- Income: We like to see that the tenant-buyer we're going to assign the Option over to makes a minimum of 3-4 times the rental amount, so we know they have more than enough to cover the rent
- Background checks: We use this company for our background checks. We believe it's wise to do background checks on all future tenant-buyers prior to signing contracts.
- Landlord references: We like to check references, or have the owner(s) we work with speak directly to references to get a feel for payment history for each person that will be responsible for the rent being paid.
- Deposit: We ask that the tenant-buyers pay the owner(s) we work with a rental deposit which is usually equal to the first month's rent. We, for our fee, collect the Option Assignment fee which is generally pretty substantial. This allows us to continue to help folks, just like you, rent/sell their homes without paying any commissions or fees, while still getting their full asking price. Plus, tenant-buyers that pay our fee are less likely to destroy the property or stop paying rent, since they know upfront (in bold writing) that they will lose all of their Option monies.
- Debt to Income Ratio: We prefer the manual underwriting approach to folks financial statements instead of just looking at a credit score. These scores (the 3 FICO scores provided by Trans Union, Equifax, and Experian) do not, and cannot, provide the full picture of one's financial situation. One could have great credit today, but be on the brink of bankruptcy or at a minimum, an over extension of credit that will lead to bankruptcy in the future. One's FICO score doesn't always indicate this fact.
- Meeting with a Mortgage Broker: We believe it is a good idea that our tenant-buyers meet with a mortgage broker prior to renting/ purchasing the Option rights on a given home we're working with. This is because the mortgage broker can provide good insight as to when the tenant-buyer would realistically be able to buy in the coming years. Credit issues, income to debt, saving for the full bank-required down payment, and time on the job, are usual factors that are considered by mortgage brokers and provide valuable insight as to how long of a lease term should be negotiated.
While this is not an exhaustive list, it summarizes what we feel is most important when analyzing the risk involved in rental repayment and the future purchase of the property by our tenant/buyers.
If you'd like to gain free access to our tenant-buyer list (no obligation and you can cancel anytime), click here now. Watch the short video provided and follow the prompts thereafter. We have a lease-Option Memo that is just one page and gives you an easy out. It allows us by law to act as Principals, selling the Option rights only, since we are not brokers/ Realtors and do not represent anyone but ourselves. Click here to begin now.
Russell & Diana de la Peña
P.s. We here to help, not hurt. We make our living by helping you get your full asking price, by helping you avoid paying any commissions or fees, and by finding you a tenant-buyer within 7-14 days (assuming your home is priced correctly, of course). That's it. No surprises. Feel free to hire a real estate attorney too to review our contracts. We're pretty transparent. Get started here today.