Great article in todays new york times on renting to own by vivian marino
WHEN sales began almost two years ago at the first Northside Piers tower in Williamsburg, Brooklyn, buyers snapped up more than 20 percent of the 180 luxury condominiums in the first two months. They may have been drawn by the sweeping East River vistas and myriad amenities like valet parking and rooftop cabanas.
Faced with the prospect of empty units and static cash flow, just as sales were starting on an even larger sister tower — Two Northside Piers — the developer, Toll Brothers, decided to take a different approach and expand a program used elsewhere in the country that 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.)
Prospective buyers at Northside Piers tower are essentially able to try out certain one- to three-bedroom apartments. If they like what they see, they can purchase them later on. Or, once the lease is up, they can simply walk away.
“It’s really experimental, but all indications so far are good,” said David Von Spreckelsen, a senior vice president of Toll Brothers City Living, a division of Toll Brothers. Two families have signed up for the rent-to-own program since it began this fall, he said.
In the last several months, as residential sales have softened in the city and throughout the region, other developments (many in parts of Brooklyn that are rife with new construction), have been offering similar deals, as have a smattering of motivated individual sellers. Some are finding help through Web sites devoted to such listings, like iRentToOwn.com — which, according to its founder, John Kobs, has had 4.4 million page views since its inception a year ago.
At the same time, real estate brokers have been revamping their approaches to marketing hard-to-move property to include renting with an option to buy (a k a lease purchase or lease option).