Expert: Dick Dennis - 8/25/2006

Question
Hello Mr. Dennis,
I'm looking at a rent-to-own home on the Monterey Peninsula in Ca.  Both rent and home prices are very high, and I'm wondering if this is a good compromise?  What information as the renter/buyer do I need to know?  What should I look out for?  Is this even a good idea, or just a waste of money?  I was also wondering what happens if I need to move before the house is paid off; do I lose the money I have invested?
Thank you for your time,
Kim


Answer
If you found a seller who is willing to lease/option his property, that's pretty good for that area. It may give you a foothold on a house that ordinarily is hard to find.

A lease/option usually works like this: The owner requires a deposit that is non-refundable, but can be credited toward the purchase of the property when that time comes around. A set amount of time is agreed upon and at the end of that time, usually one-three years, the tenant is given credit for a certain amount of the monthy rent paid toward credit in buying the property.

If you don't know what you are doing in this respect, I strongly suggest you hire a REAL ESTATE attorney to negotiate and make sure your interests are protected. I would suggest a Realtor, but unfortunately, most of them are not sophisticated with lease/options mainly because they don't get paid until the property actually changes hands, unless the buyer/tenant agrees to pay the Realtor to negotiate for him/her.

I wish you well.

Dick Dennis               dixiedee13@aol.com