Is it EVER okay to purchase real estate investments at full price?!?

Lee’s Notes: Good post from Vena Jones-Cox..

Is it Every OK to Pay Full Price for Real Estate?
Here’s an idea that’s gone out of fashion: building humongous wealth in real estate is a long-term process.

I know, I know…wholesaling, retailing, buying and selling creatively-they all hold the promise of quick cash. That’s why sales of courses and bootcamps on these topics will continue to outstrip those of courses on long-term buy-and-hold strategies by a margin of 100 to 1.

But let’s face it, not everyone is cut out to do the wheeling and dealing that these strategies require. Each and every one of them requires the investor to sift through dozens of potential leads to find the one deal where the seller is desperate enough to take 70 cents on the dollar for a quick sale, or is open to creative finance deals that are way outside of the average American’s frame of reference and comfort zone. In other words, the investor has to be both willing and able to negotiate a price and/or terms that make the deal work for him-and find a seller for whom the terms work as well.

Furthermore, depending on the strategy, the investor (let’s just call him “you” from now on) has to have the time (and in some cases, skills) to make the deal make money after the purchase. In the case of a retail deal, the low purchase price does not automatically equal a high profit-cost overruns, holding expenses, poor neighborhood selection, and unexpected repairs can quickly eat up any potential gain. In many creative buy/sell deals, as little as one month a year in vacancy can kill the profits for the entire year.

Now, don’t get me wrong-I am a big fan of (and practitioner of!) these short and medium-term deals. Like most full-time investors, I depend on them to take care of immediate cash needs, build money for long-term holds, and, frankly, to keep food on the table. But the source of my wealth-and that of every other real estate investor in the country-is the tax breaks, appreciation, and mortgage pay-down that comes from owning rental properties.

And what’s more, quick-turn deals just don’t fit into everyone’s lifestyle. Many people are just downright uncomfortable with the negotiation factor; others are unwilling or unable to commit the time it takes to deal with dozens of sellers for each property they buy; still others are in a tax situation that makes any type of short-term capital gain a major tax burden. And a mega-profitable quick-turn business requires a lot of volume-1,2, or even 10 deals a year aren’t going to make anyone a millionaire, especially since the profits are ultimately taken out in cash which, let’s face it, we tend to spend rather than grow into more profits. And doing more than 10 deals a year is difficult for anyone who plans to keep their “day job” for whatever reason.

So what if there was a way to become a millionaire in real estate without hard-ball negotiation, without a full-time commitment, and without making dozens of offers for each deal you buy? What if, in short, you want to be a completely hands-off, passive real estate investor?

There is-but in order to do it, you have to be willing to go against all of the training you have that says that smart investors don’t pay full price for properties. Oh, and you may have to consider investing outside of your own geographical region. Wanna hear about it anyway? Here goes.

When and Where to Consider Paying Full Price

First, some background for readers who live on certain parts of the east and west coast, Arizona, and Florida.

In most of the United States, it’s possible to purchase single and multi-family rental properties in decent areas for full price, pay 20% down or less, and still have positive cash flow at current interest rates.

This rule primarily applies to properties with an after-repaired value of 120% or less of the median house price in the area, and becomes MORE true as you move DOWN the scale. For instance, in Cincinnati, the median house price is around $125,000; a home with an ARV of $170,000 will rent for about $1400 a month and have positive cash flow if the mortgage is 80% of value, or $136,000

On the other hand, a home with an ARV of $70,000-which will be in an almost all-rental neighborhood-will rent for about $800 and will have a cash flow of $200 or so with $56,000 mortgage at 6 %.

A $50,000 property-which will be a high-demand rental, but almost certainly in a “border zone”, will rent for $700 a month and have a $300+ positive cash flow if mortgaged at 80% of value.

The trade-off, of course, is that the $170,000 will appreciate a LOT more and have a LOT more tax benefits than the $50,000. And needless to say, there are factors other than the mortgage payment that must be considered; in cities with very high property taxes or additional fees for garbage collection or landlord licensing, the numbers clearly change. But on the whole, here in flyover country, it’s possible to break even-or even make money-paying full price for a property and financing it conventionally.

So what’s so exciting about breaking even?

Well, not much-IF your goal is to live off the cash flow from the property today. But remember, for the vast majority of people looking at investment real estate, cash flow now is not as important as cash flow later, wealth-building, and, most importantly, ease.

