Is a Lease to Own a viable option in the Coeur d'Alene area? Is there any benefit of it if we would otherwise seek to us a VA loan?

Asked by OneThree, Coeur D Alene, ID Wed Jun 12, 2013

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Dan Baker, Agent, Hayden, ID
Wed Jun 12, 2013
To get right to the point of your question "Is a Lease to Own a viable option in the Coeur d'Alene area?", the answer is not really unless the home is in the $750k and over price range.

Sellers will almost always prefer to be cashed out if they can. The reason they will consider selling with a lease option is usually because they can't sell it outright under the existing market conditions. But those conditions are not present right now. With current market conditions, we're seeing upwards of 50% of listed homes in certain price points already under contract. We're also seeing appreciation of over 10% per year.

When a buyer asks a seller for a lease option, they are asking them to wait a few years for their money, but also asking them to accept today's value in a few years. If the home appreciates, the buyer receives the benefit. If it depreciates for some reason, the buyer simply doesn't buy the property, so the seller loses. So there is only risk to the seller and no upside. For this reason, those sellers that will consider a lease option will, or should, ask for a substantial option fee to be paid upfront. For example, let's say a home is listed at $150k today. If a buyer asks for a 3 year lease option, the seller should consider what the value of the home might be in 3 years. They could either factor in appreciation and set the option to purchase in 3 years at, say $175k, or leave it at $150k but ask for an upfront non-refundable option fee of $10k-$15k.

The reason that I mentioned is homes the $750k and above range still as a viable option for a leas option is simple market conditions. There are many homes in that price range that are not moving yet and sitting empty. A monthly lease payment of $2,000- $4,000 to the sellers can go a long way toward covering taxes, upkeep, etc.

Regarding your question about a VA loan versus lease option, market conditions greatly favor buying versus renting. For instance, a home with a value of $175,000 is going to rent for upwards of $1,300 per month. The payment on a 30 year fixed loan on $175,000 at 3.5% has a payment of just $785.83, and you own it.

Please let me know if I can help in any way.

Dan Baker
Keller Williams
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Janna Rankin…, Agent, Coeur dAlene, ID
Thu Jun 13, 2013
Athought not for everyone, leas option is a viable option, and I am aware of a few properties in the greater Coeur d'Alene area that are available under such an agreement. Give me a call and I will tell you about them..
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Theresa Waldo, Agent, Athol, ID
Wed Jun 12, 2013
It is an option to do a lease to own a home here in the Coeur D Alene area, if there is a seller out there willing to. The main reason a seller would be willing to is if they are still upside down in equity, or can not get there house sold. This could benefit both buyer and seller, and lock in a price range to work with. In this market of rising prices, that could be a good option for someone. Going VA for a loan would be a good way to go, low interest rates, and opting to buy a home now at a lower price before rising prices take buyers out of a qualifying status. The option to wait, typically means higher costs later, we are still at historical low rates to buy. Not sure if I answered it all for you, but tried to.
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Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Wed Jun 12, 2013
Use the VA loan.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
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Ron Thomas, Agent, Fresno, CA
Wed Jun 12, 2013
You are desperate!
Your Credit or Finances, or both, will not allow you to go the conventional route:
You need the Seller to help you out!

The Seller will know it, and you are going to pay dearly for this service:
There aren't too many altruistic Sellers out there.

There is no FORM printed by anyone; there are just too many variables.
The terms that can be written into a Lease/Option can be dangerous to you:
How long is the Option period?
How much money are you putting in to the Option?
What happens if you are not able to execute the Option?
How do you know what your financial situation will be 2-5 years from now?
How much is the rent in the meantime?
Who will be responsible for maintenance and repair in the meantime?
What will be the Market Value of the home in 2-5 years?
What will be the Selling price 2-5 years from now?

This is the Ultimate Caveat Emptor!

Go into your VA Office and talk to them.
And thanks for serving!
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Shane Greenf…, Agent, Coeur d Alene, ID
Wed Jun 12, 2013
There isn't many available, and even the one that are, are not the best options because of their terms. I would most definately make a move on a va loan.
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Tim Moore, Agent, Kitty Hawk, NC
Wed Jun 12, 2013
Rent to own is not a smart idea or a practical idea at all ever.
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