Your thoughts on Rent to Own w/ Home Partners of America (formerly Hyperion)

[Corey Westermann]

I have a close friend whose realtor has convinced him to apply for Home Partner of America's rent to own program.  I believe this company used to be Hyperion Homes.

He asked what I thought - I told him I had no idea.  Does anybody here have any experience with these guys or guys like them? 

Sounds like it would go something like this - They buy the house you pick, you agree to a 2-month security deposit and to rent it for above market rates, you then have the option to buy it after a year at 5% above their original purchase price provided you can finance it.

Are these guys and their programs legit? Is the process as transparent as they make it seem? 

Thanks in advance.

[Wayne Brooks]

They came to our office about 9 months ago, wanting us to bring clients.  They refused to provide a copy of the agreements the buyers would sign, so I passed.  But yeah, 5% per increases per year form the prices hey pay, plus up to like $3500 in repairs/maintenance the buyer may have to add to eventual sales price.  5year right to purchase.

[Corey Westermann]

@Wayne Brooks

Thanks for the reply. Did any of the other agents in your office decide to partner with them? Any idea one way or the other whether they are a decent outift to get in bed with?

[Wayne Brooks]

Don't know anyone local who has used them.  I did track down an agent in CO who had done five of them.  I asked him about the agreement the buyers signed and he responded "I never thought to ask to see it".  But I can't operate that way.

[JOANN TAYLOR]

I have signed up with them - it seems like a great option for those with little or no credit and need a fairly decent place to live - my problem would be in protecting my own skin - I mean, I would want a buyer to sign something that says they will hold me harmless when they sign up with this company.  If things don't work out as they expect them to I don't want them coming after me when all is said and done.  But I hear it every day; with the rental supply drying up in PBC, Fl., LTO (especially with nothing down) is going to become a real option for some.

[Corey Westermann]

I've got a lot more info on Home Partners of America and their process since I first started this thread. They just started operating in the Portland, Oregon market so there's not many folks around here that have gone through the program. 

The program is legit - but the tenant/buyer needs to be very aware of all the costs that are going to be passed along to them. Part of the sales pitch most realtors will use when trying to sell a client on Home Partners is that they have the option to purchase the house they are renting for 5% above what Home Partners pays for it... But, by the time you account for their above market rents, a sizable initial repair budget (that the tenant/buyer has no control over what Home Partners decides to spend), maintenance and repairs while renting (yes, the tenant will have normal repairs and maintenance costs during their lease added to their purchase price), closing costs, and the company's 5% fee - you should expect a right to purchase price that is more like 10-15% higher than the original purchase price. 

Keep these things in mind: Your deposit (2 months rent) is due as soon as the house is under contract - with no real clear picture of what your final right to purchase price will be. Also - Home Partners will increase your rent and right to purchase price by another 5% every year that you are unable to get financing. You are only allowed to attempt to exercise your right to purchase once, and if something goes wrong your purchase right is nullified completely.

IMO, in most cases it would take a great deal of appreciation over the course of your lease in order to make it worth paying the full right to purchase price of the house that Home Partners buys for you to rent. 

Maybe, however, it's a decent option if you're desperate for a place to rent and choosing your house from the MLS is worth the inflated rent payment to you.

[Brian Gibbons]

@Randy Rutman

Can you respond to those comments of 

@Corey Westermann ?

It does not great for the tenant buyer.

[Randy Rutman]

In my home market of Southern California we are on a price increase escalator. We are seeing price increases in most markets.

• What Home partners is offering is a way to slow the price increase to something the buyer can manage. a 5% increase annually is better than 7% or 10% or more on the open market. Years ago I personally rented a home smaller than I  needed for several years waiting to get into the market until my credit improved and then buy a bigger house. By the time I finally entered the market I could barely afford to buy a house the same size I was renting. It was very disappointing. Home Partners at that time would have been a fantastic solution.

• While it's not the reason people start with Home Partners, remember you can quit. You are only committing to 12 months. And if you quit your deposit is refundable. This is hardly an option any lender is currently giving, or has ever given.

• Repair costs are added to the purchase price upfront (after the home inspection) but are shown to the buyer before the escrow completes giving the buyer the chance to approve them and move forward or not.

