Don’t be misled by the title of well-known real estate author Robert Irwin’s latest book “Rent to Own.” Just one chapter in the book is about renting a home with an option to purchase. The balance of this well-written book is about why owning is better than renting, and how to purchase a home with a minimal amount of cash.
The book’s one and only chapter about lease-options explains virtually all the pros and cons for both the home seller and buyer. However, as a reader I question how much actual lease-option experience the author has since he doesn’t provide any personal examples. Also, he neglects to use any examples that would add to the practical usefulness of the material.
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To illustrate, in his checklist of potential lease-option problems, Irwin suggests the buyer-tenant get a credit report on the home seller. As a longtime user of lease-options for more than 25 years, I would be shocked if any buyer asked for my seller’s credit report. I seriously doubt Irwin, when selling a house or condo on a lease-option, would allow his buyer to obtain a credit report on him.
An important lease-option topic the author avoids discussing is the amount of option money the buyer-tenant should pay for locking in the home’s purchase price several years before the option expires. Not only does Irwin neglect to discuss option money, but he barely mentions it should be clearly labeled “nonrefundable” in case the tenant doesn’t exercise the purchase option.
Although the author does an admirable job of explaining many additional low- and no-cash home-purchase methods other than lease-options, he barely scratches the surface of all the lease-option considerations. For example, topics such as who pays for maintenance during the option period, how the amount of rent credit should be determined, and protecting the lease-option seller are barely mentioned.
However, the balance of the book explains other low-cash methods of acquiring a house or condominium. Rarely discussed topics such as contracts for sale and buying “subject to” an existing mortgage are superficially covered. Greater depth and detail would have made the book more useful for home buyers, sellers and realty agents.
A few major topics in the book seem out of place. One is foreclosures. Another is “for sale by owner” (FSBO) home acquisitions. What do these subjects have to do with the book’s title, which implies it is about renting to eventually own your home?
Much of the book deals with mortgage finance techniques, especially methods of buying with little or no cash. Heavy emphasis is placed on understanding adjustable-rate mortgages (ARM), especially their pitfalls after the initial one- or two-year low “teaser” rate expires and the monthly payment jumps to the much higher fully indexed rate.
Irwin has a definite dislike (and rightly so, in my opinion) for ARMs that have negative amortization where the borrower winds up owing as much as 125 percent of the initial amount borrowed. But he does admit sometimes a “negative am” ARM is the only way a home buyer can afford to purchase.
Chapter topics include “Why You Should Own Your Home”; “Do Market Conditions Really Count?” “But Can I Afford It?” “Using Your Rent Money to Buy: The Lease-Option”; “Contract for Sale and Subject-To Purchases”; “Nothing Down and Lower Monthly Payments”; “Getting Financing Even When Credit is a Problem”; “Buying Foreclosures”; “Bidding Low for Bargain Buys”; “FSBOs and First-Time Buyer Programs”; and “Understanding Real Estate Tax Advantages.”
This is another in the Robert Irwin series of well-written real estate books. But it is disappointing because the book spends so little space on the title topic of lease-options and instead jumps around to other real estate topics. The book would have been much more valuable if Irwin had shared some of his personal lease-option realty investing examples. On my scale of one to 10, this disappointing book rates an eight.
“Rent to Own,” by Robert Irwin (McGraw-Hill, New York), 2007, $16.95, 221 pages; available in stock or by special order at local bookstores, public libraries and www.Amazon.com.
(For more information on Bob Bruss publications, visit his
Real Estate Center).