Even full time investors like me aren’t generally looking to their rental properties for immediate income; instead, I’m looking at my rentals as a retirement fund that have no impact on my income right now, but have a major impact on my TAX situation right now. My income-the putting-the-food-on-the-table money-comes from my short term, highly taxable wholesale and lease/option deals. My wealth-the retiring-young-and-traveling-the-world money-comes from rentals. And in the meantime, I want to be able to focus my time and energy on my high-profit, quick-cash strategies, and have someone else worry about filling and managing my rental homes.

So in order to evaluate the REAL benefits of paying full price (or close to full price) for we have to look at the long-term impact of owning the property. And this means evaluating the tax implications (which affect your income immediately) and the growth implications (which affect your future) of owning rentals.

The Tax Benefits. The IRS allows owners of single family investment properties to “depreciate” the property over time. In other words, for tax purposes, the home is treated as if it were “wearing out” and decreasing in value each year, instead of growing in value.

Single family homes are depreciated over 27 1/2 years, and a conservative accountant will tell you to set a “basis” on your property of 80% of your purchase price. The resulting number is then deducted from your net income from the property. And if THAT number is a negative number-which it almost always is in the first 5 years you own the property-that “loss” can flow over and shield your ordinary income, as well.

A paper loss of $1,000 a year equates to a tax savings of $150 in a 15% tax bracket, $300 in a 30% tax bracket, and so on. Although the tax breaks are something most people think of only on April 15th, they are a real, quantifiable addition to your yearly income, and must be taken into account when looking at the overall profit from the property.

Long-term appreciation. Another benefit of owning properties for the long haul is the growth of value of the property over time. Although the appreciation in the last 3 years has been NEGATIVE, all this means is that by paying full price, you’re buying at or close to the bottom of the market, and are positioned to get the appreciation that will be driven by the recovery of house prices.

If you use 3% as an extremely conservative estimate of yearly appreciation, over the next 5 years, a house worth $150,000 today will be worth $168,000 in 5 years-an untaxable, unspendable, but very real profit of $18,000.

Equity Paydown. At the same time that the property is increasing in value, the loan amount is decreasing thanks to the efforts of the tenants to pay it off for me. As you know if you’ve ever looked at the amortization schedule of a 30 year loan, this takes place slowly at first and accelerates as time goes by.

Nonetheless, in our example of the $150,000 bought with 20% down at 6% interest, the tenant pays off $1,473 of my loan in the first year-another real, untaxable profit center. Of course, this number gets bigger each year as principal payoff accelerates, but even in the very first year, it affects your overall return.

So, sometimes, for some people, in some situations, paying full price for investment real estate is a smart move. But before you run out and do this, let’s talk about what it takes to make it work in the real world. No matter what your financial situation, do NOT contemplate this strategy unless:

The property is fully renovated when you buy it. Obviously, it doesn’t make sense to purchase a home for full retail price if it needs work to bring it up to full retail value. But it also doesn’t make sense to pay full retail less the actual rehab costs for properties that need repairs. The whole attraction of this technique is that it is relatively hands-off; if you’re going to do work to a property, you can and should be paid for the time, money, and energy you put into repairing it. And since the idea is that you’ll be paying close to full price anyway, it just makes sense to buy something that won’t need a roof, an electrical update, plumbing, etc. in the near future.

The property has at least break-even cash flow, NOT including the effects of appreciation, tax savings, and equity paydown. The only time it makes sense to buy rental properties that have significant negative cash flow is when the same property has very large appreciation potential-and expecting a property to appreciate 10-20% a year in today’s slowing market is speculation at its worst.

Incidentally, if you’ve never owned rental property, you may not be aware that “break even” cash flow, in the real world, means negative cash flow in some years and positive cash flow in other years, evening itself out over the long term. If you live in a market where it’s impossible to buy a decent house in a decent area with break even cash flow, you may have to consider buying a package of properties in another region of the country and having them managed to make this work for you. Remember, the idea here is long-term growth with minimal hassle, NOT to get rich in 5 years from high appreciation, and NOT to spend your own money “feeding” your rentals year after year after year.

You’re qualified for the financing that makes this work. In theory, when you buy a property that breaks even in year 1, it should be cash flowing by year 5 and cash flowing strongly by year 10 due to rent increases.

