How to get an investor to buy a Rent-To-Own for you

In today's episode, we have a conversation with Adam Zach to get insight into financing of a Rent-To-Own as offered by Home Equity Partner for homebuyers. Adam explains how working with Home Equity Partner can help you acquire distressed properties such as preforeclosures and foreclosures as a Rent-To-Own (lease with an option to buy). We discuss the eligibility criteria for their program and the next steps to take once you have identified a listing on Foreclosure.com or the MLS. Learn how properties on Foreclosure.com and Rent-To-Own financing from Home Equity Partner is the ideal choice for your next home purchase.

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Transcript

0:00 - TJ - Welcome to foreclosure.com. My name is Tim Jones, and I have Adam Zach, with Home Equity Partner, with us today. Home equity partner is one of the leading investor lenders for users who are interested in rent-to-own financing for their next home. Adam, thank you for taking the time to speak with us.

0:15 - AZach - Hey, I'm glad we got connected and happy to help and hopefully help get some people into some homes.

0:20 - TJones - That's great. Can you tell us about the rent-to-own process Home Equity Partner offers to users?

0:27 - Yeah. So, we offer the traditional rent-to-own path. You know, sometimes it gets different vernaculars, but this one, specifically a lease with an option to buy but rent to own, is the most common terminology. And so the idea is that you get to rent now, and you have the exclusive option to buy the home, and it might be a set price. It might be, you know, a future appraised value, but you're essentially agreeing to rent the home. And then the goal is that you're looking to move into the home if you can't secure the traditional financing route.

1:00 - TJones - OK, So how can our customers work with an investor like Home Equity Partner to purchase pre-foreclosures or foreclosures as a rent-to-own?

1:11 - AZach - Sure. So we do this all day, every day. And what we and our investors want is ironically to buy homes for individuals like that's, that's all we do. There are some investors that are like, I'm just gonna buy an asset, and then I hope I can find a renter. Well, there's specific investors like me, and ours, were like, I only want to buy that asset for Jack or Jill or Mary or Bob. Like this is our whole strategy is we're a people-first, property-second mentality. And so where this works out is I or us investors only want to buy the home if you, the tenant, are moving into it. I don't want to buy just an empty house and then hope I could fill it with a rental. That's a completely different model. So in this case, if someone has identified a foreclosure, an REO, a pre-foreclosure, and they're like, ‘Hey, that looks like a really good property’ or a really good deal, you know, I got some contact information, but maybe I don't have $150,000 grand, you know, to buy the home if it's, you know if you need to do cash if you have to do financing, like whatever it is. But I really have a unique advantage because maybe other rental properties or other MLS-listed properties, you know, aren't willing to do rent-to-own, or you're kind of stuck in a situation where, you know, you either can't get bank financing quite yet or it's maybe a couple of years away. So, you know, using a service like that where, like, hey, I found this home, and I would love to rent to own it. So that's where we would say, ok, great. Like,  let's talk, let's find the home. And then our whole goal is to screen both, you know, you first and be like, ok, cool. Like, you know, tell us about yourself, you know, what, what's your situation? Because we found that a lot of people have unique situations where, you know, maybe bad things happen to good people; maybe it's credit score, maybe it's debt to income, maybe you're self-employed, you know, for whatever the reason that you can't, you know, normally get, you know, traditional financing, which is exclusively what we try to do and who we buy homes for. And so if they were to identify a property, you know, maybe they have the owner's address, maybe they have a phone number and email, you know, if we have a contact, you know, that's kind of even better. So if they already have contact with the, you know, with the owner of the property, that works otherwise, if it's like, hey, we're going to send them, you know, a letter and be like, hey, I'm interested in owning your, you know, and buying your home. and you can kind of start off that way, and, really, it kind of starts the negotiation process. And so, you know, we have specific terms that we follow, but there's, you know, a lot of different investors, you know, maybe locally that would have some different criteria. But in general, the whole goal is I would love to buy a home for someone so that they can live in it. You know, if someone else is in a poor situation, it's kind of like a triple win where the individual that's in a foreclosure, you know, avoids the foreclosure because we're buying the home oftentimes, you know, cash or with, you know, some pretty secure financing you as the, we call them tenant buyers or the rent to own candidate, get into a home that you want, hopefully at, you know, some discount or some value. And then what investors are looking for is kind of an investment stream where they can deploy some capital and get a return on that investment.

4:21 - TJones - I would love to explore that a little bit further. What do they need to qualify?

4:26 -AZach - Sure. So in our particular program, depending a little bit where you're at, they have, we have a 7000 a month income with around 5% down as a minimum, and then depending on your credit score, the risk and where you're at, the down payment can range from 5 to 20%. And what I would add to that is Home Equity Partner is one model, and we typically have a, you know, we're looking at homes $150,000 or higher. And so if there is a potential deal or you don't have the equity in the home, or you don't have the down payment, what we've done for other people is like, well, if you can find a home with equity in it, let's say you find a $300,000 home, you know, for $240,000. Well, now you don't need a 20% down payment because you basically have 20% equity in the home. So we've had individuals approach us in that fashion where, you know, either they don't have the income or they don't have the down payment, but they're like, hey, look, I found this opportunity where, you know, this person's mortgage, you know, on a $300,000 house is $220,000 and if we gave them $230,000 you know, they'd be super happy with it. I think we can strike a deal here. We say perfect, you know, that works for us in lieu of, you know, the 5 to 20% down with our program, but we are trying to, you know, state that the three times the rent, income ratio. And so, you know, with that $7000 a month, it's roughly, you know, maybe two grand a month, you know, for rent, once you start getting less than that, sometimes they get into rural properties or, you know, the home conditions, once they're less than that could be sometimes a little bit tricky, but we would still do the inspection, do the appraisal, do all the senses, and we've bought an $80,000 houses, $120,000, $1.5 million homes. So it's kind of all around the range. But right now, you know, at the recording of this suite, you know, at the recording of this podcast, we're looking at those homes $200,000 and up.

