Lease Options - ? - Posted by Gary
Posted by Gary on January 23, 2002 at 16:59:35:
A question for the pro’s on this board.
I’ve been under the impression that investors want to do lease options for three main reasons…
To command a monthly payment higher than what one can expect for rents.
To put a chunk of money in your pocket (consideration)
To put the party leasing the home in a position where they feel it’s in their best interest to purchase it down the road.
I’ve also been under the assumption that the party who leases the home is most likely one who has a few glitches on their credit and perhaps can’t qualify for a loan. By leasing the home and making regular and timely payments they have a chance to ‘clean up’ their credit a bit and be able to qualify for a loan after a year or so.
Today I discussed this with a mortgage broker and he stated that a party with dinged up credit will not improve their credit score any by making timely payments for a year on their lease. He said you as the landlord could ‘help’ a case that has borderline credit by writing a letter stating the party has been making timely payments, but it would only help a slight bit, but most likely wouldn’t be enough to help someone with moderate to bad credit.
Obviously, my understanding isn’t correct here somewhere, because it appears many of you pro’s are putting L/O’s together and stating it is truly win-win, and helping people with bad credit…so where am I wrong? Can someone straighten this lost soul out? Thanks.