Why rent-to-own when you can rent?

Every so often I get a protective urge toward prospective home buyers. I almost always feel that urge when I see a rent-to-own offering.

Rent-to-own programs are usually pitched as a boon to the cash-starved home buyer.

My take: you’ll generally find this kind of offering on overpriced properties in second- and third-tier neighborhoods. If you’re a cash-starved would-be buyer, avoid rent-to-own programs unless you’re savvy enough to understand all the details – all the details. Only a fool would enter into one without a good home inspector, a good appraiser, and a very experienced lawyer. And how can you afford that team if you’re cash-starved?

The purported key to a rent-to-own program is that a portion of the rent you pay is credited toward your down payment. Why not simply rent or share a lower-priced apartment for a while and save the difference toward your down payment?

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