Not sure whether to rent or buy a home? Meet the middle ground, rent-to-own.

Although rare, rent-to-own properties are in the spotlight amid reports that President Trump may build up to 1 million “Trump Homes” that would start out as rentals with the option to buy. The idea has also spawned specialized listing sites, such as Rent To Own Labs, and attracted celebrity backers, like Jay-Z and Will Smith.

Sounds great in theory…but does it work?

Investor Shayla Dempsey of Four 19 Properties tested the model recently on three single-family homes in Texas. “Rents were roughly $1,450 to $1,700, and we credited about $250 to $300 per month toward the purchase price,” she explains. “Most had the option to buy in two to three years.”

The outcome was mixed. One tenant purchased her home after three years. The other two deals fell through—one after a job loss, the other due to relocation. Dempsey learned that this arrangement has its pros and cons. “Since these tenants had skin in the game, they treated the homes better,” she explains, adding many were happy to wait on repairs or fix things themselves. The downside? “These transactions require more communication. If you don’t have everything documented, it won’t take long before issues arise.”

A rent-to-own reality check

Dempsey’s experience reflects why rent-to-own has struggled to gain traction. Even larger institutional investors have fumbled: Divvy Homes and Blackstone’s Home Partners of America both shut down their rent-to-own programs last year.

“Many assume it’s easy to switch from tenant to owner, but circumstances can change,” says Matt Bigach at Nexus Homebuyers in Knoxville, TN, who has tried five rent-to-own arrangements. Two parties ended up buying their homes. “Both were focused from day one: stable income, improving their credit, taking care of the properties. You could tell they already saw the homes as theirs.” As for the three who did not, Bigach says, “One moved for a job. One got divorced. The other couldn’t qualify for a mortgage once lending tightened. That’s the reality with rent-to-own.”

Even in the best-case scenarios where renters do end up buying, investors often lose out.

“Landlords assume a lot of risk. Typically, a purchase price is pre-negotiated, and if the market goes up, tenants are in a great position to get a deal,” explains Sierus Erdelyi, a Los Angeles real estate attorney and broker at TruLine Realty. “But if the market goes down, the tenant simply doesn’t exercise their option. Rent-to-own is a fool’s errand.”

Still, Dempsey isn’t writing off the strategy.

“Would I do it again? Yes, but we screen much harder now and talk through expectations early,” says Dempsey. “When it works, it’s a great bridge to homeownership, but it has to be structured carefully. Rent-to-own is a serious commitment.”

Where we’re moving: Americans flocked to the Carolinas and Idaho last year. Want to guess the states they fled?

America’s fastest (and slowest) markets: In San Jose, CA, homes sell in just 25 days according to Redfin. Meanwhile, one of the fastest markets 10 years ago is now the slowest of all.

The almighty McMansion is dead. Time of death? 2026. And as overbuilding falls out of style, some men may lament the demise of their favorite room.

Foreclosures are knocking. ATTOM found that bank-owned properties nearly doubled in December year over year. Here’s where these bargains are hiding.

An unexpected injection of capital: How one investor turned $1m in student loans into a $3m real estate portfolio using this overlooked funding source.

Heartbreaking: 42% of Gen Z and millennial renters linger in relationships because moving out costs too much. But while they’re willing to compromise on matters of the heart, they still have three real estate non-negotiables.

The Breaking Bad house has a buyer. After a bloodbath of a price cut from $4 million to $400,000, the iconic New Mexico home may now belong to a famous fan with grand plans. Here’s to hoping roof pizza’s on the menu.

An old grain elevator near Fargo, ND, just went to market for $325,000—and once you step inside, the steep price (at least by grain-elevator standards) makes sense: Architect Scott Dahms transformed this dilapidated structure into an indoor amusement park with a spiral slide and climbing wall that has become an Airbnb hit. Here’s how he put it together.

Q: What inspired you to buy a grain elevator? “I went through a divorce, and when you get divorced, you do crazy things. I also needed a place with space for my two boys. So in 2017, I bought a grain elevator off Craigslist for $15,000 and started renovating. I absolutely did not pay attention to how much time or money I spent because I just didn’t want to know. You don’t buy an RV for the gas mileage. How many people’s dreams have been squandered because they didn’t make sense on paper?”

