With the credit crisis continuing and no real end in sight we are seeing those people who are still stuck with homes running out of reserves. As a mortgage banker we always have put a big emphasis on reserves, especially with Investment property purchases and purchasing another home without selling the previous home. Renting the properties is a decent way to make ends meet but putting the pressure on the homeowner to be the bank is turning out to curt the homeowner except their is no government bailout for the people who pay their bills.
Lease purchase is a great way to get a buyer in the home and have the buyer hedge their bet the market will stabilize soon and possibly increase within the next couple years.
Conforming and Government loans will allow a portion of the rent to go to down payment when the option is exercised. There are specific requirements to make this happen but are relatively minor when preparing the lease purchase option.
Many of my clients including myself have entered into lease purchase agreements on a 2 or 3 year term. I believe it setting up a win win situation and minimize risk. The formula I use is to take a 3% down payment 3 years from now so I know they can execute the option and remain in the home. On a 150,000 house that is 4500.00. The guidelines agree that you have to apply excess rent over the market rent to apply to down payment. So on a 150,000.00 the market rent could be 1100.00 in our market. I would collect 2500.00 down payment for the option and 2000.00 a month extra rent for 3 years. So the rent would be 1155.00 a month with 55 a month going toward purchase. On a 2 year option it would be 1184.00 a month.
Just an idea. If you were to get a Real Estate Professional involved you can work out a commission structure up front and on the back side. Many agents would like to get a small income now for bringing a Lessee and when the option is exercised you can pay then again.