Benefits to the Tenant
Major benefits in addition to the equity and security are:
- A clean, functional home. We deliver a freshly painted and cleaned home, sometimes with new carpet, tile, and other improvements. The tenants can identify with the home and they see it as a suitable property to own. Tenants have added improvements, sprinkler systems, dishwashers, and other improvements to increase their use and enjoyment of the property.
- Fixed monthly payments for two years. The payments are set, but they increase each year. The increase is normally four or five percent, and is attributed to the ever-increasing taxes and insurance. There is consolation in the fact that the increases will not be any larger than stated.
- Fixed credits for care of the home. The credit of $100 per month, or per the contract, will establish a FHA 3% down payment, when combined with the deposit. In doing hundreds of these contracts, it is evident that these tenants do more maintenance than the average renter, but certainly not all. They will not repair a roof, or replace an air conditioner, except in rare occasions.
- Credit for all deposits. The tenant receives down payment credit for what would normally be a last month’s rent and security deposit. They view this as a positive use for applying to the down payment, rather than funds wasted for rent and security. When tenants do not buy, which happens some of the time, the funds held for a down payment will be used as the last month’s rent, and a security deposit, regardless of what the documents say. When the tenant is unable to buy, and decides to move, they will not pay the last month’s rent, or additional security. The funds held usually cover the unpaid rent and damages.
- Credit counseling. The lessor-landlord can increase or decrease the number of tenants buying these optioned properties. If they do nothing, and force the tenant to get their own mortgage financing, some will do that.
- If the lessor:
- counsels the tenant, and reviews their credit report with them, advises on negative items, and how to remove them, and
- connects them with an experienced and aggressive mortgage broker, many more will close.
- It has beed shown that a single parent, with three children, many credit problems, and student loans, work their way through the process and close on a FHA loan.
- A fixed sales price for a set time. The price is usually set at neighborhood comparable list prices, which the buyer can verify. When the property is sold, without a Realtor™, vacancy, and with fewer repairs, the net to the seller has been acceptable, even with an increase in market prices.
- Fair and non-Discriminatory Pricing. At this time, we are seeing some appreciation in some New York State Housing markets, and an alternate pricing formula could be used. A fixed price could be held for one year, and an appraised price anytime after the first year. The average of three appraisals approach could be used to remove risks for either party.
- Extensions can be offered to responsible parties to extend their leases and option to purchase agreements.
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