Home Buying in Elk Grove>Question Details

Moe, Home Buyer in Elk Grove, CA

can any one tell me about rent to own for houses? In elk grove ca.?

Asked by Moe, Elk Grove, CA Sat Jul 5, 2008

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The concept of 'rent to own' had been used in the past for people that couldn't get the downpayment in order to purchase a home outright. There a few factors included in a 'rent to own' agreement. One is a standard rental agreement. This would include a security deposit, length of time, rental amount etc. all defined as any other rental agreement is defined. The second part is the option agreement. The rent to own option is defined for a certain amount of time, during which you could exercise this option to buy, at a specified price, and some portion of the monthly rent MAY be applied to the purchase price, (not always). For this option, the buyer/tenant would often provide an option amount of some significant amount ($2,000-$10,000?) that would be non refundable should they decide not to buy the property.

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!
Web Reference: http://www.suearcher.com
1 vote Thank Flag Link Sat Jul 5, 2008
Great article. Thanks for the info, you made it easy to understand. BTW, if anyone needs to fill out a rental agreement, I found a blank form here http://goo.gl/jDpaHr. This site also has some tutorials on how to fill it out and a few related forms that you might find useful.
0 votes Thank Flag Link Tue Jan 6, 2015
Hello 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 ‘play it safe’ 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 wasn’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 ‘time the market’ 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 today’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.
0 votes Thank Flag Link Sun Aug 31, 2008
Hi Moe: Rent-to-Own (lease/option) is a viable choice for someone who for some reason cannot qualify for a loan to purchase a home right now. If that same person could qualify for a loan right now, buying is clearly the best choice. But since there are so many people who now have had a short sale or foreclosure, rent-to-own is an extremely viable option for them. It allows you to get into almost any home on the market that is in good condition and is offered for sale in today's market. The offering terms on the home don't have to be lease/option.

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.
Web Reference: http://SoldByErin.net
0 votes Thank Flag Link Sun Jul 6, 2008
There are 1171 homes for sale in Elk Grove on Metrolist. Of the 1171, only 5 list rent-to-own (also known as lease option ) One of these is a short sale so we know that entry is a mistake. That leaves four. One of these is list priced at 2.38 Million Dollars.
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.
0 votes Thank Flag Link Sat Jul 5, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
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