• In practice it's usually much simpler. For example if a home is listed for $500k HP may offer say $480k.And because they buy cash they often get discounts. On top of that there may be $5,000 in closing costs and $5,000 in repairs. They will attempt to get the seller to covers some or all of the repairs but assuming they didn't pay anything the buyers purchase price in this example would be $490k or a saving of $10,000 off the asking price. This is because HP doesn't make money on the initial purchase. While this is only an example I've found it to be fairly common.

• Home Partners is better than typical Owner Financing. Why? It's Cheaper, It's faster, and the selection is huge.  I've trained over 200 agents how to do owner financed deals properly, legally, and safely. But that's not the primary issue with normal owner finance. Typically even finding an owner willing to finance is very difficult. Secondly that seller usually wants a 10-15% or Higher non-refundable downpayment. Thirdly finding a buyer who, likes the house, is in the right price range, and has the large down and the desire to do it can be nearly impossible. Its Very frustrating for the buyer and the seller.

• Home partners is providing a new form of owner financing, or interim financing. even though it's technically a rent to own. It's not for everyone. It has costs, but it offers many self employed people, recent BK and divorce or other financial hardship buyers who are in the process of rebuilding their credit to move into the home now they want for their family and buy it with a loan later. Avoiding the need to move again, maybe change schools, or just have to start the whole process over. Moving is considered one of the six most stressful events in peoples lives. If you can avoid an unnecessary move or just settle your family now vs a few years from now, and do it with a low start up cost, doesn't that have value? 

• Many complaints I've heard say it's not for everyone. Well it's not supposed to be. But that does not mean there are not people whom this program is perfect for and can truly be helped by it. 

• A home purchase is a big decision. You need to weigh all the options. Home Partners is one of those options.

Have a great day,

[Brian Gibbons]

@Randy Rutman

It seems that a 3 to 5 year lease and a "right of first refusal" with FICO coaching such as www.upgrademycredit.com would do the trick for most homebuyers; I don't like the home buyers having to deal with all these other costs. 

[Randy Rutman]

Oh yes I forgot. Home Partners will provide a buyer with a full copy of all the documents prior for their inspection if asked. I know, because I asked. I wanted to see everything and I have. I'm not sure why they didn't in the past but I'm guessing it was near their startup and was a policy they realized was dumb.

[Randy Rutman]

Originally posted by @Brian Gibbons:

@Randy Rutman

It seems that a 3 to 5 year lease and a "right of first refusal" with FICO coaching such as www.upgrademycredit.com would do the trick for most homebuyers; I don't like the home buyers having to deal with all these other costs. 

 Brian, 

I agree with you except for one problem. Finding a landlord who wants to give the renter a "right of first refusal" in a house the buyer actually wants to own is very difficult. If you can put that together, do it. It's just not an option for most people.

[Randy Johnston]

@Randy Rutman

Thanks for the info. I agree that this program is not for everyone, but as you mentioned, it's a great way for someone who's looking to buy a home, but has little or no credit, to get into a place of their own.

I'd like to add . . . they will not buy just any home, it needs to be in an approved school district and, at least in the Portland area, they have a $500k cap on what they'll pay for a home.

[Randy Rutman]

Originally posted by @Randy Johnston:

@Randy Rutman

I'd like to add . . . they will not buy just any home, it needs to be in an approved school district and, at least in the Portland area, they have a $500k cap on what they'll pay for a home.

 In California the cap is $750,000 and yes the house needs to be in a top 10 rated school district. But most buyers want good schools and can fit into that budget.

[Calandra Harps]

I know this an old thread but I wanted to chime in because there is not a lot of "real-world" information about this program online.  I am a first time home buyer and have entered into a lease/purchase agreement with Home Partners.  Home Partners closed on our home two days ago and we are preparing to move in in a couple of weeks.  

My husband and I live in a city which is in huge demand with no let up in sight.  The schools in the city are the best in the state and nation, so demand was already high, but now a huge movie studio has opened up in the county which has put incredible demands on the rental market here, as well as the housing market.  Prices are shooting up and lower middle class families are being priced out of the market.  In the real estate market, there is fierce competition for houses under $350K in good condition and those listings are few and far between.  

