Property Owners Are Offering Rent To Buy Options To Motivate Cash Flow

3Dwalkthroughs.com came across a story in the NY Times about a strategy being employed by certain property owners to stimulate cash flow in the face of this deepening economic crisis.

The new strategy allows prospective owners to lease with the option to buy, using part of the rent toward the purchase.

Rent-to-own options, which come in many variations, have become increasingly common for developers in areas where home foreclosures are high, like Nevada, California and Florida. In most cases, the accumulated rent is used to lower the purchase price or to reduce closing costs. (Fannie Mae and Freddie Mac guidelines generally preclude using rent money toward the down payment, mortgage experts say, because buyers need to prove that they can save on their own and thus qualify for a loan.)

The last time lease-purchase options were seen with any frequency in the New York area was in the late ’80s and early ’90s — a time when market conditions may have been even more dire than they are now, according to veteran real estate professionals, and certainly a time when interest rates were a lot higher.

Source: NY Times

To market this new strategy, property owners are using flyers and billboards encouraging people to test drive buildings and neighborhoods.

Somehow when I think of renting with an option to buy I cannot help but think of the scene in the movie Fletch when Chevy Chase's character is asked "if he owns rubber gloves?". Fletch says, "I rent with an option to buy".