Renting with option to buy Pros and Cons

[urbanartist]

As I have mentioned in other posts i am on the quest for a new rental situation. It is not the best timing and that is the downside to renting you are at the whim of the property owner. Anyway, rents are crazy high especially in the NW part of Seattle. Is it still a better deal to rent I wonder. I have seen some rent to own deals, some are scams, but is that a good way to go. If your not ready to buy, but you find a place you like is it a good deal to try and negotiate a rent to own deal. What are the pros and cons. My thinking is the high rent would be easier to deal with if you knew it was going towards something. Any information on this would be great.

[Markor]

My thinking is that rent-to-own is not a good deal in a falling housing market. You pay a premium to have the option to buy, at a price that was fair when you bought the option but likely not when you exercise the option. That explains why rent-to-own is prevalent in falling markets. From the landlord's perspective it's getting something for nothing.

[WestSideBilly]

I've always viewed these as combining the worst aspects of renting and buying with no real upside for the renter. You pay a premium on your rent and are locked into a buy option price; if you buy it after a year or two you've "wasted" that time/money paying the other guy's mortgage rather than your own, and if you walk away you've basically just overpaid on your rent.

There are a lot of vacancies in rentals right now; there is a good guide on the blog about negotiating rental decreases. Most landlords would rather have someone paying slightly less vs being vacant. Use that to your advantage.

[WestSideBilly]

Relevant links:

http://seattlebubble.com/blog/2008/10/0 ... in-seattle
http://seattlebubble.com/blog/2008/02/2 ... at-rental/

[ira s]

There are appropriate times to do renting with option. Those times are when the market is rising, and/or you don't have a downpayment but will have accumulated enough funds in the period of the lease option...They work various ways. One is that you put down a certain amount that may or may not be refundable and is generally credited towards the purchase price, and then sometimes a certain dollar amount per month goes toward the down payment as well, but that usually results in a higher rent, and that monthly amount you will lose if you choose not to exercise the option...
I'd mostly advise against it, and agree with whoever said it combines the worst of both renting and buying.