We had originally intended to rent for 2-3 more years until we were in good enough financial shape to qualify for a mortgage on our "forever home". Our credit scores are good but we need to pay down debts to lower our DTI and to save for the down payment for a more expensive home. However, rental properties here are so scarce and so high in price, and the houses here are appreciating so rapidly , we decided we needed to buy a less expensive home now to get our foot in the door and build equity while we save for the down payment and pay down debt. The rentals are not only high in price, but usually in awful condition. Even if we were not going to exercise our option to buy, we probably would have ended up using the program just to get a better quality rental.

Someone said earlier that Home Partners rents houses at a price higher than the fair rental value.  However, this is definitely not true in our market.  The home we are leasing is significantly less in rent than for comparable properties, so it was a good deal for us even without the option to buy.  Maybe this will change but for now it is a very good deal.   

The whole process is pretty transparent and you know up front all of the details.  I would say that the terms of the contracts and lease are fair.  Our purchase price right is calculated by adding the price HP paid for the home, plus the "make ready" costs HP expended to get the home ready for lease, plus closing costs.  Then HP adds 5% to that figure and that is our purchase price.  For instance, HP paid $252K for our home, and our purchase price right is going to be about $280K when all is said and done.   Even though it is $28K over HP's purchase price, we think that is fair.  The only profit HP is getting is the 5% appreciation and whatever rent they collect from us in the first year.  We have no obligation to purchase the house and can leave after the 12 month period is over, so if we end up hating the house or the housing market unexpectedly tanks we can walk away and get our deposit back, just like any other rental.  So they are taking a significant risk.  

I only have two criticisms with the program.  First, the rent is based on the price the seller lists the house and not the price HP pays for it.  Thus, if the house is way overpriced the rent is going to be way overpriced even though HP is going to buy the house for much less. 

The other concern I have is that if the house does not appraise for the purchase price, there is no provision to reduce the purchase price or negotiate it down.  We would just have to come out of pocket for the difference.  I have heard that HP usually is able to purchase the house for about 10% less than full market value because they purchase the homes in cash and are able to close on the homes in 2 weeks or less.  Also if it's an appreciating market, the normal appreciation may make up the rest of the difference.  We are happy with the purchase price of our home so we are hopeful that we will be able to get a loan for that amount.  But if the house does not appraise well, then we would be free to purchase another home no strings attached.   We really hope that doesn't happen because we already think of the house as "ours".  

I hope this helps someone who, like me, is looking for more information on this program.  So far, it has been a really good experience for us.  

[Atarah Wright]

Thanks everyone for responding as this is good information for my research for a client that is looking to use this program. It seems they need to lower their DTI and improve their credit score. So I was asked about this program and didnt know much. The information provided above will help me advise on how they should move forward.

[Jacques Wurms]

I have found an other company that does lease options similar as Home Partners. With Home LPC you do I have to come up with option money but they will split the equity 50/50  Love to hear if anybody has done business with them? If you do not exercise your option you can sell the home or sell the option.

Hereby the link: http://www.homelpc.com/

[Giuseppe Piccinini]

I am a real estate broker in Dallas, Texas and my agents and I have had considerable experience with both Home Partners and HomeLPC . Each of the two programs are really targeting a different demographic. While the absence of an option payment in theHome Partners (originally Hyperion) may be attractive to many potential rent to own clients, the costs and the 5% per year increase in the option price only makes sense if you expect double digital home appreciation annually. Thus, it seems that Home Partners works for the group that his little or no savings who is willing to let the future market determine the viability of the option, if any.

The HomeLPC model is clearly the better option for the family that has some savings and is committed to purchasing the home that it chooses to be purchased by HomeLPC. The 1st year rents are comparable but HomeLPC keeps the rent fixed for the 3 years while the Home Parter rent increases annually. As you correctly stated, the HomeLPC program does require a 5% option payment which is applied to the purchase price at the time the option is exercised and provides for 50/50 split of appreciation. That is really quite appealing to the family that is committed to becoming homeowners. HomeLPC will also accept into the program condominiums and new construction.

