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RENT TO OWN???

 

We find that even though many Roanoke Buyers are interested in Rent To Own transactions most do not fully understand the transactions at first, not to mention how to tell if it is structured properly.  Here we will discuss the basic structures of a Rent To Own / Lease Option transaction so you know what to look for when buying your next home.

Definitions:

Lease – A contractual agreement between the Lessor/”landlord” and a Lessee/”Tenant”

Option – An option is the right to convey a piece of property.  The person granting the Option is called the optionor (or more usually, the grantor) and the person who has the benefit of the option is called the optionee (or more usually, the beneficiary).

Lease With Option To Purchase – This type of transaction consists of a Lease for a specific time as well as a SEPARATE Option for the same term.  The price can be locked in at signing or set according to market price, appraisal value, loan balance, etc. at the time the optionee/buyer exercises the option to purchase.  This is not to be confused with a Lease Purchase which “locks” you into purchasing the home by the end of the lease.  The Option gives the optionee/buyer the right to purchase but does not obligate them to purchase.

 

Types of Rent To Own/Lease Option Transactions:

 

Traditional Rent To Own/Lease with Option to Purchase

This is the most common structure for our transactions.  Families who opt for the traditional Rent To Own are usually very close to qualifying for a mortgage but still need some time to rebuild credit or pay down debt.  The lease and option term is usually 1 -3 years and the option consideration is usually 3% – 5%.

Long-Term Rent To Own / Lease with Option to Purchase

Long-Term Rent To Own is less common but is highly beneficial for families that have experienced divorce, bankruptcy, foreclosure, etc. or have very high debt or very low credit and need more than 3 years to qualify for a mortgage.  This structure behaves a lot like owner financing because the lease and option period are typically 10 years or more and the price is the loan balance at closing which means that you’re not locked into today’s pricing and any equity that is built is yours to keep.

 

Regardless of which structure is used REsolutions Real Estate Services provides quality homes in great neighborhoods within the highest rated school systems so you’re sure to find a home that fits your family’s needs.  Now that you have a better understanding of what Rent To Own is visit www.Rent2OwnVA.com to explore the benefits to buying a home as a Rent To Own and learn how our process works.

–  Chad Corbett, President REsolutions Real Estate Services


 

 

Unfortunately, there are many stories about how Roanoke Tenant-Buyers have invested a lot of time and money into what they thought was a Rent To Own transaction but lost everything at the end of the lease because they didn’t structure the transaction properly and had no interest in the property even though they spent 12 months and a considerable amount of money on repairs and improvements.

When used responsibly Rent To Own / Lease Option transactions are a wonderful way for families who cannot qualify for a mortgage at the time to purchase a home that they can live in, love in and grow in even before they officially own the home.

If your family decides that Rent To Own / Lease Option is the right fit it is very important to work with professionals who are transparent and explain every detail of the transaction before you sign anything or move into a home.

REsolutions Real Estate Services is the leading company specializing in Rent To Own / Lease Option transactions in the Roanoke Valley and we take pride in providing a solution to Buyers and Sellers who can’t buy or sell on the conventional market.  Our team of professionals is comprised of top lenders, attorneys, credit repair agencies and even financial coaches so you know you’re being set up for success.

To learn more about our process and how we protect Buyers and Sellers visit our Rent To Own page at www.Rent2OwnVA.com

– Chad Corbett, President REsolutions Real Estate Services


The 2nd Annual Roanoke MSA Real Estate Market Statistics Presentation is Here!

In November 2011, after careful consideration of 6 Appalachian cities, I chose Roanoke, VA to be my new home and place of business.  I decided to start a real estate business just weeks after being dropped into a market I knew nothing about.  So, being the analytical guy I am I decided to pull all of the data I could get and quickly learn the market.  I pulled a list of closed transactions from RVAR MLS and Roanoke City GIS to get started.  After several hours of excel work I realized I had created a pretty good summary of the market that painted a clear picture.

In January 2012 I was invited to present my findings to the Real Estate Investors Group of Roanoke so I pulled together a presentation to share what I had learned. Some of the data was obvious but I think everyone noticed at least one thing that was clearly different than what they thought.

After presenting last year I realized that this is a valuable source of information not only for real estate investors but also for Realtors, Buyers and Sellers.  I am happy to share this with you to help you make more informed decisions in buying a house, selling a house or growing your business.  Please feel free to pass this along to anyone else you think might benefit.

 


Anyone who has known me for long knows that I’m a numbers guy.  When I decided to move to Roanoke, VA from Maui, HI I took a years worth of tax data and MLS data and boiled it all down to a simple table that told me exactly where the market was here.  Just a month after moving here I was speaking as “the expert” at my Real Estate Investors group because of the fresh data in my head.  I LOVE real estate and I believe it to be the safest investment of all if you know enough about it to stay in front of the trend.  A VERY intelligent investor here in Roanoke, VA who has studied and made money in all asset classes put it best: “I plan to put all of my eggs in one basket and just protect the hell out of my basket.”.  That basket is real estate and he is seizing the opportunity to fill it now while eggs are on sale. The real estate market is just like the stock market, the majority of the activity is the “dumb money” that is making decisions based on emotion and either buying or selling behind the small portion of educated investors and consumers who make decisions based on facts and logic.

Identifying Real Estate Market Cycles

So, if we can take the emotion out of it and see the real estate market the way we see the stock market shouldn’t we be able to identify patterns just as we do in the stock market?  Sure we can.  Homer Hoyt, a real estate economist in the 1930’s did and his findings have been updated and validated by Fred E. Foldvary, who (along with Ron Paul) predicted “The Depression of 2008″.  Keep reading for now but click back here for Foldvary’s full 40 page brief.  If you’ve got better things to do you can get the main points from this short editorial. These guys identify a very clear pattern that has continued to repeat roughly every 18 years.  This is essentially a secular market cycle just like we see in the stock markets.

