Lease Options Abound
A few weeks ago I wrote about the rising popularity of lease options as a way to rent/buy a home. Even builders are offering this method of financing to move their homes.
Like any method of financing, every type of creative purchasing has advantages and disadvantages based on the market and the individual purchaser. A wrap around contract isn’t always the best way to handle subject to financing. Likewise, a lease option isn’t always the best way to purchase real estate.
Considering the local market conditions, lease options are looking pretty good in my estimation. The biggest concern any home buyer should have right now is whether their home will lose value. With the latest housing boom clearly coming to an end, that’s a serious concern. A lease option alleviates that
worry because the buyer isn’t committed to buying the home and has an opportunity to gauge the market before they pull the trigger on the purchase. Say the market starts to heat up again, the buyer can exercise their option earlier. If things start to really get bad, they can renegotiate the option price lower, extend their rental term or simply walk away.
Please see my previous article on lease options to learn how to structure such an agreement to your benefit. If done incorrectly, a lease option can very quickly turn into a bad deal.
I decided to take a look around and see what kind of deals are out there for these types of purchases. There are quite a few it appears. Do you want a new home in Traverse Mountain where the builder will carry the note…for 0% down? Take a look at this - 3600 s.f. - $1799 month, 0 down at 6.9%. How about a new home in Saratoga Springs for $2000 per month with a lease option? You can get a new home in Lehi for $1950 a month with a lease option or seller financing.
There are lease option purchases available all over Northern Utah that can get you into a home for a nominal down payment, few credit restrictions and the opportunity to own your own home. Bear in mind that lease options have a high failure rate. Part of that is unrealistic expectations from renters buying their first homes, part of it is not completing the lease option properly to provide for an exit strategy which is a refinance onto title, not a purchase.
If you’re afraid of what may happen with Utah housing, but want a home of your own, a lease option will provide a level of safety and freedom not found in any other type of real estate transaction.