I have also learned that HomeLPC has just started doing business in the states of Florida and Washington and is soon targeting further expansion. My contacts there are Nick Bratsafolis ([email protected]) and Pam Mills ([email protected]).

-JP

[Raphael Brach]

Home partners is actually a legit program which gives great options to buyers.

The idea that it is made for people with poor credit is absurd.  It is a great way to get intot a house cheap and to buy it if you like it.  Because their requirements are a low credit score of 520, people think that it is for poor credit people.  it is not...

[Fern Poyser]

I have worked with HomeLPC and I have sent many many prospects over to them and they were all declined because of not enough down payment, high debt to income ratio, etc.  I gave up on them and now I am using HomePartners.  I especially love the Broker Agent Portal for Home Partners which enables you to invite people to apply via email and they keep you informed as to the status of your applicant.  

[Wanauma Graham]

I know it's a few months past the original post but I wanted to comment and thank everyone who chimed in and provided information about Home Partners of America (formerly Hyperion). I am a Realtor in Dallas TX and I fully support the program. It is a great option for renters who want to own a home but may need a little more work on their credit, DTI or some other issue to qualify for a mortgage. Or maybe they just need a little more time for personal reasons.

The path to homeownership can be challenging and for some clients this is a fantastic option to get into the home they want, get their children in a good school, and experience the culture of the community while they prepare to purchase. And I'm not sure if it has been mentioned but renters in the program can exercise their right to purchase at ANY time. They do not have to wait until their 12-month lease is up. The program also offers a quick close (usually less than 30 days) because Home Partners makes a cash purchase. In the Dallas market homes are selling quickly and multiple offers make for major competition between buyers leaving some buyers on hold. This program is a solution.

If you need more details, feel free to reach out. I'm more than happy to help.

Cheers! And - greatest success!!

[Rebecca Potter]

Originally posted by @Brian Gibbons:

@Randy Rutman

It seems that a 3 to 5 year lease and a "right of first refusal" with FICO coaching such as www.upgrademycredit.com would do the trick for most homebuyers; I don't like the home buyers having to deal with all these other costs. 

We need more realtors like you who truly look out for others and not just yourself. That sure would make for a better world.

[Rebecca Potter]

***SCAMMED HOME PARTNERS OF AMERICA LIBERTY REALTORS MCKINRY PATH LIGHT MANAGEMENT*****

I would NEVER recommend this realtor to anyone I know or do not know. We were convinced that fixing a few things on credit due to bad divorce is best so in the meantime we could purchase a home through Home Partners Of America with Pathlight Management as the company to deligate repairs and monthly payments. We were told when we asked about home inspection prior to purchase that the investor Home Partners and their Management company will handle all that. As it states o their website they do the inspection and do not purchase homes with pre existing problems such as mold etc. The realtor and assistant stated to us when we questioned about home(Owners daughter just moved out a few months ago) come to find out from the neighbors as we are the laughing joke not jus in the neighborhood but town the home had been vacant for almost 3years due to so many issues related to the home. Shotly after move in I started to become very ill and then housebound. Could not think, see, hard to understand me when I spoke rashes burning itching all over from scalp down. Very tired but cant sleep do to wanting to crawl out of skin, no longer can drive with no family neighbors pitch in to help with son groceries and meals. before moving in we came to the home questioned downstairs bedroom/office (work from Home) not anymore since this all started. We were told that was due to clogged gutters and dirt from vacancy. Painted over. After almost two weeks or so of living in home Path lights inspector came to due walk through and we stressed our concerns since walls were turning again and we were told "this will be reported and addressed ASAP" NOTHING I shortly after move in became ill and then worse and worse n Doctor could figure it out . I even flew to California to the University of LA to see if someone could help me. @ days prior o leaving a neighbor out of concern came over to ask me if I had ever gotten the walls in the downstairs/home office addressed. If not they are truly concerned and recommend for us to have it tested threw a likened state analyst for black mold. When I came back from California and the few days I was out f the home I stopped itching brain fog was diminishing and I could walk and see things better some. Results came in and two of the worst types TOXIC BLACK MOLD!!!! Funny Home Partners Of America/Path light and realtor contact you once you report to them the news "O WWE ARE SO SORRY WE WANT TO HELP IN ANY WAY" then nothing!!!! You put your SAVING INTO FIXING UP THE HOME THINKING YOU ARE GOING TO PURCHASE AT YEAR MARK. Nope they don't care you cant work you lost all that money medical bills stacking up marriage is in shamble and you no longer are that parent who was once involved. you are advised you have to leave your home which splits your family (YOUR WHOLE WORLD) and they don't care!!!!! Realtor wont return calls nor help to relocate you as they made their commission and P.S. buy the way we will take your call if YOU PAY MORTGAGE!!!!! Hired home inspector because no one will give you a copy of the one they state on website and to you that was done. So out of your [pocket AGAIN more money you come to find out the home has Toxic Black Mold in more that just the locations than the two areas Quest Analytics (HIGHLY RECOMMED GREAT CO.) not anyone of them care nor will they have a full home testing done. In the mean time you NEW OF A WONDERFUL LIFE 8MO. AGO and NOW its all torn to shreds they don't care. WHERE IS ARE RENT??? This realtor new that this home did not pass inspection so did Home Partners ad the contractor and Pathlight Management BUT they put us in the home thinking WILL ALL PROFIT!!!!n PER OUR HOME INSPECTION 3 DAYS AGO THIS HOUSE IS NOT PASSABLE AND UNSAFE!!!! Your LIFE MEANS NOTHING
BEWARE BEWARE BEWARE

