@David Perez, yes, they are a legit alternative. The idea is that you pay an upfront option fee (1 to 10% depending on the owners market/motivation/competition) to purchase the house later at a predetermined price while you rent it, usually at slightly higher market rents (& you may be given rent credits for monthly on time payments which will be used for your closing costs at time of purchase). The option fee and rent credits are NON-refundable if you are unwilling/unable to purchase. So, similar to a land contract, in the respect that you have an upfront downpayment, and above average monthly loan rate payment, which you will forfeit if you stop payments. In both instances, (because your credit is not so good) you are higher risk and are paying more to mitigate that risk (just like a bank will charge you a higher interest rate for a loan if your credit is poor).
Just a very brief overview.
There is a forum here on BP you should dive into but some things you should look out for as a 'rent to owner' are;
1. Make sure the owner IS THE OWNER! Check property tax records on line.
2. The end purchase price to be realistic in a year or 2, it will need to get appraised by your bank prior to purchase ( some owners will set that price with you using an appraisal prior to your agreement plus perhaps 3-5% per year for appreciation)
3. This should be listed as #1, go to your bank, find out what you need to do to improve your credit & how long it should take then Do IT, cause if you don't, you won't be buying that house in a year or 2, possibly get evicted & loose your option fee!
4. You are usually responsible for the cost of upkeep on the property but make sure the owner is for things say for more than $1000, so if the furnace quits & needs replacement it is on them. Think about paying for a home inspector to tell you if there are any major problems with the property.
Personally, I only accept people who do go through a credit improvement Co etc. so I know they actually have a much greater chance to be successful, I also have extended their timeline if they were unable to meet the original. Some charge an additional fee for that, I don't, I'm actually routing for them.
I'm sure others will chime in and fill some gaps in my thoughts.
