Lease to Own Real Estate: We Can Help
Credit problems plague
people across the globe. These problems can lead to many other problems not
limited to difficulty purchasing vehicles, getting jobs, opening checking
accounts, and purchasing or renting a home. For those who are experiencing
credit problems hope seems like a long lost commodity when it comes to the very
American dream of owning a home of one’s own.
The good news is that there are some savvy investors around that are willing to
take the risk on those who have had credit problems but are attempting to get
their lives back in order. The bad news is that this good will often comes at a
rather high price to the consumers. Getting into trouble with credit takes a
while from which to recover. For many the process is long and filled with pitfalls
and missteps along the way. For those that are living the nightmare of poor
credit there are times in which the situation must seem hopeless.
For this reason investors that offer lease to own real estate to those with
less than spectacular credit are often viewed as saviors on the one hand and
villains on the other. However, they are taking a risk that others are
unwilling to take on a person that has proven not to be the best credit risk in
the business. In other words, many would find that they are justified by
charging a higher price or interest rate than traditional lending institutions
will charge. After all, it is their money that is on the line if the lessee
decides to default on the contract. It is also their money that will be
required to make any repairs that will be needed if eviction becomes a
necessary conclusion.
For investors who are interested in ‘buy and hold’ investing this is one way of
making that system work in their favor. Many times the ‘buyers’ will find
another property after a couple of years and will have essentially rented the
property for a specified amount of time. At other times they will seek
alternative financing once they have been able to straighten out their credit
situations. Either way there are many occasions when the property is returned
to the investor and has turned a relatively decent profit while holding those
who took some degree of ‘pride of ownership’ in the property during that time
rather than ordinary renters who often have little or no regard for the condition
of the landlord’s property.
There is more than one way that a lease to own deal can work. The most common
however, is that there is a specified amount of time typically 2-5 years in
which those that are leasing the property can live in the property with a
portion of the monthly lease being applied towards a down payment for the
property once they are able to get traditional financing. If a twenty percent
down payment is achieved during that time the odds of them being approved for a
loan are greatly improved. If they (being the lessees) combine this opportunity
with serious efforts to improve their credit scores then there should be no
problem achieving this.
As a real estate investor this situation is so much more attractive than
renters for many reasons. First of all, the maintenance in these cases becomes
the problem of the lessees rather than your problem, you have ‘renters’ that
are hoping to have ownership of the property in time, and you can charge a
little more each month for rent in order to cover the money being applied to
the down payment on the property.