• Written by

  Rebecca Horan

[George S.]

I personally think that in the vast majority of cases, people should NOT do rent to own contracts.  Whether its houses, or furniture.  You end up paying significantly more than if you'd have saved, worked on your credit score, and bought a house you can afford.  

The real issue is that people don't want to wait.  They want their house or furniture now, no matter that its a bad deal for them.    

We've seen it with subprime loans, some with variable APR to allow the buyer to buy more home than they can afford, because they "deserve" it. Now we see the rent to own trap. The finance industry is always very clever to take as much money as they can from you.

[Rebecca Potter]

We were convinced that fixing a few things on credit due to bad divorce is best so in the meantime we could purchase a home through Home Partners Of America with Pathlight Management as the company to deligate repairs and monthly payments. We were told when we asked about home inspection prior to purchase that the investor *Home Partners of America* and their Management company *Path Light Property Management* will handle all that. As it states on their website they do the inspection and do not purchase homes with pre existing problems such as mold etc. The realtor and her assistant stated to us when we questioned about the home (Owners daughter just moved out a few months ago) come to find out from the neighbors as we are the laughing joke not just in the neighborhood but the town, the home had been vacant for almost 3years. Due to so many issues related to the home. Shotly after move in I started to become very ill and then housebound. Could not think, see, hard to understand me when I spoke I basically thought I was dying and NO DOCTOR could figure out what was wrong!!! Rashes all over my body from scalp down, BURNING, ITCHING, stabbing. Very tired but cant sleep due to wanting to crawl out of my skin. I could no longer drive. With no family neighbors pitched in to help with my son, groceries and meals. Before moving in we went to the home while the contractors were doing the make ready. We questioned downstairs office in regards t the beveling of the wall as if someone was inside and trying to get out. We questioned the black coming out of the cracks and opposite wall with black draining out of cable jack? We were told that was due to clogged gutters and dirt from vacancy. Painted over. After almost two weeks or so of living in home ***(All 3 AC units out!!! No dishwasher NOT EVEN BOLTED IN, Oven not working, Plumbing issued ETC.)***Path lights inspector came to due walk through and we stressed our concerns since walls were turning again and we were told "this will be reported and addressed ASAP" NOTHING!!!! Shortly after move in became ill and then worse and worse no Doctor could figure it out . I even flew to California to the University Irvine to see if someone could help me. 2 days prior to leaving a neighbor out of concern came over to ask me if I had ever gotten the walls in the home office addressed. If not they are truly concerned and recommend for us to have it tested threw a licensed state analyst for black mold. When I came back from California the results came in and two of the worst types TOXIC BLACK MOLD!!!! I HAD BEEN POISONED!!!! Funny Home Partners Of America/Path light Property Management contact you once