Go online and search "lease options." You'll get a lot of information for investors, because that's who they mostly benefit. As an investor myself, I sat through many club meetings where investors spoke about how they structured their deals. They're an investment technique. It doesn't really make sense for a buyer, because prices aren't going up yet, so a buyer might lose out two ways. First, they pay higher up front. Second, the investor will try to get the buyer to take the shortest option period possible, banking on the fact that he/she won't be able to exercise the option by the end of it. Many renters can't qualify for a loan, or they wouldn't do it.
If your buyer's set on doing it, it'll only make sense if you can get the longest option period you can, like five years in this market (good luck talking an investor into that), AND they know they'll be able to qualify at the end of that period. A typical option period is one or two years.
I'm not sure why you'd need a financial company to do the lease option, since there's no loan. It's only rent in the beginning.
I am not aware of first step financial but would like to share an experience about another rental scam.
In the past I have had my listings posted by scam rental agencies online and in print. The renters would be told the property owner is out of country and they would have to do a drive by first. If they liked it then they were to submit a deposit to this "fake agency" and the keys and contract would follow later. The rental rates were about half the normal neighborhood rents, so that was attractive. If the prospective renter was smart they called my number on the sign to discover it was a farse.
Jeff Smith | RealtorÂ® | Your Best Choice!
HÃ”M Sothebyâ€™s International Realty
16909 Avenida De Acacias | Rancho Santa Fe | CA | 92067
858.367.4333 direct | 858.756.1150 office | 858.756.1171 fax
The most common issue is in the amount of "rent" that the seller/buyer will go towards the "down payment". From a financing perspective, only the amount over fair market rent can be credited as a down payment. In other words, if fair market rent is $1000, only funds above that amount would be used in financing calculations. Too many times, the buyer/seller come up with a more agressive plan (say $500, in this example) and the buyer approaches a lender after the fact, thinking they have contributed $500 times number of months and have satisfied their down payment obligations. When, in fact, they have made no down payment and still need to come up with funds for the purchase.
Best advice: Stay away from them all together. Unless, as Cory states, you are an investor looking to take advantage of unsuspecting consumers.
Caller was shocked when I told him: the house you called me about is not for rent, is on sale. Caller said: thank you for the info, that sounded tooooooo good to be true.
Potential buyers: If you cannot afford to purchase a home using a reasonable down payment and financing, you should avoid buying. Period.
That's how we got into this mess in the first place.
Let me know if you research any further, I get a lot of questions from Buyers on this matter.
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