Q: What was the biggest renovation challenge? “Energy efficiency and heating costs. January is when the propane company loves me, and it’ll cost around $1,600.”

Q: And it’s an Airbnb? “I wasn’t spending much time there, so I tried renting it out when I wasn’t there. Even with me living there half the time, it brings in $50k–$60k per year. And it has huge potential where an investor could add more units.”

Q: What advice would you have for the next owner? “I’m no banker, but I doubt it will qualify for a conventional loan since there are no comparables, but there are ways around that. And now that I’ve done the heavy lifting, it has become a sustainable investment. My biggest advice to whoever buys this is to stay in touch with me. I’m not going to dump this on someone and walk away, because I care about it.”

Q: Will you miss having this place as your own? “I’ve had some great parties there. My first party there was a Footloose-themed party because that movie’s finale features a grain elevator. People came up to me and were like, ‘We thought you went out to the deep end.’ And now those same people are just blown away.”

Click here to check out more photos of this against-the-grain listing.

Falling mortgage rates have made housing more affordable this year, with Americans now needing to earn about $111,000 annually to afford the typical US home. That’s how Stephanie Maupin knew the time was right to buy her home in Columbus, OH. “I ran scenarios across different interest rates to understand how small changes affected monthly costs,” she explains. “I also actively improved my credit score, which helped me secure a better rate.”

In many places, buying is becoming more competitive with renting. According to ATTOM, homeownership is now more affordable than renting in nearly 58% of U.S. markets. That makes comparing local costs a smart first step—using a rent-or-buy calculator can quickly clarify the math.

“After my last rent hike, I realized I was paying more for a two-bedroom apartment than some of my friends were paying for their mortgages,” recalls Leslie Johnson about the moment she decided to buy in Dallas.

Another point of consideration is the 28/36 rule, which says that you should pay no more than 28% of your pre-tax income on housing and no more than 36% on all debts, mortgage included. So if you’re earning $10,000 per month, you can comfortably afford $2,800 for a house and $3,600 on your mortgage, college loans, and other IOUs. Going over this limit might stretch your finances thin.

Still, experts advise against obsessing over timing the market perfectly.

“If you find a house you love and the monthly payment fits your budget, that is the right time,” says Johnson. “When my desire for a backyard for my dog outweighed my fear of a 30-year loan, I knew I was ready.”

Got a question about real estate? Share it here, and we’ll answer it in a future issue.

This week, we head to the Triangle and hear from Ryan Smith at Cinch Home Buyers, who has flipped over 200 homes in this area of North Carolina.

Average home price: $424,924 (Down 2.8% YoY)
Homes that sell over list price: 13.2%
Homes that sell under list price: 70.6%
Average rent: $1,574

The pros: Rentals in the Research Triangle—the tech-and-research hub connecting Raleigh, Durham, and Chapel Hill—are like winning the landlord lottery. “The tenant quality here is the best in the Southeast,” says Smith. “Investors aren’t just getting rent checks, they’re getting rent checks from software engineers and PhDs. While prices have corrected slightly from their peak, the floor is incredibly high because we have close to 100 people moving here every single day.”

The cons: North Carolina real estate practice typically requires a nonrefundable “due diligence” fee from a prospective buyer, paid directly to the seller, to obtain the right to inspect the property. In competitive markets like Wake County, home to Raleigh, this fee can be substantial. “If you walk away, you lose that money,” Smith warns. “It forces you to be deadly serious about your numbers before you make an offer.”

His advice: “Be careful with ‘luxury condos’ in Downtown Raleigh. We have an influx of supply, and I see stagnation there,” Smith says. “If you want to get rich slow and stay rich forever, buy around the Outer Ring of Highway 540 in Fuquay-Varina, Wendell, and Knightdale. These towns used to be ‘too far,’ but the new highway loops have cut commute times by a fourth. You can still buy a three-bedroom, two-bath house here for under $375k that rents for $2,200. That math doesn’t work inside the Raleigh beltline anymore. The Outer Ring and I-440 up to Durham is where this generation’s gold is made.”