Rent-to-own programs are resurging

Wall Street firms targeting potential buyers with blemished credit

TRD New York /
Jul.July 29, 2015 11:20 AM

Rent-to-own programs, popular in the 1990s, are making a comeback, with several newly-established firms giving potential buyers with damaged credit an opportunity to become homeowners.

The new programs allow customers to secure a home before they have enough money for a down payment — though they may pay a higher rent than market-rate in the meantime, and end up paying an overall higher price for the home the longer that they rent, according to the Wall Street Journal.

One of the fastest growing firms is Home Partners of America, co-founded three years ago by ex-Goldman Sachs executive William Young. The company received a $500 million equity investment last year from BlackRock’s alternative investments arm.

“What really frustrates me personally is that a lot of people I grew up with, extended family members, would have trouble getting access to mortgage credit today,” Young said.

Home Partners customers can select from homes between about $100,000 and $725,000 in pre-approved communities, which are usually suburban areas with good school systems. Home Partners will then purchase the home and rent it to the customer.

The renter benefits by getting access to a community that wouldn’t usually have many single-family rental options, with the door always open for them to walk away and decide not to purchase the home. Home Partners of America expects about half of the renters to eventually purchase a home. [WSJ] — Tess Hofmann


Related Articles

arrow_forward_ios
(Credit: iStock)

US homeownership rate rises to highest level in 6 years

US homeownership rate rises to highest level in 6 years
Home prices rise at slower pace despite falling mortgage rates: report

Home prices rise at slower pace despite falling mortgage rates: report

Home prices rise at slower pace despite falling mortgage rates: report
REITs upped their portfolios of mortgage bonds to $308 billion (Credit: iStock)

REITs’ investments in the American mortgage market are skyrocketing

REITs’ investments in the American mortgage market are skyrocketing
9004 Congressional Court (Credit: iStock)

Party politics: Huge event-ready house in D.C. area is headed for auction

Party politics: Huge event-ready house in D.C. area is headed for auction
Google Employees Clogging Mountain View Street With Campers, In Effort To Avoid High Local Housing Costs (Credit: Getty Images)

In the shadow of Silicon Valley’s tech boom, thousands of Bay Area residents live in RVs

In the shadow of Silicon Valley’s tech boom, thousands of Bay Area residents live in RVs
U.S. new home construction is down (Credit: iStock)

Everywhere a sign: New home construction falls in March

Everywhere a sign: New home construction falls in March
Fannie Mae issues ruling on renting newly-purchased second homes on Airbnb

Fannie Mae issues ruling on renting newly-purchased second homes on Airbnb

Fannie Mae issues ruling on renting newly-purchased second homes on Airbnb
Another canary? More homes sell at below asking price, report shows

Another canary? More homes sell at below asking price, report shows

Another canary? More homes sell at below asking price, report shows
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...