Re: Rent to buy arrangements
From: Dick Margulis (dickdmargulis.com)
Date: Sun, 23 Sep 2018 03:58:56 -0700 (PDT)
On 9/23/2018 12:09 AM, Betty Grant wrote:
At Oakleigh Meadow Cohousing  in Eugene the idea of Rent-to Buy has surfaced as a possible way to stretch our economic diversity. Our concept: a current member or a group of current members purchase one or more still available units, then set up a "rent-to-buy" option for an interested party who cannot afford to buy-in outright.

We haven't been able to make the model work on paper. In order to build equity toward purchase, the monthly payment (excluding common charges, utilities, and taxes) would have to be about the same as a mortgage payment calculated for a zero-down-payment mortgage. So if someone could afford to buy a unit on these terms, they would be better off obtaining a down payment assistance grant of some sort and then buying the home themselves. And they would be far better off buying one of the subsidized affordable homes, because under the rent-to-own model, the owners would not qualify to purchase one of the affordable homes, so the model would only apply to market rate homes.

In short, rent-to-own would be a bad deal for anyone who would be in a position to think it might be an attractive option.

I'd love to learn that we're wrong and that this can indeed work, but I'd have to see the math.

Dick Margulis
Rocky Corner cohousing, Bethany CT
http://www.rockycorner.org


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