We are trying to decide whether to start working with another investor/realtor doing lease purchases. With his method, the goal would be for the renters to qualify to buy the home in a year. My concern is the economy right now and it being harder to get loans. He said they haven’t had one person yet not buy the home, but I’m afraid that because of the lending situation that people may not qualify after a year as easily as they have in the past. I would greatly appreciate any input on this subject.
With 12 on-time payments you should be able to get them qualified without a problem. You probably want to talk to a mortgage broker in your area first though.
My initial thoughts for the realtor/investor would be -
If he hasn’t has any that weren’t able to purchase in 12 mos on their own financing…
How many have they done?
Are they scrutinizing their credit before they sign the lease/option agreement, and what standards are they looking for?
What are they doing in those 12 mos to work with them?
How long is it taking them to get a tenant/buyer in the property?
From what I have seen and learned, a Rent to Own or Lease Option will drive alot of interest and calls - but you may not get the right tenant/buyers in there the first time and they may not be able to buy. I’ve heard that it’s pretty hit and miss. So asking those questions should give you a good idea on what they are doing to have results that high.
I agree with stevie. Every ‘expert’ will agree that, at most, HALF of the tbs will end up buying. I’ve never heard of anyone getting everyone to buy. Pretty amazing if it’s true.
I have one that I am listing now. I talked to a mortgage broker and he is going to prescreen all applicants. In return, I will be having the applicant finance through him.
I would also ask that mortgage broker to send you any purchase turndowns that may have credit issues, but do have a small downpayment and you can contact them for tenant buyer leads.
What I tell my TB is this…I will do everything in my power to set you up to be able to by this property…So I will need you to help me help you…By this I mean getting all your monthly bill together ie car payment, credit cards anything that can be paid off. I will also need you to get set up in our credit repair program that I will refund to you 100% once you buy our property. Then what I do is show them how to paydown there debt by using the money they already have, while getting there credit in line. So when it comes time to buy the property all there ducks are in a row. This takes a little more work but in the end if they don’t buy for any reason, and try to get there option consideration back. I have all this documentation showing that one the option consideration is non refundable and that I did everything in my power to help them out.
Can someone elaborate more on using a credit repair program. Does anyone recommend a particular company. This sounds like a great idea to ensure the t/b is able to qualify.
I have 2 Mortgage Brokers as part of my team, they help people improve their credit too, not all do. Its just good business practice for them and me. I trust these people more than I would some companys.
herbster