In the long-standing debate between renting and owning, Ashley and Matthew Klein may have found the best of both worlds.
The Annapolis, Md., couple have rented a one-bedroom at Bozzuto’s Mariner Bay apartments since 2010 (1910 Towne Centre Blvd., Annapolis, Md.; 877-584-6145). When they decided to buy, they learned they could get credit for all those months of rent checks — to the tune of $10,000.
“Every renter at some point feels like they’re throwing money away,” says Ashley Klein, 29, a survey specialist at Mathematica Policy Research. “It was nice to know a portion of our rent was going to ultimately buying something.”
The couple is taking advantage of Bozzuto’s SmartRent program, which allows renters at certain properties to earn a $350 credit every month — up to $10,000 — toward closing costs or upgrades on a new condo, townhome or single-family home sold by Bozzuto. The Kleins didn’t know about the program when they first moved in but received credits dating back to the start of their lease. They’re cashing in their $10K toward a two-bedroom rowhouse at Uptown at Murray Hill, also in Annapolis.
“I don’t think we would’ve been able to do a lot of the upgrades without the credit,” Ashley Klein says. “That’s a big chunk.”
The couple says it’s an added comfort to stick with the same company from which they rented.
“It gave us more confidence in making our decision,” says Matthew Klein, 30, who works at Merrill Lynch.
Bozzuto has four apartment communities in D.C. that participate in the program, 35 in Maryland and 13 in Virginia. Renters are automatically enrolled when they sign a Bozzuto lease, says Jamie Gorski, Bozzuto’s senior vice president of corporate marketing.
So far, 15 rental customers have used the credits to buy a new home, Gorski says.
“We’re just really talking about it now,” she says. “We expect it will be really popular.”
Racking Up Credit
Other rent-to-buy programs in the area include Van Metre’s Renter Rewards program. Also known as Rent Plus, the program allows renters to apply their rent payments toward up to 3 percent of the purchase price of a Van Metre home.
Renters can also earn “points” toward upgrades in a new Van Metre home (such as nicer flooring or a washer/dryer) by “liking” the company on Facebook, following it on Twitter or Instagram (each worth 500 points) or visiting a show house (worth 1,000 points). Most of the upgrades require 5,000 points or more.
“We’re able to help people who aren’t able to buy right now,” says Alexis Tsonos, director of marketing at Van Metre Companies. “They know they’re building that credit while they’re here.”
In a slightly different spin on the concept, Equity Residential’s Rent with Equity program credits a portion of monthly rent toward the purchase of a newly built home from a participating building company — up to 3 percent of the total cost – because the rental company doesn’t build or sell homes itself.
“For us, this is a resident retention program,” says Marty McKenna, vice president of investor and public relations at Equity Residential, because residents stay longer when they know they’re accruing credit, he says.
In Bozzuto’s and Van Metre’s programs, the credit is good for a year after you stop leasing with the company. Equity Residential’s credits expire 120 days after you move out.
The Kleins, who are planning to move into their new digs this summer, say more real-estate companies should consider offering such perks.
“It’s nice to feel recognized as being a good renter,” Matthew Klein says.
Not Quite Ready to Buy?
Another option for residents with hopes of buying — but not just yet — is a rent-to-own home. In these arrangements, a sale price is set, and the buyer has a fixed amount of time, typically one to three years, to get a loan and put a down payment on the house. The resident pays rent, usually with a portion going toward the down payment. For example, a monthly payment might be $1,700, with $1,500 going toward rent and $200 toward the deposit.
Usually the landlord takes an initial deposit, as well, all of which goes toward the down payment if the sale goes forward.
“It’s a great way to buy a home,” says real-estate investor and occasional Washington Post columnist Justin Pierce of Snow Goose Homes. “You just need to make sure you’re absolutely capable of closing the deal.”
Rent-to-own agreements have a pretty low success rate, Pierce says, with many people not ultimately buying the home in time. Generally, the renters couldn’t qualify for a loan initially because of bad credit. But there are other reasons to consider these arrangements besides credit problems, Pierce says.
Pierce signed a rent-to-own lease on his current home to allow time to sell his old house and free up some cash.
Rent-to-own isn’t extremely common in D.C., but there is a niche market for it. “You generally see it where it’s difficult to sell,” says real-estate attorney Jamison Taylor of the law firm RISM. “You don’t see a lot of it in more desirable areas.”
Rent-to-own agreements could involve a Realtor, but often they’re negotiated directly with the seller, Pierce says. E.B.