Lease options/lease purchases and/or renting to own is not the right scenario for everyone. You truly need to be committed to improving your credit and, after the analysis of a lender, it needs to be realistic that you will be able to actually repair your credit within a 12-24 month time period.
I work with a company that will have an investor purchase the home of your choice. You will essentially need to pay about $3750 upfront, and then you will also have to front the earnest deposit at time of contract. The earnest deposit is credited towards your future purchase. So, I would expect your total out of pocket expense to be around $5000-$6000.
There are benefits to doing a lease purchase/option, especially in this market. You don't have to worry about moving again, and you can treat your home like it is truly yours. It is also an advantage in a market like this, to lock in your price while the market is so ripe with great deals. We enjoy great success in helping families to gain home ownership and look forward to helping you get into a home which makes sense financially and meets your desires.
Letâ€™s review your benefits. The goal is to create a win-win for you and an investor who will be the bank for you. The investor will use his good credit and pay the down payment and fees to purchase the home of your choice. Your investor will expect you to cover the monthly cost and will make a nominal return of 10% when you become financeable after working with a credit consultant. This fee can be completely offset through the negotiation process when we make an offer on your home. You may have heard this before: â€œYou make money on a home when you buy it not when you sell it.â€
The key to a successful transaction is negotiation. Good negotiation equals a good deal. This is why they provide a local buyers real estate agent (me) who is good at finding the right type of house. Discuss with me what type of home you want, what area you would like to live in, and what price fits within your budget. Work with me to negotiate the best price. Think of it this way: The better the deal the more money in your pocket (equity) when it is time to get the home refinanced in your name.
Here is an example of how we can create a winâ€“win opportunity. Letâ€™s assume you and I find a nice home worth $200,000 and the seller/bank is motivated to sell and open to negotiate. Most buyers are motivated as the market is a â€œbuyerâ€™s marketâ€ today. Great discounts can be found in the short sale and or bank owned properties today as there are an abundance of them.
$200,000 House value (based on an evaluation of recent closed comparable properties)
$-40,000 (20% discount)
$160,000 Purchase price
$ + 5,000 Closing cost/fees est.
$165,000 Investors purchase price
$ 16,500 Investorâ€™s 10% gain
$181,500 Buyback price for you within 2 years
$-200,000 House value
$18,500 Your equity in the home
In this example you would have an equity position of $18,500 through the negotiation of the purchase price. In addition, the home should appreciate in value during the lease term.
Letâ€™s say the home appreciates at a nominal rate of 5% a year:
$200,000 House value
X 5% Appreciation rate
$10,000 Equity in one year
In one year this would create a house value of $210,000 and your contract price of $181,500 gives you a total equity position of $28,500! If you had to go another year there could be even more equity available to you.
Buying a home can be an emotional decision but you also want to make it a wise financial decision. Our goal is to help you get into a home and make money doing so while we assist you in improving your credit. We want to help you find the right home that makes sense. We want to help you get back on your feet and into home ownership. We understand that you have some credit issues. We understand these credit issues are probably serious enough to have stopped you from pursuing your dreams of owning a home. Do not give up, but be very serious about your ability to pay for your new purchase. The purchase of a home should be based on your current income and not on income what may or may not be coming. We do not want to put you or our investors at risk. We want this to be a solid start for your new future.
As stated above, we understand you have credit issues. We will base our ability to help you on the belief we will be able to get the home financed in your name within a two year period. Contact me if you would like to learn more about the program.