What Are the Risks in Rent to Own Real Estate?
Rent to own property investments and lease purchase options have inherent risk factors that cannot be removed. These, as with risk factors involved in any type of investment scenario, are just the nature of the beast. However, in order for a real estate investor to be able to profit from such a venture, these risk factors must be acknowledged and addressed to minimize potential loss. What are the general risk factors in rent to own and lease purchase options? Consider that the tenant buyers with whom you will be working are those with whom standard mortgage companies and banks are unwilling to work. This is usually due to insufficient credit, lack of steady work, high debt to income ratio, and other factors that are considered high-risk for a mortgage loan. This means that you are automatically signing up to accept a form of credit,through a contract, with someone that is not able to receive formal credit approval elsewhere. This is one of the risk factors that must be taken into consi