6:26 - TJones - That's great information. And if they found a listing on foreclosure.com, what are the next steps for Home Equity Partner?

6:35 - AZach - Sure. So if they said, hey, here's the property I'm interested in buying, I would say great. We're still people-first, property-second. I want to know about you. So we're gonna go ahead and say great like that's information, you know, we can kind of start working that side process, but I would love for you to apply with our program, and what it's gonna be is like we're, we're gonna do the same thing that you know, a landlord or maybe a mortgage company would do is we're gonna try to verify your income. We're going to, you know, see if you have any civil judgments or recent bankruptcies and evictions, and instead of telling you no, we're going to say, ok, here's your, in our mind, you know, kind of tenant-buyer grade, right? If you had a 700 credit score, but you just happened to, you know, open up your own daycare and you don't have the debt to income ratio like, ok, you know, that seems like a pretty good fit because you're like, oh I just need to file my 2023 taxes or my 2024 taxes, and I just need the tax returns, and then I'll be able to get the mortgage, and we say great, you know, that seems like a fairly low-risk individual. We've had others that, like, you know what, I had a bankruptcy last year, and I'm getting evicted, you know, just the full ends of the spectrum being, you know, transparent from an investor that's seen as more risk. And so either the property's got to have a lot of equity into it because it's more risk, or that individual has to come up with a higher down payment just to offset the risk. And I realize that everyone's situation is a little bit different. That's why we kind of go through the screening process, and we say, hey, ok, based on your income, based on your situation, like here is your terms, it would be, you know, a $2500 a month payment and you would need 12 grand to move in, and they'd be like, oh, for that home, that sounds great. Let's move forward. And in which case, then we would engage with the homeowner to get a contract written up. And at the same time, we've gotten all the terms to use. So basically, putting you in control, be like, hey, here's your terms for a rent to own. Tell us yes or no. You could tell us no, and we wouldn't be offended. We're just providing the opportunity, but we're not going to, you know, ask for earnest money or, you know, $1000 or whatever it is. It's $60 to apply. And from there, we'll give you some sort of pre-approval terms that you can either pick that house or other homes. Kind of like what a bank would, you know, a $200,000 $300,000 pre-approval letter. And then that way they can go pick the homes, you know, maybe they have the one home, you know, from foreclosure.com, maybe they, you know, decide to go pick something off the MLS, you know, we give them a little bit of freedom on what they can do, and then how they're going to play with the equity on the home. So it's essentially once they apply, we approve them, and then once they say, yep, I'm good with those terms in this house, and here's my proof of funds, we say fantastic. We got a purchase and sale agreement. We execute that with the owner. And then, as we go towards closing, we still have an inspection, and we still have an appraisal on the home. And so you get to see the inspection on every home that we do with home equity partners. So we want to make sure that if you're moving into this home, utilities are on, they work, there's not a foundation issue, there's not like a 60-year-old furnace because when you move in, you wouldn't want something that you gotta put a bunch of money into. And so either that has to be baked into the cost, or we negotiate that have the repairs made before closing, and we try to make everyone happy so that there's no surprises so that you can kind of thoroughly see everything. And then, the same day that we close on the home, we don't even get the keys. We just literally have the title company hand you the keys at closing because we're doing all these virtually.

10:04 - TJones - That's terrific information. Thank you for breaking down the process for us. So, why should users choose Home Equity Partner on their rent-to-own purchase?

10:16 - AZach - Sure, I'll I'll say this is what we do all day, every day, any home, any city. And so what's a little bit unique about that is if you want one of the major metros and have someone do a rent-to-own for you, there's maybe three or four, you know, big national companies that can do it. On the other side, you know, maybe there's some local real estate investors that are, you know, maybe interested, but they don't quite understand how this process works on a rent-to-own, whether it's through our podcast content, whether it's through our ebook, whether it's through our Google reviews where you can see 40 people giving us five-star ratings of like, hey, I had credit issues. Hey, income, hey, I, once you know, my situation was unique and home equity partner happened that, you know, happened to help us, I would say take their word for it, not ours, but this is exclusively what we do and who we're trying to help in any city anywhere. As long as the numbers make sense from if you prequalify and if and if the deal passes, 

11:20 - TJones - Adam, thank you for providing our users with valuable information into the rent-to-own program that you offer. You can learn more about the program at homeequitypartner.com. Remember to sign up for your free email alerts on foreclosure.com. Thank you again, Adam, for speaking with us.

11:40 AZach -You're welcome, Tim. It was a pleasure 11:42 - TJones - And that's all the time we have for today. Until next time, I'm Tim Jones.