Why this is a lousy time to rent-to-own real estate

With the credit markets tight and struggling sellers desperate to get deals done, "lease options" and "rent to own" deals are no longer just the stuff of late night infomercial hucksters: They're actually attracting interest in the real estate market.

CNNMoney.com reports that "These deals, also called rent-to-own and lease-option, usually require buyers to pay extra rents each month plus up-front fees of about 5% of the purchase price. The regular rent then goes in owner's pocket (presumably to pay the mortgage), but the additional payments are used to buy down the price of the home."

For most prospective home buyers, lease option deals are not a good option at this particular moment in history. Lease options really only have value in situations where home prices are rising so that locking in the right to buy a home at its current market price in 12 to 24 months actually has value.

But with home prices most likely to be flat to down over the next year or so, there is really no good reason to pay extra for the right to buy a specific home at its current price in a year or two. If a home is available for $150,000 now and a comparable home will be available for $150,000 in a year, why would you pay someone for the right to buy it for that price in a year? In rare cases, renters/buyer-hopefuls may be able to find an exceptionally good deal but remember: Time is money. You'll probably be better off renting a house, working as many hours as possible, and saving up cash for a down payment. The intricacies and expenses of finding and putting together rent-to-own deals are completely out of balance with the highly dubious benefits they might yield.