Exiting From A Rent to Own Program
Having been established in the rent / lease to own business since 2006, we have seen many rent to own companies come and go. Many are small start ups formed by individual investors, realtors and property managers and generally lack sophistication when it comes to packaging a deal with little to no underwriting considerations. Many of these deals end in default and disappointment since the minimum requirement for down payment is never met or the tenants credit forbids them from qualifying with any bank lender.
Statistically more than 65% of these rent to own deals end in default resulting in negative press. I often compare tenants with bruised credit in our program to hamsters on a running wheel, they run hard but never getting anywhere. Most clients that enrol into “B” lending products with low beacon scores remain low even after the term is up.
In many cases, clients are left with no financing options if they were not allowed to renew and many end up losing their homes if they are not aware of our program. In order to make sure our clients are financially prepared at the end of the term, we decided to refer to a third part credit rebuilding program.
This program runs for a period of 12 to 36 months that will provide a personal coach for 30 minutes per month on a scheduled basis to the tenant for a nominal monthly charge. This will ensure that a couple of trade lines are built up and monitored to ensure enough history and beacon score requirements to satisfy bank insurer and lender guidelines. This program is crucial for the success of the rent / lease to own program. Once the tenant has reached their goal of 680 plus beacon score, they will be able to secure financing through all of the major lenders that are available.
What is more important is the fact that you have allowed them to break the pattern of bruised credit and they are able to rebuild their financial future that will allow them to qualify for low rates and specials they were blocked away in the past.
What we are now offering is a choice between a program designed to generate a minimum of two trade lines along with a credit coaching program that will keep your client on a straight path to recovery or they can opt for a program designed by you. Our program is additional cost and will differ from client to client depending on the credit issues.
You can charge whatever you like with your secured cards from Home Trust and Horizon. We cannot afford to leave the client to their own device, that becomes too risky.