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Area builders now offer rent-to-own programs
By Jean Murphy | Daily Herald Correspondent

Russ Ondo and Harley, one of his two daughters, will soon enjoy Ondo's new townhouse he'll lease in the Tramore community through Gallagher Homes' rent-to-own program.


Courtesy of Gallagher Homes

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Published: 6/20/2009 10:46 PM

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Necessity is the mother of invention, as they say, and in these challenging times, builders are coming up with a variety of programs designed to entice potential buyers to purchase a home.

Some builders, for instance, are offering the opportunity for hopeful buyers to rent a new home for a year or two and then apply a portion of their rent toward the down payment or toward a reduction in the home price.

Russ Ondo is participating in such a program at Tramore, a Gallagher Homes townhouse development in Manhattan.

The general sales manager for a South suburban car dealership has been living with his brother for the past seven or eight months as he tries to recover financially from a recent divorce.

"I was looking for a place to rent on Craig's List and I saw a listing for Tramore and its rent-to-own program," Ondo said. "I have some credit issues and I knew that I couldn't afford to buy right now, so I called Tramore and then stopped by to take a look.

"I fell in love with the place. The craftsmanship is unbelievable and each unit is totally different. It isn't one of those cookie-cutter places," he said.

Ondo talked to representatives from Gallagher Homes and, after credit checks and several meetings, they agreed to lease him a home in the hope that he will buy it within two years.

"I am absolutely planning to buy the townhouse because I would love to own my own home," the father of two young daughters explained. "It just is not feasible right now. But this is a great option for me.

"I am starting from the bare-bones again because of the divorce and I have been in the car business for 21 years and it hasn't been going well lately. But with this townhouse, for once I had a break go my way," Ondo said. "This is a real blessing for me - a second chance."

Since the townhouses are still under construction, Ondo even had the opportunity to pick out the tile, carpet and countertops that he would like to have. He expects to move in to his new two-bedroom, 21/2-bath townhouse by the end of July.

"We are offering this lease-to-own program for people who have decent credit, but not great credit, who we trust want to get to the finish line and buy a home," said Daniel Gallagher, sales manager for Gallagher Homes, which is building the 150-townhouse community.

"We run a credit report on people and act like a bank, financing the rental for two years," he said.

"We have been helping a wide scope of people who can't buy right now because they don't have the money for a down payment or because their credit isn't great," Gallagher said. "We have seen younger couples, families and divorced people all interested in the program and currently have two units people have moved into under this program and four more contracts pending."

Tramore began sales just in time to hit the worst real estate market in 30 years, according to Gallagher.

"The reality was that people aren't able to get financing very easily right now and our units weren't moving, so we decided to offer this program, at least through the end of the summer," he said.

"We are taking a huge risk by fronting the funds in the hopes that they can get their own financing within the next two years and buy the home from us," Gallagher said.

For more information, call (866) 900-8535 or visit

The rent-to-own option is becoming popular with other builders, as well.

Wilcox Development, an Epcon Communities Builder, is offering a similar program at their Villas at the Sonatas duplex community in Woodstock.

They are allowing 70 percent of the rent paid to be used toward the purchase price of that home, as long as the renters close and become buyers within one year of moving in.

"This program is targeted toward people who are in life transition like a job change, divorce or those waiting for an insurance settlement," said Jamie Wilcox, president.

"It allows people to start enjoying the lifestyle we offer here and join the community while they get these other things worked out.

"This is just another tool for helping people who otherwise would have to wait to buy and everyone we have worked with so far has moved in and become very engaged, active members of the Villas at the Sonatas community," Wilcox said.

Call (800) 466-4644 or visit

Fidelity Wes has townhouse communities in Roselle and Palatine where they are offering a rent-to-own program, as well.

Both The Gables in Roselle and Preserves at Hilltop in Palatine are new communities under construction, according to Mike DeMar, vice president.

"There are a lot of good people out there who kind of screwed up somewhere along the way and got overextended," DeMar said. "We see this as a perfect way to get them back on track and into a home."

They are offering to rent new townhouses (which range in size from 1,800 to 2,500 square feet and feature basements) for $1,800 per month and $300 per month of that gets applied toward equity in the home.

