Just rent a place if you can't buy right now, talk to the owner about whether or not they may want to sell within a year & put a clause into your lease that gives you First Right of Refusal, i.e. 'first dibs' on the property should the owner wish to sell within your lease term. This way you're not putting up any additional option monies that you could lose.
Shoot me an email directly if you want to talk about this some more, I don't look back on this same Trulia thread for answers posted after mine. I can email you places that are Truly for rent, so you don't end up calling on one of the scam rental properties that are all over the internet.
Realtor Since 1996
Main Street Realtors
Short Sale Expert
Have a great day,
Heather Paul, Realtor
I wrote a blog on how to find lease-options: http://bit.ly/findaleaseoption
I'm a big proponent of lease-options in the right situation. Now, not every situation is "right." And if someone is absolutely able to buy today, odds are it's better to buy. However, while I see you've awarded the "Best Answer" to someone who doesn't like them, let me at least address the points raised in that answer.
why do you want to agree to a purchase price TOday with any owner & put up non-refundable option monies should you choose not to exercise the option to buy within 1 yr?
Why wouldn't you? Let's suppose you're concerned that prices are going to drop further. A lease-option is far better than buying. Example: You find a property for $200,000. You can option it for $200,000 with a non-refundable $4,000 option fee. (All the elements are negotiable, but that's not unreasonable.) If you buy today for $200,000 and prices drop 5% over the next 12 months, you've lost $10,000. Even if you put up a $4,000 option fee, your loss of $4,000 is $6,000 "better" than if you'd bought.
And suppose you want to move in a year. If you've got a lease-option, your total "loss" is $4,000. If you need to sell, your transaction costs (commissions, other expenses, etc.) are going to be $12,000-$15,000 on top of the $10,000 decline in value. Ouch!
Suppose, on the other hand, prices go up 5% next year. If you wait, that same property will cost you $10,000 more. If you lease-option it, you can buy it for $200,000.
So you can protect yourself with a lease-option whether the price declines or rises.
put a clause into your lease that gives you First Right of Refusal, i.e. 'first dibs' on the property should the owner wish to sell within your lease term. This way you're not putting up any additional option monies that you could lose.
Check with your state and county; that protection may already exist. However, a "first right of refusal" is, in itself, meaningless. Are you going to record that at the courthouse? If yes, then go with an option; it's cleaner and safer. If no, then it's not enforceable. Besides, why would the owner want to give you a first right of refusal? What's his incentive? None, really. And at what price? With an option, both you and the seller know the price, should you decide to exercise it. Who determines the price with a "first right of refusal"? And does that mean that you're offered the property BEFORE it's put on the market? Or does it mean that you have the right to match any offer the owner might receive AFTER it's put on the market.
"First right of refusal" sounds fine, but it really means little, often is unenforceable, and seldom clarifies the conditions under which you can buy.
And regarding "rental scams": Yes there are a lot out there. But they're not connected to lease-options . . . and I acknowledge that the previous responses weren't suggesting that. So, regardless of what you choose to do, watch out for scams. Work through a Realtor (even the one whose responses I disagreed with!) to minimize any possibility of a scam.
Hope that helps.