This is a company in Burlington that specializes in investment real estate.
I have some of their promotional materials and am considereing attending one of their seminars but I don't want to go until I have my head around the program.
It involves a rent-to-buy program where an investor buys a property for, say $215,000 and then turns around and rents it out to someone who is interested in eventually buying the propery. The investor collects an up-front option payment from the tenant (e.g. $10,000) and then agrees to a contract whereby the tenant purchases the property in three (3) years for $249,000. So the investor's profit is the appreciated value plus positive cash flow, if any.
What I don't understand is why the tenant/prospective owner wouldn't just buy the the property themselves (or a similar one) for $215,000 or thereabouts?? Assuming they don't have the large enough down payment, why would they be able to handle a more expensive purchase three years hence? And how could such a future contract be enforced? The tenant/owner could be in a worse, not better, financial position and may be unable to conclude the deal. Also, what if housing prices drop in 3 years? And mortgage interest rates can't be locked in for more than a few weeks not a few years - - rates could be significantly higher in 3 years?
Anyone who can provide comment and insight on this would be much appreciated. Thanks to all in advance
Drooler
I have some of their promotional materials and am considereing attending one of their seminars but I don't want to go until I have my head around the program.
It involves a rent-to-buy program where an investor buys a property for, say $215,000 and then turns around and rents it out to someone who is interested in eventually buying the propery. The investor collects an up-front option payment from the tenant (e.g. $10,000) and then agrees to a contract whereby the tenant purchases the property in three (3) years for $249,000. So the investor's profit is the appreciated value plus positive cash flow, if any.
What I don't understand is why the tenant/prospective owner wouldn't just buy the the property themselves (or a similar one) for $215,000 or thereabouts?? Assuming they don't have the large enough down payment, why would they be able to handle a more expensive purchase three years hence? And how could such a future contract be enforced? The tenant/owner could be in a worse, not better, financial position and may be unable to conclude the deal. Also, what if housing prices drop in 3 years? And mortgage interest rates can't be locked in for more than a few weeks not a few years - - rates could be significantly higher in 3 years?
Anyone who can provide comment and insight on this would be much appreciated. Thanks to all in advance
Drooler