However, this scenario really only works with a fixed-rate, low interest loan. It’s a fact of life that our mortgage interest rates will be increasing in the foreseeable future, and it’s also the case the rent increases normally lag interest rate increases.

If you can’t put 20% down, or can’t qualify for a low fixed-rate 30 year loan, it just flat won’t work.

You can leave your money invested in the property. Since this entire scenario is based on long-term growth and mortgage paydown, it’s crucial that you have the ability MAKE a downpayment, and then LEAVE it in the property (I know, I know, there are gurus all over the U.S. who would be rolling over in their graves right now, were they dead). But if you refinance the property at any point to pull out cash, you’ll not only decrease your cash flow a that point in time, you’ll also set yourself back years in terms of the mortgage paydown. Investing this way is like buying stock-you should be in it for the long haul, or not at all.

You are absolutely certain that the property will be well-managed. The success of this strategy-both long-term and short-term-hinges on good management. Whether you plan to self-manage or hire a property manager, your razor-thin cash flow margins depend on keeping the property rented, keeping the tenants happy, and collecting every dime you’re owed.

The 20% expense allowance in the examples assumes that you DON’T put a tenant in your property that’s going to do major damage to your property, and that you DON’T lose out on months of rent each year through vacancy, non-collection of rent, or lengthy rehab periods between tenants. If you can’t run your rental business like a true business, hire a good, competent property manager who will.

A note: if you’re going to hire a manager, talk to your tax professional first to make sure you won’t be subject to passive loss limitations in your tax write-offs.

Buying rentals at full price certainly doesn’t give you the “rush” that some of the other strategies available in real estate do. But real estate is such an important part of every financial portfolio that if you aren’t ready or aren’t able to do what it takes to wheel and deal in the real estate world, it’s sure better than doing nothing at all. For the right people in the right situations, it’s the obvious alternative to waiting to start a real estate career.

Top Ten Tax Deductions for Landlords!

Lee’s Notes: Shamelessly stolen from here…

Every year, millions of landlords pay more taxes on their rental income than they have to. Why? Because they fail to take advantage of all the tax deductions available for owners of rental property. Rental real estate provides more tax benefits than almost any other investment.

Often, these benefits make the difference between losing money and earning a profit on a rental property. Here are the top ten tax deductions for owners of small residential rental property.

1. Interest

Interest is often a landlord’s single biggest deductible expense. Common examples of interest that landlords can deduct include mortgage interest payments on loans used to acquire or improve rental property and interest on credit cards for goods or services used in a rental activity.

2. Depreciation

The actual cost of a house, apartment building, or other rental property is not fully deductible in the year in which you pay for it. Instead, landlords get back the cost of real estate through depreciation. This involves deducting a portion of the cost of the property over several years.

3. Repairs

The cost of repairs to rental property (provided the repairs are ordinary, necessary, and reasonable in amount) are fully deductible in the year in which they are incurred. Good examples of deductible repairs include repainting, fixing gutters or floors, fixing leaks, plastering, and replacing broken windows.

4. Local Travel

Landlords are entitled to a tax deduction whenever they drive anywhere for their rental activity. For example, when you drive to your rental building to deal with a tenant complaint or go to the hardware store to purchase a part for a repair, you can deduct your travel expenses.

If you drive a car, SUV, van, pickup, or panel truck for your rental activity (as most landlords do), you have two options for deducting your vehicle expenses. You can:

• deduct your actual expenses (gasoline, upkeep, repairs), or
• use the standard mileage rate (58.5 cents per mile effective July 1, 2008; 50.5 cents per mile from January 1, 2008 through June 30, 2008; 48.5 cents per mile for 2007). To qualify for the standard mileage rate, you must use the standard mileage method the first year you use a car for your business activity. Moreover, you can’t use the standard mileage rate if you have claimed accelerated depreciation deductions in prior years, or have taken a Section 179 deduction for the vehicle.

5. Long Distance Travel

If you travel overnight for your rental activity, you can deduct your airfare, hotel bills, meals, and other expenses. If you plan your trip carefully, you can even mix landlord business with pleasure and still take a deduction.

However, IRS auditors closely scrutinize deductions for overnight travel — and many taxpayers get caught claiming these deductions without proper records to back them up. To stay within the law (and avoid unwanted attention from the IRS), you need to properly document your long distance travel expenses.

