Hope that helps.
0 votes Thank Flag Link Sat Jul 23, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Hi Always and thanks for your post.

Charles Butterfield took the words right out of my "mouth" (or off the page, as the case may be) in answering your question, so I won't rehash what he has so succinctly noted, and that is, this area (whether it be the Cupertino School District side or the Moreland District) will be expensive. Your wish list is a $1 million home or better.

Second, I assume you're opting for a "rent to own" method of purchase because you lack the 20 percent down payment or $200,000 to buy a home in this area. Please remember that you--like many other parents--are interested in buying in this section of town due to the great schools. As a result, there's no shortage of buyers looking at these homes, so any homeowner wishing to sell will sell on the open market to buyers. A "rent to own" scenario only really makes sense to the seller when there are not any other interested buyers for the property. Unfortunately, in 95129, there are too many buyers and not enough great homes, so the type of property you're describing would be quickly bought by someone with adequate financing and sufficient down payment to consummate the deal.

My suggestion is that you find a great lender to prequalify you for a loan so that you know exactly how much you can spend. This will help you, then, narrow down your housing choices to those that you can truly afford and which will not jeopardize your long-term financial health. Then find and begin working with a great Realtor who specializes in the area in which you would like to buy and can afford. This will help you maximize your housing buying power without "breaking the bank."

As any of us here on Trulia can attest, we want buyers to find great homes but NOT at the expensive of their overall long-term financial health or the future of their family members. So before beginning the search for housing, start with the lender to determine what you can comfortably afford. Once you know this, you'll know exactly where you can buy and can hone in on the type of house you'd like to purchase.

Good luck!!

Sincerely,
Grace Morioka, SRES
Area Pro Realty
0 votes Thank Flag Link Sat Jul 23, 2011
Thank you for your inquiry:

I understand.

I grew up in the 95129 zip code. My mother was a single mother after my father died when she bought our home in the 95129 zip code.

In the 95129 zip code, a home that you describe, in reasonably good condition will be approximately a minimum purchase price of $1,200,000 or more.

The monthly rent payments would be a minimum of $7,000 or more if one was available..

Currently there are no homes available that match your criteria on rent to own terms in the 95129 zip code or in any of the zip codes nearby.

The first question that you need to seriously consider is whether or not you can afford that.

I recommend that your monthly housing payments be no more than 30% of your monthly income.

That means that you need a monthly income of at least $23,000 per month or an annual income of over $276,000 per year to be able to afford what you are asking for without putting you and your family at serious financial risk.

Very few individuals have incomes in that range. It usually takes a family with at least two incomes to be able to afford the kind of home that you describe.

I do not know what your monthly income is, however the first step that I recommend is that you get a home where the monthly payments, that is principal, interest, taxes and insurance is no more than 30% of your monthly income.

Please call me at my cell phone (408)509-6218 and I will be honored to talk with you to help you find a home that you can afford without putting yourself and your children in financial jeopardy.



Thank you
Charles Butterfield
Real Estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address: charlesbutterfieldbkr@yajhoo.com
DRE#00901872
0 votes Thank Flag Link Sat Jul 23, 2011
Dear Always;

There are several opportunities available for you. There are a few questions that I would need to answer to refine your search, including what your rental target rate is per month, location and rating of schools, etc. Call or write anytime and I would be happy to help you.

Jason Jegge
Century 21 Alpha
jegge1@gmail.com
408-515-3770
0 votes Thank Flag Link Sat Jul 23, 2011
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