Why REAL is not rent-to-own, and better for homeowners.

Todd Omelchuk
August 15, 2019 -

According to Investopedia: “Lease-option contracts give you the right, but not the obligation, to buy the home when the lease expires.” Basically, lease-options were designed for renters who may wish to become owners but want the flexibility to “walk away without any obligation to continue paying rent or to buy.”*

Typically rent-to-own programs have low barriers to entry, with minimal out-of-pocket costs, a slightly higher than average monthly payment, and a “rent credit’ that goes towards a down payment if you exercise your option to purchase. 

If you’re a renter rebuilding your credit or don’t have enough saved for the acquisition premium  (typically 10% of the home’s purchase value) there are many lease-option and rent-to-own programs that may be a solution for you.

So, what makes the REAL Program different?

To start with, REAL is not a loan. REAL is a real estate acquisition lease that lets you leverage our buying power to get the home you want, when you want, with the option to purchase at a later time. Let’s discuss what it is and why it may be better for your circumstances. 

 A real estate acquisition lease is designed to be attractive to homeowners, not necessarily renters. With REAL, there is no premium, or rent credit attached to your monthly payment amount because all of the net equity in the home is yours to keep. Plus, what you bring to the table determines your lease payment and fixes the program purchase price you pay when you exercise your option to buy. 

Just like traditional homeownership, there are three ways to exercise your purchase option:

  • Obtain a traditional mortgage
  • Sell the property on the open market
  • Pay in cash

Plus, there’s one more option: you can choose to extend the lease term. Each agreement comes with a provision for you to stay in the Program for an additional two years — with no increase to the price you pay for the home. 

How does REAL compare to a mortgage? 

Because REAL is a lease, a Trust buys and holds title to the property. Not a bank. But not the homeowner either. However, all the economic benefits are yours, including 100% of any net appreciation value. Key to the agreement is that your purchase price is locked in when you enter the Program. That means you’re paying today’s price whenever your exercise your option, regardless of the home’s future market value. 

In addition, our underwriting criteria is considerably less demanding. REAL can help you get into the home you want at a price you can afford, with fewer hassles. You may have experienced some real-life challenges, but we simply don’t disqualify people on that basis. 

  • No income or employment documentation
  • No debt-to-income ratio qualifications
  • No restrictions on your source of funds to close

You’ll find that the typical lending time to close a purchase transaction today is 49 days. With our Program, the average is around 14 days. 

Explore the many uses for REAL that help solve challenges homeowners face. 

And more.

What is the interest rate?

REAL is not a loan of any kind — not a hard money loan,  not a mortgage — so there is no interest rate. 

How much are the monthly payments with REAL? 

Your REAL monthly payment amount is calculated based on the acquisition premium you contribute to the purchase or sale of your home, your FICO score, and taxes and insurance associated with the property. As a result, the payment is slightly higher than a typical mortgage payment but usually less than comparable rent. 

If you have more questions for us about REAL, you’re invited to contact a Program Advisor. They will suggest the right solution for your specific needs. 

*Jean Folger, Rent-to-Own Homes: How the Process Works. Investopedia, updated July 8, 2019