I’ve never had a client ask for a “lease to own” deal. And, I’m glad about that. They seem confusing and fraught will complexity and risk.

Anyway, here’s how I see it might work, with a little help from the Wall Street Journal.

Suppose you found a home you liked but you weren’t in the position to make an offer – maybe you don’t have enough of a down payment or maybe you’re rebuilding your credit or something.

And, suppose you’re an owner of a home that just won’t sell, no matter what you do. Well, suppose you’d do anything but lower the price, maybe because you owe more than you can sell it for or you’re too stubborn to lower the price. Maybe you’ve had it on the market for months with no activity. Your agent says it’s the price but you say it’s the market.

In a situation such as this, perhaps it would make sense to work out a rent-to-own deal. The buyer and seller first come up with a price on the property – perhaps it’s less than what the owner thinks it’s worth but more than what the buyer thinks it’s worth. The idea is, the buyer gets a home for less because he/she is willing to commit to buying it today, during the recession, while the seller now has a buyer who is willing to pay at least close to what the seller thinks the property is worth. The downside to the seller is that he/she isn’t getting the money from the sale right away, so may not be able to buy another property. The seller becomes a landlord.

The buyer-renter would work out a price to rent the apartment from the owner for a year or two. Most-likely, this would be market rent, although I can see it being a bit above market if the buyer and seller agree that the excess would go toward the purchase price of the property. The seller likes this because he/she gets a steady stream of income, which is better than nothing and perhaps enough to cover the owner’s outstanding mortgage.

The buyer would also be required to put up a deposit toward the purchase price of the property – say 0.5 – 2.0 percent. This would be non-refundable. It wouldn’t be held in escrow, I don’t think, it would be the seller’s to keep, no matter what happens. It’s the risk the buyer would have to take. The seller would like this because he/she gets some money right away.

This might make sense to you but I can’t seeing it as being a popular situation. When owners want to sell their properties, they want to sell, not be stuck in a contract for years. Buyers usually want to buy, they don’t want a landlord looking over their shoulders.

Let’s use a real life scenario. Suppose you love Manny Ramirez’s home in the Ritz Carlton Towers. It’s listed for $6,900,000 (originally listed for $8.5 million). You like it, a lot, but you don’t want to spend more than $6.5 million. The property’s been sitting vacant for two years now, with no change to the price. He’s got a mortgage on the property so each month it’s empty he’s losing money. You come along and offer $25,000 per month in rent (that’s what it’s listed for in MLSPIN). He says, sure, I’ll take your $25,000 per month (try to talk him down to $22,000) and agrees to sell it to you for $6.5 million, as long as you pay $65,000 up-front as a deposit toward the purchase price.

What do you get? A long-term lease at the market rate for a rental of this quality at $22,000 as well as a sweet price on a trophy property. The $65,000 you pay up front will go toward the purchase, but even if you don’t buy, you’re basically paying $65,000 today versus an additional $2,708 each month for the next two years, or, $25,000.

If you decide not to buy, you walk away in two years with no further obligations. He has your $22,000 plus your monthly rent payments and he can relist it for sale at whatever price he wants or what the market will accept.

What does he get? Cash flow.

The risks are obvious. To him, he has to worry that he sold too low. Who knows what the market will be like, two years from now. To you, you’ll worry that you’ll find a “better” property during the next two years, or that you’ve signed a contract to lease for the next two years. Even if you don’t end up buying, the lease is a contract and you’ll be required to pay.

So, again, this works only in rare cases.

If you think it might work in your case, let me know. Especially if you want to buy Manny Ramirez’s place.

Photo above courtesy of MLSPIN

The Mortgage Bankers Association reports that average 30-year mortgage loan rates rose last week to 4.66 percent. The average contract interest rate increased for the fourth consecutive week and is at the highest level since July 2010. The effective rate also increased from last week. Rates are still lower than their two year average but higher from the all-time low, last October.

The Refinance Index decreased 1.4 percent from the previous week. This is the fourth weekly decrease for the Refinance Index which reached its lowest level since June 2010. Refinancing activity as a share of all loans increased to over 75 percent. Adjustable-rate mortgage loans made up less than six percent of new loans.

What the future holds is an open question. I suspect rates will stay low but at some point, all this borrowing by the government is sure to have an effect. You don’t need to be an economist to understand that.

The advantage of rates slowly creeping up (at least for me …) is that it may encourage some people to get off the fence and act, buying a home. “Rates will never be this low” has been the constant cry of agents across the country – and it’s actually probably true.

True fact: for the first time in recorded history, more people live in cities than in the country.

What does this mean for all of us, Americans, Bostonians, urbaneers?

It means we’ll need to analyze everything we do through a difference lens than before. How do we take care of the very poor and the very rich, what types of housing will we build for the middle class, what will new public schools look like, what types of public transportation will be built, and how will we pay for it all?

We need to focus on new ways of doing things if we’re going to make this all work. We need wise and practical land use policies while addressing the needs of current but also future residents.

This blog will cover all this, and more!

Over the past five years, Bostonians have become quite familiar with the European idea of car sharing.  The abundance of Zipcars throughout the city has created a system that truly allows city-dwellers to say goodbye to their personal cars… for good.  Take a walk through Boston, ask around, you will find an overwhelming number of people who know where they can get a car for a weekend trip, a day of moving or even for an hour to drive over to the grocery store.  They will all say Zipcar.

Since the formation of the company, Zipcar has maintained a monopoly on the car sharing market.  Recently however, as quality of service, cleanliness of vehicles, and dated technology has been brought into question, a new compeditor has been able to get their foot in the door.

The Somerville-based company iCar (www.icarsharing.com), Wheels to Go began accepting members in August of this year and has seen success right off the bat.  Boasting significantly better service, unparalleled technology and better rates, they are certainly worth discussing, or possibly switching over all together.

Take a look at their press release below and share your thoughts!

Click to Download iCar Press Release: 11.16.10 PDF

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Mayor Thomas Menino and Governor Deval Patrick met Monday to break ground on the new Yawkey Commuter Rail Station reconstruction project, the public transportation aspect of the Fenway Center development project.  The Fenway Center development project has been cited to be one of the best things that will have happened to the Fenway area since Fenway Park.  Yawkey Station is just the beginning and Mayor Menino expects more great things to come.

The $450 million Fenway Center development project will include more than 330 apartments, 370,000 square feet of office space, 150,000 square feet of retail space, more than 30,000 square feet of park space, and over 1,000 parking spaces.  In addition, as part of the new development, Yawkey Station is to be built into a full-service commuter rail station with full-length accessible station platforms providing access from Beacon Street and Brookline Avenue.

The station construction, which commenced today and is slated to be completed in the Spring of 2012, is expected to create 150-200 jobs to the area, a bit of fresh air to an area that has seen construction halted in the recent years.  Additionally, it is expected to increase accessibility to the area, as well as reduce vehicle traffic which has become and continues to be an increasing problem in the area.

“The new Yawkey Station is going to bring real benefits to our city and improve how people access the Fenway and Longwood Medical Area,” said Mayor Menino. “It will make traveling to and from this area easier and ease traffic on city streets while also putting 200 people back to work through the construction. Separately, the new station signifies the beginning of the larger Fenway Center project, which will significantly transform the public realm between Kenmore Square, Fenway and the Audubon Circle with the creation of a number of new amenities including retail space, housing, and new green space.”