6. Home Office

Provided they meet certain minimal requirements, landlords may deduct their home office expenses from their taxable income. This deduction applies not only to space devoted to office work, but also to a workshop or any other home workspace you use for your rental business. This is true whether you own your home or apartment or are a renter.

For the ins and outs on taking the home office deduction, see Home Business Tax Deductions, by attorney Stephen Fishman (Nolo), or Every Landlord’s Tax Deduction Guide, also by attorney Stephen Fishman (Nolo).

7. Employees and Independent Contractors

Whenever you hire anyone to perform services for your rental activity, you can deduct their wages as a rental business expense. This is so whether the worker is an employee (for example, a resident manager) or an independent contractor (for example, a repair person).

8. Casualty and Theft Losses

If your rental property is damaged or destroyed from a sudden event like a fire or flood, you may be able to obtain a tax deduction for all or part of your loss. These types of losses are called casualty losses. You usually won’t be able to deduct the entire cost of property damaged or destroyed by a casualty. How much you may deduct depends on how much of your property was destroyed and whether the loss was covered by insurance.

9. Insurance

You can deduct the premiums you pay for almost any insurance for your rental activity. This includes fire, theft, and flood insurance for rental property, as well as landlord liability insurance. And if you have employees, you can deduct the cost of their health and workers’ compensation insurance.

10. Legal and Professional Services

Finally, you can deduct fees that you pay to attorneys, accountants, property management companies, real estate investment advisors, and other professionals. You can deduct these fees as operating expenses as long as the fees are paid for work related to your rental activity.

Did You Know?

Did you know that:

• Landlords can greatly increase the depreciation deductions they receive the first few years they own rental property by using segmented depreciation.
• Careful planning can permit you to deduct, in a single year, the cost of improvements to rental property that you would otherwise have to deduct over 27.5 years.
• You can rent out a vacation home tax-free, in some cases.
• Most small landlords can deduct up to $25,000 in rental property losses each year.
• A special tax rule permits some landlords to deduct 100% of their rental property losses every year, no matter how much.
• People who rent property to their family or friends can lose virtually all of their tax deductions.

Lease-Options or Rent To Own.. How they SHOULD work! Part 2/2

Lee’s Notes: Matthew Griffith, my Indianapolis Real Estate Lawyer, has an interesting article on how to properly do a lease-option/rent to own contract.

Lease-Options

(Part 2 of 2)

In addition to the matters discussed in Part 1 of this 2-part article, the following ideas should be considered by landlords and other parties to lease options:

Analyze the Tax Issues:

All rent received will be income when received. All option fees will be income when received. The profit on the sale typically will be capital gain unless the landlord is a “dealer.” If the landlord provides the financing for the purchase, then the landlord can normally defer most of the income tax to the years in which principal payments are received. However, if the landlord is a “dealer” in this type of property for income tax purposes, then all profits will be taxed at ordinary income tax rates in the year of the closing, not the year when principal payments are received.

No Public Notice of the Option:

The holder of an option to purchase real estate does not own an interest in the property itself, but merely holds a contract right to force the seller to convey the property to the holder of the option according to the terms set forth in the option. Thus, the option should never be recorded and, if the tenant/buyer defaults on the lease, the option should not be discussed in the eviction or damages proceedings.

Close the Sale as Soon as Possible:

A potentially dangerous time for the landlord arises after the tenant has delivered notice of exercising the option and before the closing. This is because the tenant acquires an interest in the property by exercising the option but is supposed to continue paying rent until the closing. Any default under the lease at this time may not be sufficient to terminate the option rights unless the documentation of the transaction is clear. The last thing the landlord wants is to be forced into a superior or circuit court, as opposed to a small claims court, to foreclose or forfeit a tenant who has paid only the option fees, is no longer paying any rent, and is unwilling or unable to close on the purchase. One possible solution to this problem is to include language in the option indicating that the option cannot be exercised or is voided automatically in the event of any default under the lease.

Exit Strategies and Credit Problems:

The transaction documents should describe what will happen if the tenant defaults on the lease, fails to exercise the option, or is unwilling or unable to close on the purchase after exercising the option. If the tenant is to use bank financing, then generally the option fees will be forfeited to the landlord if the tenant does not close on the purchase for any reason. However, if the landlord is providing the financing, another credit report should be required immediately prior to closing as a condition of the financing. If the tenant then does not have good credit, the landlord must have the right to refuse to provide the financing. If the deal then does not close because the tenant is unable to find other financing, the tenant is likely to be very upset unless the tenant clearly understood the risks. Of course, there is nothing to prevent the landlord and tenant from negotiating a new deal if the old one does not close.