you report to them the news "O WE ARE SO SORRY WE WANT TO HELP IN ANY WAY" then nothing!!!! You put your SAVINGS INTO FIXING UP THE HOME THINKING YOU ARE GOING TO PURCHASE AT YEAR MARK. Nope they don't care!!!! You cant work!!!! You lost all that money and medical bills stacking up, marriage is in shamble, and you no longer are that parent who was once involved. With no family or friends to stay with you are advised you have to leave your home which splits your family APART (YOUR WHOLE WORLD) and they don't care!!!!! Realtor wont return calls nor help to relocate you as they made their commission and P.S. buy the way we will take your call if YOU PAY MORTGAGE!!!!! So I hired a home inspector because no one will give you a copy of **(SO CALLED ORIGANAL)** the one they state on website the do prior to home purchase, and also to you that was done. So out of your **(YOUR POCKET)** AGAIN more money!! You come to find out the home has Toxic Black Mold in more that just one of the locations than the two areas you suspected!!! Quest Analytics (HIGHLY RECOMMED GREAT CO.) not anyone of them care**(HOME PARTNERS OF AMERICA?PATH LIGHT PROPERTY MANAGEMENT)** nor will they have a full home testing done. In the mean time you NEW OF A WONDERFUL LIFE 8MO. AGO and NOW its all torn to shreds they don't care. WHERE IS ARE MONEY??? THEY new that this home did not pass inspection!!!! BUT they put us in the home thinking we were despite, gullible, and they WILL ALL PROFIT!!!! PER OUR HOME INSPECTION 3 DAYS AGO ***(AGAIN MORE MONEY OUT OF OUR POCKETS)***THIS HOUSE IS NOT PASSABLE AND UNSAFE!!!! I have emails stating from a manager the dropped the ball on OTHER?MORE issues with the home. WE EVACUATE WITH NOTHING NOTHING LEFT EVERYTHING NO WHERE TO GO!!! We were then told they are so sorry they want to help ****STILL NEVER SEEN ANYTHING***** the ONLY help from them would be to take a smaller home that we would NEVER pick/NOT SUITABLE for our family*****MORE EXSPENSIVE 1/2 SIZE**** DID NOT TAKE IT! Received call to meet senior VP at home (4 guys ) show up take photos inside outside **(YES WE EVEN HAD MOLD GROWING ON OUTSIDE OF HOME)*** I was told this was the first they heard of the issue BBUUTT out of Senior VP'S mouth he states he viewed pictures and read report DATED 2 WEEKS after move in!!!! They new and chose to not do ANYTHING because they will not spend money in repairs!!! **(THAT WILL TAKE OUT OF THEIR POCKETS)**Your LIFE MEANS NOTHING!!!! They want you to sign a gage order and the ONLY concern is not to speak out and show proof!!!! MONTHS LATER WE ARE STIL LIVING IN A HOTEL AND TEHY HAVE DONE NOTHING!!!! I m still having the medical issues and life will NEVER be the same!!!!Please fix credit issue and do your own loan!!!! THEY WILL SUCK YOU DRY RIGHT TO THE CORE AND NOT EVEN BLINK!!!!!!!!!!!!!!!! THE REALTORS LOVE THEM BECAUSE THE MARKET IS SLOW AND THEY ALSO PROFIT PROFIT PROFIT!!!! SAVE YOUR FAMILY, MONEY, HEARTACHE, LIFES, MARAIGE, AND EVERYTHING THAT MEANS ANYTHING TO YOU!!!!!
BEWARE BEWARE BEWARE

[Rebecca Potter]

HOME PARTNERS OF AMERICA,BLACK ROCK INC,KKR,PATHLIGHT PROPERTY MANAGEMENT POISONED ME WITH TOXIC MOLD AND DONT CARE*
I'm fighting this with the same treatment as if I had cancer

[Julia Phillip]

It's a fantastic program! I have lots of colleagues who have helped clients go this route and I'm closing on my first transaction wit them in 2 weeks!