Slow Sales Force Massachusetts Condo Developers To Let Customers "Test Drive" Units Thru "Rent/Option To Buy" Arrangements To Unload Excess Inventory

In Massachusetts, The Boston Globe reports:

• The Carruth, a mix of affordable apartments and market-rate condominiums in Dorchester, opened earlier this year, as the market for condos had turned sharply downward. Sales of the 42 condos in the building languished, with only three sold to date. So, developer Trinity Financial Inc. of Boston decided to offer the units as a variation of rent-to-own - leases with an option to purchase at a potential discount.(1) "We've had great success with it so far," said Abby Goldenfarb, project manager for the developer, noting that nearly all of the 20 new renters have signed up for the purchase option.

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• Economic Development Financing Corp., also known by its initials EDFC, is using rent-to-own(2) in three projects now under development. They are the 82-unit downtown Brockton Renaissance Village on the site of two former shoe factories; a downtown Worcester development with more than 150 units on South Main Street; and the 275-unit Residences at Riverview in Mattapan, next to the Massachusetts Bay Transportation Authority's Mattapan station.

For more, including some of the pros and cons of rent-to-own arrangements, see In slow market, developers offer 'test drive' of condos (Rent-to-own results can be mixed, but backers point to filled units and buyers' rebuilt credit).

(1) The Carruth has reportedly advertised its rent-to-own units as "test drives."

(2) According to the story, the deals offered by both Trinity Financial and EDFC are not pure rent-to-own. Renters are not legally bound to purchase, and portions of the rent are not earmarked for down payments. At the Carruth and the EDFC projects, the arrangements are that renters have the option to purchase their units later at a pre-determined price.