AFS, options, rent to own are fairly bad ideas.
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Rent to own: should be illegal. It is not right to take non refundable money from a sub prime borrower who is financially weak. Obviously immoral. Why isn't this obvious?
Really??? How many times must I copy and paste this response before you give up dissing viable alternatives such as RTO? (And you have AFS all wrong too, btw.)
1) RTO tenants are renting regardless of whether they rent a property they can buy or a property they can't. They often pay the same market rent they would be paying whether they had the option to buy or not. Yes, a reasonable portion of option payments is non-refundable, but that usually doesn't cover the costs to the RTO company to repair and market the property to a new buyer if the tenant defaults. There is risk on both sides.
2) A responsible RTO company will only accept tenants with a good possibility of getting mortgages within the next 2 - 3 years. RTO is not meant for clients with low incomes or terrible credit and spending habits. RTO works for people who had blips in their past (usually due to either a divorce or a business failure or layoff), but are on the road to recovery. (Yes, there are companies preying on people with no hope to qualify, but they are the minority.)
3) RTO properties with conservative annual price increases can be a fantastic opportunity for tenants. We have had many tenants whose houses appraised for substantially higher than the agreed price. So they were able to live in their "forever homes" even before they could qualify for mortgages, they had the stability of knowing they wouldn't need to move their families again, and they got a good deal on the property rather than renting a regular rental and risking substantially higher prices in the open market when they were finally able to qualify.
4) Finally, if the appraisal doesn't quite work when it’s time to buy, a responsible and ethical RTO company will work with the tenant to determine a solution fair to both sides. After all, this is meant to be a fair business transaction and most RTO companies are not the vultures people sometimes make them out to be.