Rdeluca, Home Buyer in Corrales, NM

is a townhouse a good investment in todays market to do a lease-option or to rent.?

Asked by Rdeluca, Corrales, NM Fri Apr 18, 2008

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Let's dispel the myth, "today's market is a good/bad market to . . ." one's timing and the market have little to do with one another. Either one is ready to buy a property or one isn't ready--and that happens in every market. People were buying during the previous seller's market, and people are buying now.

The decision of whether to do a lease-option versus rent is more a matter of one's taste, timing, resources, and 5-10 year outlook. In a way, one can view a lease-option as rent++ or "try before you buy" housing. One has a lease in either case; however, the key difference between the 2 is that the lease-option also gives the tenant/buyer the opportunity to purchase that property at a specific price (that's locked in for a certain amount of time). Of course, that opportunity to lock the price doesn't come for free--hence the option fee.

If you could see yourself living in that TH for at least another 3-5 years, then the lease-option might be better for you--especially if you also have enough to cover the option fee, first and last months rent, and the security deposit. Also, prepare to pay an additional amount per month (aka a rent premium) that will be applied towards the balance along with the option fee--provided you exercise that option. On the other hand, if you only see yourself living in that TH for 1 year or less, or if you can't afford the rent premium and option fee, then you should rent instead.
0 votes Thank Flag Link Wed Sep 2, 2009
I'm going to assume you are either contemplating buying a condo or a lease option/rent on one.
There are many questions you need to look at such as your ability to make the payment, is this your primary residence, and your feelings about the area where located, do you like the home owner associaiton rules and regs? In our market, single family homes generally sell faster than a townhouse. With the aging boomer population and the desire to "downsize" I beleive townhouses will get more desirable. Renting can be the best option if you need to improve your credit, have uncertainty about your ability to make mortgage payments or do not want the responsibilities of home ownership (it is work). In a recent article I read, 75% of lease options don't end up closing...if you feel unsure, you may want to conduct a lease/option or simply rent. On the rental side, this market is beginning to soften because many people cannot sell their home and are turning to leasing them out - however based on the number of short sales and foreclosures - more peolple will become renters because of their fiscal situation. It is a good time to be a buyer, this is a buyers market.
Bottom line, it's a good time to buy (low interest rates, price reductions) is the payment sustainable?

0 votes Thank Flag Link Wed Sep 2, 2009
I am not super clear on the question - are you wanting to purchase a townhome and rent it and/or sell it on a lease-purchase, or do you have the option of lease-purchase yourself?
0 votes Thank Flag Link Sat Apr 19, 2008
As with any investment, your priority is to investigate factors that determine market value. If you plan to live in this investment, does it supply your most important critieria - distance to work, schools, amenities, etc.

Buying in any market after evaluating the above values is wise. Investigate financing with a 30-year fixed rate mortgage first. With mortgage rates still very affordable, this is your best option if you plan to live in the townhouse 5 - 7 years.

Select a Buyer's Agent who is familar with the area. Their exertise will save your $$$$ in avoiding costly mistakes.
0 votes Thank Flag Link Sat Apr 19, 2008
IF you are a qualified buyer and intend to purchase, then why push off your purchase time and risk the market turning against you? This is the best buyers' market I have seen in the 18 years I have been in real estate. Find what you like, negotiate a good deal (price and closing costs are both on the table) and know that the 'investment' part of your home purchase has been made at a good time.
0 votes Thank Flag Link Sat Apr 19, 2008
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