Investing in Lease to Own Real Estate
Lets face it, a lot of people are plagued with credit problems. This can make it difficult to purchase a home.
The good news is that there are some investors that are willing to take the risk on those who have had credit problems by offering lease to own real estate to individuals with less than spectacular credit.
It’s a risky business, but 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.
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