CAUTION: POSSIBLE SCAM

[Huy Thai]

Hello BP,

I wanted to share with you a possible scam I've noticed in the Houston market (could be others too).  I have multiple properties vacant and have received calls from interested parties naturally. I showed one of the listings and it turns out they were NOT looking for themselves but for clients they were doing "credit repair" for.  This person wanted to put in a renter with an option to purchase after 2 years. Even went so far as asking if possible, could they put  a lock box on my door to show other potential credit repair candidates. His selling point was that they made 3 to 4X the rent. Of course I did not pursue this any further but have since gotten more requests of the same type.... "would you be interested in renting to buy?". I might be overreacting but my gut tells me something is off. Maybe they talk you into a lockbox and then act as if it's their property and try to take deposit and 1st month from unsuspecting people? 

Maybe someone with more knowledge on the topic can share, but I wanted to bring awareness so no one gets duped. 

[Joe Villeneuve]

Lease option, rent to own...these are basically the same thing...and one of many legitimate ways to buy RE.  What you are saying makes perfect sense.  The reason they are doing this is because their credit isn't good enough to buy now, but they are working on improving it.  While that is happening, they want to find a house (yours) and will rent it until their credit is good enough to buy it.  Not a scam.

However, there are a number of potential problems you want to avoid, not the least of which is you must have two different contracts.  The Lease, and the Option to buy.  Don't credit anything in the lease payment towards the purchase price when they exercise their option to buy.  There are ways to accomplish the same end result, but works out better for you.

Also, make sure the Option Price to buy is based on future Value...not current.

In the end, you get the benefit of both profit and cash flow, and a tenant that will take care of the house better than a renter only.  Remember, as far as they're concerned, this is their house.  

Not only is this not a scam, but it's a great strategy for selling...and buying, for an investor.

On another note, I would be very careful before jumping to judgement and calling out "scam" .