< Back to Front Page Text size – +

The rent-to-own route

Email|Link|Comments (1) Posted by Stacey Myers September 1, 2008 10:30 AM

Some local condo developers are getting creative to get through the current real estate slump. When they found that units in their developments weren’t selling as hoped, they opted to go the rent-to-own route. (To read the story that was in the Globe’s Sunday Homes section, click here.)

This option lets the developers earn some income from the units and gives prospective buyers a little more time to pull together down payments and get their credit in order, etc.

This could prove a successful tactic for some of the developers mentioned in the story, because they are skipping a common provision that deters many people from rent-to-own deals – their renters will not be legally required to buy the unit in the future.

Financial and real estate experts, such as the folks at Bankrate.com, advise caution when entering rent-to-own deals. Mandatory purchasing provisions are among the chief reasons for that advice.

So what do you think, will this help the developers get through the slump? Have you ever been involved in a rent-to-own deal? If so, what did you learn from that experience and would you recommend other people try it?

Enjoyed this post? Get blog updates delivered to your reader. Click here.

« Back to Front Page

1 comments so far...

Marcus, spouse here with a question if you are around. I hope you can put in non technical terms the following: I believe that there is a 5% chance that the economy muddles through and that somehow a new bubble can be created to replace the destroyed money from the stock and RE bubbles. I think that there is a 30% chance that the ultimate resolution is hyper-inflation, and a 65% chance of deflation, ala Japan and Keynes' Liquidity Trap theory. Net is that the future won't be anything like the past 20 years. I also tink that coming increases in taxes and property taxes will be very deflationary.

It would be helpful to us, and others I am sure, if you could put in everyday terms (1) why everyone should be thinking in terms of probability based outcomes, (2) that the period we are entering will be vastly different than anything we are accustomed to, and (3) how we can easily see our RE deflate dramatically and significantly - just as in Japan and Toronto in the late 80's.

Posted by lynnLS September 1, 08 11:32 AM