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Buying Is More Affordable Than Renting with Rent-to-Own Programs

  • April 17, 2012

by Don DeBat

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Wolf Ridge Condominiums in Northlake

If you are an apartment renter who just received that spring rent increase letter from your landlord, now may be the time to consider buying a home, townhome or condo, real estate experts advise.

With apartment rents on the rise, experts say owning now is a better long-term investment than renting after federal and state tax savings for mortgage interest and real estate tax deductions. And, if the property’s resale value appreciates over the next few years, that would be icing on the cake.

In early 2012, Appraisal Research Limited reported that median net rent per square foot has risen 4.6 percent since the third quarter of 2008. In the suburbs, one-bedroom apartments now have a median net rent of $965 per month, while two-bedroom layouts are leasing for a median rent of $1,159 a month.

Rent increases are one reason why analysts at Zelman & Associates believe 2012 will be the first year since 2005 that will show a net gain in home buyers over renters.

Economists and real estate agents report that higher rents along with the current continued decline in home and condo prices is nudging once reluctant prospective buyers off the fence this spring. Analysts say the net cost of living in a rental apartment now is 15 percent higher than the cost of owning a home.

To take advantage of the trend, first-time buyers Jack and Della Campbell tapped into a Rent-to-Own program at the 60-unit Wolf Ridge Condominiums at 77 N. Wolf Road in suburban Northlake.

The couple watched their down payment nest egg grow as 30 percent of their $1,350-a-month rent was escrowed toward their down payment.

“What’s surprising is our mortgage payment at Wolf Ridge is only $9 more a month that what we were paying for rent,” said Jack Campbell. “We wish we would have purchased our home sooner. We spent $89,000 on rent in a Lombard apartment over the past seven years.”

The couple purchased a 2-bedroom, 2-bath unit with 1,336 square feet of living area and a park view and qualified for a 30-year fixed-rate mortgage at 4 percent interest.

Prices at Wolf Ridge begin at $149,900 for 1-bedroom, 1-bath units, and $169,900 for 2-bedroom, 2-bath layouts. A 3-bedroom, 2-bath floor plan starts at $239,900. Monthly assessments range from $203 to $318.

“Our condo assessments cover gas for heating, cooking, clothes drying and hot water, building insurance, management, water, snow shoveling and plowing, landscaping, and window washing,” Della Campbell said. “Our electric bill is only $49 a month.”

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235 Van Buren

For buyers shopping in downtown Chicago, an attractive Rent-To-Own program is being offered at 235 Van Buren, a 714-unit condo that sets aside up to 30 percent of the resident’s rent for a down payment. The incentive can generate up to 3 percent of the purchase price of the residence.

The developer, CMK Development Corp., also is offering mortgage-rate locks and 3-percent down payment financing to qualified buyers. And, credit stabilization assistance is provided to prospective buyers during the rental period.

The 46-story high-rise is on the southeast corner of Franklin and Van Buren. One-bedroom condos start at $139,900, while 2-bedroom, 2-bath layouts begin at $269,900, and penthouses start at $339,900.


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Don DeBat’s weekly real estate column is syndicated by DeBat Media Services. For more home-buying information visit his website at: www.debatmedia.com.

See other articles related to: rents rise chicago, rent versus buy in chicago

This article originally published at http://chicago.urbanturf.com/articles/article/buying_is_more_affordable_than_renting_with_rent-to-own_programs/5430

2 Comments

  1. Said said at 3:13 am on Thursday June 28, 2012:

    First of all FHA does not allow you to pay for certain fees, but watch out the Lender just remaens them ok?You should be consulting with your Realtor and it should be in writing on the sales contract so the lender knows how to process and close the loan.The Sales Contract should contain EVERYTHING in writing.All you have to do, is tell your agent you want the maximum amount of seller credit allowed to be written and offered in the contract. If your agent doesn’t know how much this amount is, he/she should contact a loan officer to find out.If your agent advises you against this, ask why?  If you aren’t satisfied with this answer, tell your agent you would like to find another agent you feel more comfortable with and you’ll prob. have to sign something, go to the broker of the Agent if you get any crap.  Your agent is getting a commission prob. 3% of the sales price, so you are paying your realtor to work for you in your best behalf.On the flip side of the coin, think about how bad you want this place. The worse the sellers can do is come back with a counter offer or reject your offer, more likely they’ll counter.Good luck.  Was this answer helpful?

  1. Hammerman said at 11:54 am on Friday August 31, 2012:

    Hmm Chicago is turning into New York..

    Why turn over $20,000 up front to rent from the bank?

    You will be lucky to get your invenstment when you sell.

    Housing isnt an investment anymore. It’s a place to live. The only time in 2012 where buying makes sense over renting is if the specific area’s rent is much higher then the cost of ownership….However when you buy in Chicago your optinos are to rent it out for profit or to own it FOR THE LIFE of the loan.

    Dont get fulled with all the data coming out in 2012, it’s baised and just another way for consumer to think the bottom is now. If you have any economic education you know housing values wont increase until wages and growth are injected into socciety.. You will see this when rates start to go back up.

    1 percent and the banks are skewing the prices of houses. The 1 percent are buying through hedge funds and bank credit lines. The banks are withholding inventory to the average buyer. It is a scam, but I don’t know how long it will last or if it will crash again.

    Over the long run, wages are declining, so that fewer Americans will be able to own the homes. However, speculators the world over are buying up America, including these homes. I am sure that this worker rent, wealthy own scenario has been going on in NYC for a long time, way before the housing bubble. But it isn’t something that Americans elsewhere are used to. They don’t like it. The rents don’t reflect a decline in wages. The wealthy and the banks are forcing multigenerational living and a distaste for ownership of anything except an ipad for the young.

    The banks and the wealthy are playing with fire by risking a permanent lifestyle change in the nation.

Mark Fischer

@properties

312-961-7232

Serving:

River Forest

West Town

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