Just last week I had the fortunate opportunity to hear Ray Alcorn speak at the Real Estate Investors of Virginia meeting here in Roanoke where he revealed his outlook on the 2012/13 commercial real estate market.  Ray is known for his Commercial Real Estate forecast and famous for being right most of the time.  One thing Ray said has stuck with me – “All of these reports on how well the market is doing and how prices are increasing this month over the same month last year are just NOISE.”  He hit the nail on the head.  The 18 year trend that Hoyt identified is the Secular Market and this “big picture” market is made up of several smaller bull and bear markets and that is what most news is reported on.  This month it’s a recovery, next month it’s blood in the streets.  We have to look at the big picture to really see what the market is doing.   Think of it as a bell curve like your 3rd grade teacher used to use on spelling tests.  There is a basing Phase then Growth then a Top followed by a Decline.  Ray does a much better job explaining it than I could ever do and supports his predictions with rock solid data.  Click here to readRay’s 2012-13 Commercial Real Estate Forecast

So, that’s all great but can we just get to the next bubble already?

I believe we are in the basing phase following an obvious decline and we will remain here for a few more years until the supply of foreclosed homes clears the market and credit frees up.  Sure sales volume is up now and if you only look at a 1 month snippet of data or listen to the news you’ll believe that the market has already recovered.  We’re far from full recovery but I believe we’ve seen the bottom of the market and we’ll continue to see these little rallies like we’ve seen in early 2012 but the supply of foreclosed homes and the limited amount of equity in homes will keep the market flat for 5-7 more years before we start our upward journey toward our next bubble in 2026.

For real estate investors there has never been a more perfect market to take your position for the next Secular Bull Market.  Both prices and interest rates are at historic lows and rents are at an all time high.  What an exciting time to be starting an investing career!

Chad Corbett – President, REsolutions Real Estate Services


If you ask a Roanoke Realtor what the market is like they will likely tell you they’re having a banner year and they need more inventory.  That is great news to anyone involved in real estate because it means our market is clearing distressed houses.

However, there are literally hundreds of foreclosed homes sitting vacant in the Roanoke Valley that are not on the market and nobody seems to know why.  Sure, we all have our theories like “Well it’s because the banks are bogged down.” or “It’s the government’s fault because of the slow down last year due to the robo-signing investigation.” but could it be because the banks are intentionally controlling the supply to increase the prices and cut their losses?

RealtyTrac, the leader in foreclosure data published an interesting article this week talking about this issue on a national level.  “In the May 2012 issue of the Foreclosure News Report, real estate attorney, investor, author and trainer William Bronchick argues that banks are “hoarding foreclosure inventory” and overvaluing their real estate owned (REO) properties in an attempt to squeeze more money out of their distressed portfolios. Bronchick believes that the growing glut of REO is hurting real estate markets where inventory is tight…”

Read the full Article Here:  REO Inventory Ballooning as Banks Hold Back Housing

Regardless of the “why”, slowing the supply of REO homes coming into the market only slows the overall recovery.  As long as there are vacant homes sitting in neighborhoods and intelligent investors who are waiting for those to hit the market the recovery will be slow.  There is certainly no shortage of supply with  2 – 8 million REO homes in the “shade” and at least that many more that are 90 days or more past due on their mortgages.  There will be no recovery and no real appreciation until we can clear these distressed homes and return to a “normal” supply level.

For now all we can do is wait for that next big deal and be the first offer of 20 in when the 3 bedroom ranch on the corner finally gets listed.  Maybe after the election there will be more certainty in where our economy is headed and lenders and politicians will streamline the asset liquidation so we can see a “normal” housing market sometime this decade.

– Chad Corbett, President of REsolutions Real Estate Services


Let REsolutions Show You a Controlled Exit That Will Not Destroy Your Credit.

Last week the New York Times featured an article “Speeding Up Short Sales”. In which they highlighted the positives of how expediting the short sale process will clear the glut of homes that are in default that will inevitably foreclose.

“With rules that take effect next month, federal regulators have hopes of greatly streamlining the short-sale process.

Starting June 15, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, will require both agencies to give short-sale buyers a final decision within 60 days.”

Typically a short sale takes from 4 – 8 months with the vast majority of them falling apart after the buyer and the seller have invested a considerable amount of emotion and energy into the process.  Speeding up the process may force the lenders to become more efficient and process more which will result in more that actually close but I still don’t recommend short sales any longer.

Because of the uniqueness of this housing crisis owners have no equity and banks have no liquidity and until one side frees up we aren’t going to see any kind of real recovery.  Banks realize this more than anybody and are now willing to “make a deal” with most owners.  There are much better solutions than a short sale for owners but not many professionals know this. 

We Can Solve Your Housing Problem Quickly and Without Damage to Your Credit!!

REsolutions Real Estate Services has a vast network of real estate professionals including agents, bankers, attorneys, loss mitigation teams and more.  If you’ve falling behind on payments or know that you are over-leveraged in your home do not give up.  If you want to stay in your home we can show you a way to clear your current mortgage and refinance at today’s fair market value so you’re not throwing money at long gone equity.  If you just want rid of the house and want to move on we can show you how to get out without destroying your credit as you would with a foreclosure or short sale.  Either way your only obligation is a $400-$500 appraisal and a document that will allow us to work with your lender.  This process takes only a few weeks and once an agreement is made it’s unlikely to fall apart.

Call us today to schedule your 100% confidential consultation where we learn about your challenges and present you with multiple options.

REsolutions Real Estate Services

540-999-6084