Zep1988

I can't remember where, but I saw a thing on here about how new expats should rent for a couple of years before they buy property. I can't remember what the reason was, can anybody enlighten me? Something to do with tax?

I only ask because, in my preliminary apartment hunting (still currently in UK but moving in Feb), I keep coming across 'lease to own' stuff, and it looks a whole lot more appealing than the options I have to just lease/rent (what even is the difference?), both in terms of the actual property and location as well as the idea that it must surely make more financial sense. Is anybody savvy on this?

Thanks!

Zep1988

Crap! I meant Property!

GeoffM

The waiting before buying is so you get familiar with the area - in all seasons. And to build up credit history in order to get cheaper mortgages.

Rent to buy ties you in at a higher than rent rate for a year or whatever. At the end of the period you must get a mortgage or be kicked out. With no credit history, even after a year, there is a high risk of either being refused or have a silly high rate of interest. End result: find a new property and kiss goodbye to those premiums you paid on top of the rent.

sir_eccles

Usually recommended to hold off buying until you are at least a PR.

HarryTheSpider

+1

Michael

Many lease to own properties are scams. With so many houses underwater, some owners delay foreclosures as long as possible and then advertise lease to own which generally requires some up front money and a higher rent but then the owner doesn't make the monthly payments and when foreclosure occurs, the owner is no where to be found and the mortgage is more than the agreed on price.

Bob

Plenty of reasons to rent first.

Big one is, till you've got a greencard, you might find yourself laid off and then trying to sell a property and not being around to do it.

No US credit history, so crap mortgage rates, crap home owners insurance rates, renters insurance costs peanuts.

Costs much more to sell than to buy here, generally need to live in the place for 5-8 years to make it worth the cost.

Maintenance is a very different ball game to the UK, so gives you time to learn about it so you know what to look for and what to avoid when buying, based on experience and what you'd be willing to put up with as well as knowing what to expect from the different seasons which can be much more extreme here.

Gives you much more flexibility to move around because you decide the area you've moved to is soulless during the evening, or too many kids around during the holidays, or that the new road works is a 5 year project so commute will be a nightmare next summer, or the town does a shit job of clearing the roads of snow, fixing the roads/pavements, that parking is a major hassle especially for guests, or that the town doesn't do rubbish collection and private pick up might be $50 a month or using the town dump costs $400 a year for a sticker or any other scenario in between.

No idea about the rent to own, but they never seem like a good idea.

Zep1988

Fantastic response, thank you. I would never have considered any of those things!

Tarkak9

Like people have indicated, the merits of renting is that you have no commitment to a property or area (other than lease obligations); so if plans change etc you have the mobility and flexibility than tethered to a house. It is always wise to get familiar with an area first rather than doing things on haste and impulse.

With rent to own scenarios, I'd be leery of them as often they are accompanied with pitfalls. That is not to say that the intentions of all the owners are shady and nefarious, but, the unknown ramifications to all can be worse. A safer alternative is to have a lease with an OPTION to buy or even a first-right scenario.

Penny to wise for everyone - there are many things which can go wrong with rent/lease-to-own situations....
R-t-o's is just that - 'rent' is applied to the agreed price and in essence, you pay until the balance is paid off.... but in reality, you never have conveyance of ownership or title upfront... so there is no proof that the current owner will ever have the ability to convey free and clear title to (you) at the end of the term because they don't already own it outright or (b) in the interim they get it encumbered or (c) may not be able to pay off their bank and may have a few more years left on their note etc.... ie problematic for the 'buyer'.

Like someone has indicated - foreclosure. Although (you) act in good faith and pay rent or your apportioned r-t-o amount, should the owner default and keeps the money and stops paying their bank ..... bank forecloses. Often enough LL/Owner can't be easily found. Altho, the r-t-o person may have a legitimate legal interest in the property... its often second to none to the bank; and unbeknownst to the tenant/ r-t-o person, you could find the sheriff at your door stop to literally throw you out... or, be in a legal entanglement in pursuant to your possible legal rights.

In many states, they may not be recognized. If you look at it from one stance, r-t-o can be seen as a private mortgage and with that equity rights can come into play. Not only that, they may also be seen as equity skimming - and furthermore, it can be viewed as (you) participating in loan fraud - in essence, the current owner misrepresented themselves to the bank with obtaining the loan in the first place and buyer/r-t-o person unknowingly attached themselves to it.

Lease with an option is just that, you are renting until a time to purchase at a later date; often at a predetermined and agreed upon purchase price upfront. First Right (depending on how its worked) is basically just that, first right with/to purchasing the property.

Why do rent to own exist?? Well, they look like enticing options for sellers and buyers alike for a solution, don't they. If a market is hugely appreciating, its presenting that you're securing a cheaper price now. BUT if its a depreciating market your are locked in at a higher price to pay. However, the aforementioned considerations are often never thought about and often ignored.

Regardless of the transaction, protect and incorporate your legal outages of the deal, and, as always, seek representation and an attorney. It was once said to me "You either buy or rent; or you sell or lease the property - but you never commingle the two.".

lgabriel73

My advice would be dont buy until you have your GC and know you want to stay. I bought 5 years ago while waiting for my green card. i am still waiting after 9 years since I applied. I recently got laid off and cannot find another job in my field. I am faced with possibly going back which I think I want to anyway, but my mortgage is underwater and I have to try to figure out how to get out of it before going back.