When you look at today's market, I'm not sure I've seen many situations that would make this a good alternative for a buyer/tenant. One, the price of homes are declining, and over the length of the time the home may be worth less than the agreed upon price. The option amount may be cost prohibitive. You may find a better alternative is to just rent now and buy later, or buy now using many of the FHA backed loans available. Paying an option amount in a declining market is probably a waste.
For sellers today, they expect that a tenant who has a rent to own contract, will maintain the property better, considering that they see it as their own, and sometimes they are willing to pay more in rent. Last, some feel that they are hedging their bets against a further decline in property values.
As for Elk Grove, there are so many wonderful buys in Elk Grove. I would seriously look at your financial situation and see what is the best alternative for you. Rent to own is one alternative. I'm just not convinced it's the best in this market.
Great question Moe!
I think rent-to-own homes are a great investment in today's uncertain market.
Thousands of families purchased homes in the last few years only to watch the value drop to tens of thousands of dollars below what they owe on the property. These people cannot sell their homes, they cannot refinance their homes, they are likely to go into foreclosure and lose everything. If they had moved into Rent-to-Own Home they would have been able to either negotiate a price reduction down to current pricing or simply walk away from their small deposit. Experts do not agree on whether the market will continue to fall considerably or turnaround and start going up again. The only way you can take advantage of either scenario is with rent-to-own homes.
Should I just rent or rent-to-own?
If you decide to â€˜play it safeâ€™ and lock yourself into a lease instead of choosing a rent-to-own home you could lose out on significant appreciation by sitting out the next real estate boom. It wasnâ€™t long ago that thousands of families were priced out of the real estate market as homeowners got richer and renters had nothing to show for their monthly rent payments. Most of those renters thought they could â€˜time the marketâ€™ and buy once things started to go up. The truth is, there is a long enough delay in the reporting of housing data that by the time you read that the next boom has started it will be too late. Sellers will wait for higher offers as the familiar bidding wars drive prices up out of your reach again. However, if you take advantage of a well structured rent-to-own home agreement, you will have the price locked in at todayâ€™s low level for up to 2-3 years. You will get the benefit of all that equity as the home increases in value.
The frustrating thing right now is that Elk Grove rent-to-own homes are only staying in our inventory for 1-2 weeks and we don't have any right now. I am expecting a contract back on one in the next few days though so I encourage you to visit http://www.optionplushomes.com and sign up for property notification.
If you are among this group, you can find out much more on my website by visiting SoldByErin.net and clicking on the Rent-to-Own tab on the left. It is very important to work with an agent who has experience in this Rent-to-Own transaction.
That leaves three.
First 3 bR 2bath at 215,000. The upfront option money requested by the seller is $10,000.
( Why wouldn't someone just get a loan if they have that kind of money to put down? )
Next, a 4 bedroom 3 bath 3750 sq ft house at $559,000 -
Third, a ranch on 4.8 acres starting asking price $675,000.
There are many more choices for pure renters or for pure buyers. Unless one these four is perfect for you, my advice is to choose to be one or the other, then you will have more to choose from.