Rent to own

I think top selling list is by number sold rather than percentage sold. There are many which are fully sold. Lazy reporter.

If the rent is high enough say $7-8 per square ft per month, it seems like a good strategy.

Curious why you see it as a good strategy. I suppose it all depends on the contract. Is the sale price guaranteed not to exceed X? How long can the rental go before a purchase decision must be made? Can the sponsor sell to someone else during the rental and tell the tenant "too bad, so sad"? Is the rental rate guaranteed not to rise?

Are they the only one offering this?

Since they have not been able to sell say 50 percent of the apartments, they can get an inventory loan. If the rent is high enough, they can make positive carry or break-even, live another 2 years, and people renting there have an incentive to buy there due to percentage of rent refund.

Also I am sure, they do not plan or expect to rent out all the units. There will be plenty left for buyers.

This can be interesting for a buyer if the terms are favorable: You get to live in a brand new luxury condo at negotiated fair market rent. You have the option to buy or walk away after one year. Do your best to negotiate a good sale price for end of term. Then you get a 75% credit of rent paid and maybe a commission rebate if you're really smart (;

Keith

With some rounding for ease of calculation and based on the info in the listing for 20C: Asking price $7.6m. potential rent: 3200sf @ 200_m's # of $7.50/sf/mo: $24k/mo or $288k/yr. 75% of that: $216k.
$216k / $7.6m = a 'discount' off ask of ~2.8% per year of rent -- I assume there's a time limit on renwals and you can't fully 'rent to own'. Could you walk in now and buy it for 5% off ask? A quick look at other sales indicate that you could. Not sure this is such a great deal, except for the indecisive (unless my math is off).

Your math makes sense. However, I would think a renter can negotiate a discount at the time purchase and get additional kicker.

It's a nice option for those worried about where the markets going in a year.

Renting will make renter a little bit committed. Renter as they do not have to move and get some money off in their mind even though some one else could have negotiated a lower price in the absence of 75 percent credit.

Also the mentality of if they move/don't buy then they "lose" the credit.

"It's a nice option for those worried about where the markets going in a year."

Yes, but it's also a Sponsor punting and admitting that that chances of finishing the conversion and selling out within the next year or two are essentially zero. This would have been totally unthinkable 2 or 3 years ago, and is a sign of what Sponsors are anticipating in the market. No Sponsor who thought the market was rebounding would pull the trigger on this.