Necessary Documents:

The following is a document checklist which the landlord/seller may find useful:

Lease Application

Credit Report, etc.

Employment Verification

Bank Verification

Lease Security Deposit

Lead-based Paint Disclosure

Lead-based Paint Booklet

Seller’s Residential Real Estate Sales Disclosure

Option to Purchase

Sample Purchase Agreement

Sample Warranty Deed

*Sample Note

*Sample Mortgage

Notice by Tenant of Exercise of Option to Purchase

*Second Credit Report

Title insurance commitment

Notice by Owner of Changes in Property Condition

Appraisals, inspection reports, etc., as required by lender

Settlement Statement

Signed and recorded Deed

*Signed Note

*Signed Mortgage

Disclosure of Sales Information

Record Deed and *Mortgage

*Mortgagee’s Title Policy

(*used when landlord is providing financing to tenant)

Conclusion:

In general, lease-options can enable a landlord to sell a property at a price on the high end of fair market value to a buyer who presently does not qualify for third party financing but is likely to qualify after the end of the lease term. The landlord can also collect an option fee at the time the lease is signed and additional option fees during the life of the option. The option fees compensate the landlord for keeping the property off the market during the option term and improve cash flow. The tenant gains access to a property worth purchasing and prepays, essentially, a part of the down payment. This gives the tenant a good reason to remain current on the lease and close on the purchase. As with any complicated transaction, changes in the facts and circumstances of a case will cause the need to alter standard form documents, so be alert to opportunities and call this author if you have any questions.

Lease-Options or Rent To Own.. How they SHOULD work! Part 1/2

Lee’s Notes: Matthew Griffith, my Indianapolis Real Estate Lawyer, has an interesting article on how to properly do a lease-option/rent to own contract.

Lease-Options

(Part 1 of 2)

Recently, the Indianapolis Landlords Association hosted a guest speaker who discussed the many benefits of selling investment real estate by using lease-options, also called “Rent to Buy Agreements.” A lease-option is actually two documents representing two separate transactions: a lease with option to purchase, as discussed in more detail later in this article.

Although there are many advantages to selling investment real estate by use of lease-options, they are not perfect and are often inappropriate. Moreover, the substance of a lease-option is key to completing a transaction to the landlord’s satisfaction and benefit. This article, which comes in two parts, will raise some of the considerations a landlord should make before using lease-options.

Two transactions In One:

A “lease-option” is actually two transactions occurring at the same time. The first is the execution of a standard residential lease. The second is the granting to the tenant of a special option to purchase the property in the future.

Often, the landlord will require an initial option fee for the option, which is in addition to any security deposit or first month’s rent. The monthly rent should be equal to the fair market rent; however, the landlord should charge an additional monthly option fee. The total of the additional option fees should be about the same as the discount given from the future fair market value of the property at closing. This will leave the landlord in financially the same position as if the property were sold at the end of the lease to a third party, but provides incentive to the tenant not to default under the lease and to keep the property in good repair.

For example, if the property is worth $50,000 today and would be worth as much as $55,000 after one year, the deal could be structured as follows:

(a) Lease for one year with rent equal to $500 per month (the market rent); and

(b) Option to be exercised during only the 12th month for a purchase price of $55,000 at closing; an initial option fee of $1,000 and additional option fees of $250 per month.

Only the additional option fees will be applied to the down payment at closing. If the tenant does not purchase the property then all option fees are forfeited.

The tenant/buyer should be better than the typical tenant.

The tenant/buyer should be more creditworthy than a typical tenant and should have a strong desire to purchase the property. The landlord/seller should have a desire to sell the property in the near future. The tenant’s income needs to be higher to support the additional option fees and the tenant will pay more cash up front. Also, the tenant should be required to perform more of the regular maintenance and repair duties than a typical tenant. However, do not expect the tenant/buyer to keep his/her promises to maintain the property. You should inspect the property regularly.

Use separate documents.

