Just renting with the first right of refusal has it's own risk as well...what if at that specific time the owner has a buyer and at that point you are unable to purchase whether it be due to financing or just bad timing.
Rent-to-own/Rent with an option is highly customizable and in response to "What if the property loses value": you can easily add a clause specifying that the terms will continue until the property does appraise for the contracted price unless some other arrangement is reached (i.e. the seller having the option to reduce the price to the appraised value for example). This way your option fee still counts towards the purchase and is not "lost".
There's always advice to work with an agent and/or consult an attorney, and I'll further that advice to say if you're working with an agent...make sure they specialize and/or have lots of experience with lease options and same with the attorney you have who reviews the contract. Just like with doctors...there's all kinds and you wouldn't go to a Pediatrician to advise you on brain surgery.
Better bet is to put a clause in your lease agreement simply stating that should the owner choose to sell during your lease term that you have a FIRST RIGHT OF REFUSAL. Meaning you would get first dibs to make an offer.
Realtor Since 1996
There are not to many lease to own options. When you do a lease to own option you are agreeing on a price now. A portion of your rent (usually above what you are paying for rent goes towards the purchase option.
You may consider just buying a home with an FHA loan for as little as 3.5% down.
If prices go down you aren't protected. Interest rates could also go up by the time you are ready to purchase you may not be able to afford it.
The Carrabba Group
Keller WIlliams Hollywood Hills