Buying a house in California is expensive. The average home price here in Anaheim is over $450,000, which is one of that city's wealthiest neighborhoods. However, Californians don't want to spend their entire lives throwing their money away on rent, so a compromise has arisen in the form of lease to own (also known as "rent to own") properties. If you're considering choosing a lease to own property, let us tell you a little bit more about them first.
How does lease to own work? Well, when you sign a lease to own contract on a home for sale you're agreeing to rent the property for a certain amount of time (usually 3 years or longer). During this time you have the exclusive option to buy the house. In exchange for this option, you agree to pay the seller a certain amount as a down payment, plus an extra "rent premium" on top of the agreed upon house rent. If the buyer does take the house, these payments go toward the purchase price, if not, he or she loses them.
It may seem to you like the advantages in a lease to own agreement are all on the side of the buyer, and you would be correct. Generally the only time a buyer would consider a lease to own agreement is if he or she can't qualify for a mortgage at the time they were interested in real estate and are hoping they'll be able to repair their credit by the time the option agreement is up.
However if you are in a mortgage-less state and you anticipate not being so in a few years, by all means consider leasing to own a unit of condos. If you're going to do so, you need to go over your contract with a fine toothed comb first. It is very easy for the seller to include loopholes such as "you can be evicted if you don't pay your rent on time" that will help him part you from your deposit and rent premiums. Don't let this happen to you. Have a lawyer look over the contract. The law professionals at Tzaferis PI Law Offices for instance, strongly suggest you hire a legal team that is well versed in the area of law that you require help with.
One of the things you should try to plug into the contract to give you an escape route in case it looks like you won't be able to buy is the right to assign the option. That way you can sell the option to someone else instead of losing it along with your deposit.
If you can't get a mortgage and you have no concrete prospects of improving your appeal to the bank, going the lease to own route is throwing away even more money than continuing to stay in that home for rent.