A common mistake is to merge the lease, the option, and the purchase agreement into the same “short” form. This can be extremely dangerous for the landlord because it allows the tenant to interpret the lease as a purchase agreement and thus delay or prevent eviction. These problems often arise in the tenant’s bankruptcy.

The option should either include the terms of the purchase or incorporate a separate purchase agreement. The purchase agreement would not be signed, however, until the option is exercised by the tenant. Only the lease and option should be fully executed at the closing, but not the exercise of the option or the purchase agreement. Do not refer to the option in the lease. If the landlord is also going to be financing the tenant’s purchase of the property, then attach forms of the warranty deed, note and mortgage to the purchase agreement. You should also consider using lead-based paint and state-required real estate disclosure forms which would have to be updated at the time the option is exercised and the agreement is actually signed. Land contracts, which are different from lease-option documents, should generally be avoided unless there is insignificant down payment and default by the buyer is expected.

Landlording & Legal Affairs

Landlording & Legal Affairs is a series of articles written by Matthew A. Griffith, an attorney with the Indianapolis law firm of Thrasher Buschmann Griffith & Voelkel, P.C., for consideration by members of the Indianapolis Landlords Association. Mr. Griffith is long-standing member of ILA and is the Legal Affairs Chairman. This article is an overview of the topic and is not to be considered legal advice. Each reader’s particular circumstances will differ. Readers should seek their own legal counsel and should not rely on this article to conduct their affairs.

Lease-option, Rent to own. What does it all mean to a seller?

I did an article for buyers, but is this a very good option for sellers?!? Generally the way a deal works, is that the buyer pays a down payment, rents/leases the home for up to 3 years, and then they have a balloon payment due(rest of the balance). So if a home was 100k, they put 3k down, and make payments for a year, then at the end of the year, they get a loan for 97k+closing costs. Now this could change based off whether or not extra monies are escrowed during the lease, whether you are helping to pay for repairs, etc.

All of the below items of consideration would need to be detailed in the contract(s) you write up with the potential buyer. Get with a tax consultant, and lawyer,etc to make sure you and the buyer are covered.

• Generally you get a bit of cash up front, which is non-refundable. ie.- they pay you 3k up front, and at the end of the lease/rental term, if they decide to not buy, you get to keep the 3k. If they decide to buy the property at the end of the term, you credit them this amount towards their purchase price. Note: you don’t generally have to pay taxes on this money(gain) until the actual closing.
• You get to claim depreciation on the property while they are renting. Talk with a tax consultant, but generally you take the value of the property subtract the land value, and divide by 27.5(years).. the amount calculated is what you can deduct on your taxes. House is worth 250k –  land worth  25k equals 225k, divided by 27.5 equals $8181.82 per year.. and if you are in the 35% tax bracket you saved an additional $2863.64 that year(15% tax bracket = $1227.28)…
• You can write the contract with a non-refundable escrow for the buyers. i.e.-they pay an extra 100 per month, 1 year later, they get $1200 towards downpayment when they go to buy, but if they decide to not buy, then you get to keep the cash(depends on how contract is written).
• You still have to make your payments(if you have a mortgage), pay your taxes(if your buyer isn’t specified to pay them), pay some insurance(structure), etc until the buyer closes on the home. Again, depends on how contract(s) is/are written.
• Depending on how you work the deal, the buyer generally pays for maintenance or repairs, etc. Becareful though, if something goes wrong, the buyer may not have the money to fix it, and it could become a bigger issue down the road.
• You will need to verify your tenant/buyers, or hire a property management company to do it for you. If your deal states you will provide maintenance, and you want property management company to handle it for you, then you will generally pay a fee per month. I generally charge first months rent to find/qualify a tenant, and 10% per month to handle maintenance.
• If home needs repairs, and the buyer completes them. You might get to keep the improvements at the end of the term, if they decide to not exercise their option on the home. Again, depends on how contract(s) is/are written.
• If you have a mortgage on the home, it will still show up on your credit report and affect your debt to earning ration during the term. Check with lenders, the ones I use on Indianapolis Real Estate deals, generally will take your rent/lease contract into consideration at 75% of rent. so if buyer is paying you $1000 p/month in rent, then bank will consider that as $750.00 p/month extra income. This would help your debt to earning ration for buying a different home.

There are a lot of things to consider, but in this market, a lease-option/rent to own, is a very definite option for some sellers who need to sell a home.  Check with professionals to make sure your interests are coveredd.