The hopeful buyers also get to choose their own options since the townhouses are not yet built and if they choose more than $10,000 in options, only one percent is added to the monthly rent. In addition, the purchase price is fixed for two years. A security deposit equivalent to a month and a half of rent is required.

"Before we started offering this program, people just wouldn't make a decision," DeMar explained. "It is hard times out there and now people are most appreciative of this option. We have seven people taking advantage of it in Roselle and two so far in Palatine."

For more information about the Fidelty Wes program, call (847) 934-7250 or visit

KLM Builders is offering a rent-to-own program at Sunset Ridge in Spring Grove where they have eight new models with base prices starting at $189,000.

"We are just rolling out a program in which we are allowing people to stabilize their job situation or save money for a down payment or whatever and we expect to offer it through the end of the year. Then we will re-evaluate," said Kim Meier, president of KLM.

For a maximum of two years people can rent a new single-family home from KLM and then apply one-third of the rent they paid toward a down payment on that particular house.

"In most cases, through this program they will be able to save enough to qualify for FHA financing," Meier said.

"Some of the people who are interested are recently divorced and starting over, but the largest pool of buyers right now are the first-time buyers who have nothing to sell and are aspiring to be homeowners," Meier said. "We see this as another option for them and we are doing something that allows them to bypass the townhouse stage and move right into a single-family home."

For more information about the KLM program, call (815) 678-4018 or visit

Optima Inc. is offering a lease-to-own program on a very limited number of condominiums in their Optima Old Orchard Woods development in Skokie.

According to Andrew Zajac, vice president of sales and marketing, one year leases are being offered with the option of applying half of the rent toward the purchase of that condominium. They are available on one-bedroom, two-bedroom and three-bedroom units. Call (847) 583-4700 or

Gateway Centre Development is also getting into the business of renting to own at The Gallery at Gateway Centre, a condominium complex in West Chicago that is 65 percent sold.

"If someone rents from us and after one or two years they aren't behind in their rent or in default, we will apply 15 percent of what they paid their first year and 20 percent of what they paid their second year toward the purchase price," said Jim Madden Sr., president.

A $1,500 upfront payment (which will be eventually deducted from the purchase price) is also required. For information, call (630) 562-1880 or visit

Marquette Cos. is also offering this type of program at The Ponds of Naperville.

Prospective buyers who are not yet ready financially to purchase a home can sign a one-year lease, as well as a contract to purchase their home at the end of the lease. After one year, Marquette will put 100 percent of the rent paid toward the purchase price of the home, which is typically 8 percent of the purchase price. This is done by reducing the purchase price by 5 percent and providing an additional 3 percent to cover closing costs or assessments, whichever the buyer prefers.

For information, call (630) 848-0488 or visit

In Countryside, the Conneely Group is offering a rent-to-own program at its 108-unit Clocktower Pointe condominium development.

"Luxury condominium renters sign a one-year lease, plus a contract to purchase their residence at Clocktower Pointe, and half of their $2,500 per month rent will be applied toward their down payment at closing at the end of the year," explained Ron Rydin of TCD Properties, the marketing agent for the development.

"Our rent-to-own program helps prospective condo buyers save $15,000 in down payment cash while they reside in a luxury condominium for a year and effectively pay $1,250 a month in actual rent," he said.

Condominiums at Clocktower Pointe sell for base prices ranging from $449,900 to $464,900. Call (708) 516-8510 or visit

DonnaMarie Beach, vice president of Shodeen Management, said the company recently started a rent-to-own program, as well. But its program works differently.

Shodeen manages apartment complexes and it has a new community, Mill Creek in Geneva, that it is building and selling. Mill Creek includes single-family homes, townhouses, row houses and villas.

Under the Shodeen program, anyone who rents an apartment in one of their seven complexes in Geneva and St. Charles will earn home credits they can later use to purchase a Shodeen home.

"We wanted to add a spark that would encourage people to rent from us and would help people who are just starting out," Beach said.

Under the program, you must rent from Shodeen for at least 12 months and you can earn credits for a maximum of 18 months. The home credits equate to a percentage discount on the price of a new home and that credit can be used toward the down payment, the purchase price or toward options like upgraded countertops.

Beach estimates that a renter can earn credits up to 2 percent of the purchase price of a home over an 18-month period. For information, call (630) 232-8570 or visit