Profiting From The Changes In The Real Estate Market

So is the Lease To Own sceanario going to be the next 'wave' in the real estate markets?

My opinion is that it will have an appropriate place just like any other type of hybrid financing. I do see it as a potentially VERY attractive alternative in some markets. For example, I live in Michigan. The markets here have taken a severe price regression and I believe that we haven't seen the end of the fall yet. With recent changes released by Fannie Mae, Freddie Mac and several private mortgage insurance companies in the last several weeks, tighter lending is going to exacerbate the problems in the market. With the potential for a continuing decline in values, Lease To Own has the ability to be an attractive alternative to shrewd and patient home buyers.

Consider the fact that if you purchase a home with a market similar to what is occurring in Michigan. If you elect to buy with little or money down right now, utilizin an interest only mortgage, essentially what you have done is created a situation where you are 'Renting' from the bank or lender.

A Lease To Own, if structured properly, may allow you to build equity faster than a traditional mortgage - allowing you to profit if the market stays flat or by chance does happen to appreciate. In the event that it falls (and especially if it falls hard - ouch) you still have the ability not to excercise your option or even renegotiate your contract. But at least you're not stuck in a situation where you've gone backwards in equity.

Our next discussion will be about some of the negatives related to this strategy.

Hope that you had a great weekend!

Warmest Regards - Jon