If I want to buy a home in 2 years, is rent to own a good thing?

Asked by David, Lake Mary, FL Sat Aug 20, 2011

Help the community by answering this question:

+ web reference
Web reference:

Answers

10
Maria Cipoll…, Agent, Coral Springs, FL
Mon Nov 12, 2012
Renting to own is an option that many people are being considering lately, but to achieve a successful outcome, you really need to hire an attorney you can trust to advice you and advocate on your behalf.

Best of Luck,

Maria Cipollone

Century 21 Tenace

http://www.Flahomesepcialist.com
1 vote
A''Nickie''…, Agent, Cedar Key, FL
Sun Aug 28, 2011
NO!! The reason is: It is not in your best interest. IF the market is going to continue to come down, do you want to be in a contract and commit to buying a house that will be worth less next year?? AND/OR do you want to even take that chance??
Web Reference:  http://www.SelectiveMLS.com
1 vote
Joan Braunsc…, , Morris County, NJ
Sat Aug 20, 2011
Just google "pitfalls of rent to own" and it will answer your question. Many more cons than pros in my opinion.
1 vote
Christopher…, Agent, Tarrytown, NY
Mon Nov 12, 2012
Hi, Keep in mind theta rent to own scenarios usually always favor the seller. I would speak to an attorney first so you get all of the details on how it will work and definitely have an attorney review the lease before signing.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
william Raveis Legends Realty Group
914.406.9023
0 votes
Don Tepper, Agent, Burke, VA
Fri Aug 26, 2011
It depends.

It's a good thing if you're not in a position to buy today. For instance, if your credit scores aren't where they need to be, or you don't have the necessary cash. (Yes, you can buy FHA with just 3.5% down, but you really do need some cash reserves beyond that.) However, then you'd use those 2 years to improve your credit score and to save up some cash.

It's a good thing if you're concerned that values might drop further. Example: Let's say you're interested in homes currently selling for $150,000. But you think they might fall. You do a lease-option for, let's say, $150,000. If prices fall to $125,000, then obviously you don't want to buy for $150,000. You just walk away at the end of your lease and you haven't lost $25,000.

It's a good thing if you think values will rise substantially. That's probably not likely--a local Realtor can help you with that question. But, using the example above, if you're concerned that while you might be able to afford $150,000 in 2 years, you might not be able to afford $200,000, then you can lock in the $150,000 price today. (Same thing with the lease-purchase described by Michael and Tom, below. Except with a lease-purchase you're locked into purchasing.)

Let's look at the other side.

It's not so good if you're in a position to buy now and you plan on living in the property for, perhaps, 6 years or more. Interest rates are great and prices--when compared to a few years ago--are very attractive. Still, there's a possibility that prices will stay flat, or even decline, for a few more years. However, if you're confident you'll be there for a while (I said 6 years, but the longer the better), then there's sufficient time for the market to stabilize and even recover.

It's not so good if you find the ideal house today. Now, there are always going to be houses coming onto the market--plenty of them. But your selection of properties is going to be much narrower with lease-options or rent-to-owns than with straight purchases. You really don't want to just "settle" for an adequate lease-option property rather than purchasing a home that really meets your needs.

It's not so good if you're dealing with real estate professionals (Realtors, lawyers, etc.) who don't understand lease-options and rent-to-owns. Even from the answers below, I can see that some of the folks do understand lease-options and rent-to-owns. Others . . . not quite as confident about them. Further, there are some special protections you want built into the agreement to protect you. A Realtor or lawyer with experience in the area will know what they are (for instance, protection against the owner not paying his/her mortgage, and protection for you in case property values drop).

So, unfortunately, the answer to your question is "It depends."

Hope that helps.
0 votes
Laura Hope, Agent, Winter Springs, FL
Tue Aug 23, 2011
Hi David-

Hello potential home buyer. I too would be happy to serve you in seeking knowledge in this process. Just understand that the "shadow" inventory which is currently reducing the number of homes on the market and creating a false sense of a seller's market. Just be careful not to over pay as we WILL experience another market decline when the inventory is released from the banking industry.

I am just a phone call, text or email away, plus I live in the Lake Mary area myself,

Fondly,

Laura Hope, MA
Investment Specialist
Text and call: 321-388-6649
email: Laurahope@cfl.rr.com
0 votes
Tom Priester, Agent, Tequesta, FL
Sun Aug 21, 2011
David,

There are a couple different options when contemplating the rental of a home for future purchase. Each involves two legal documents, the lease itself and then either an option or purchase agreement. The option gives you the right to purchase the home at a specified price, for a specified time in exchange for consideration (the option payment). The purchase agreement is a normal purchase agreement with an extended closing date which is typically at the end of the lease. In most cases, the best use of either of these type of agreements is to allow the purchaser time to either sell an existing residence or sort out credit issues that is preventing financing at this time.

A lot depends on your particular situation and it is something you should discuss at length with a professional Realtor® who can fully explain this process to see if it makes sense for you. Remember that we will be ruling out all short sales and foreclosures which currently dominate much of the market in Lake Mary and the surrounding communities. Without knowing more about the particular details it would be very rare that a rent to own scenario would be a fit for your situation.

I hope this information is helpful but if you need any additional information please feel free to contact me at your convenience.


Always at Your Service,


Tom Priester e-PRO
"Results Driven Real Estate"

Keller Williams Realty
561 308-0175
tom@tompriester.com
Web Reference:  http://www.tompriester.com
0 votes
Genevieve Ra…, Agent, Punta Gorda, FL
Sat Aug 20, 2011
David depends on your situation. Yes prices are at an all time low and interest rates are good too, but it is where you are that is important and what would work best for you. Talk to a lender and crunch the numbers and then decide whether to rent or lease or buy. It is also your personal situation.
Good Luck!
Genevieve Ramachandran
0 votes
Michael Dale, , Lake Mary, FL
Sat Aug 20, 2011
A better option would be a lease purchase contract. I have done several for both myself and clients. They are not complicated but have some nuances that you need to have someone walk you through. Best Regards.
0 votes
Jenelle Ferr…, , Lake Mary, FL
Sat Aug 20, 2011
Well, it's cheaper now than ever to buy because of home prices and interest rates. It's definitely a landlord's market right now. Rent is higher than many people's mortgage who purchase in this market. However, if you're looking to do a lease purchase agreement (lease with option to buy) it's a great idea if you're working with a seller of a home you truly intend on purchasing.

You have several options. Renting something smaller than you'd like in order to pay less can save you money in the long run which is also an option. The more you can put down and save towards a downpayment and closing costs, the better options you have of getting something you want. Interest rates are low now and no one knows what they'll be in two years. That's what you need to consider.

Hope this helps! Let me know if you have any other questions =)
Web Reference:  http://www.jenelleferrer.com
0 votes
Search Advice
Search
Ask our community a question
Home Buying in Lake Mary Zip Codes

Email me when…

Learn more