With mortgage rates super low and a reasonable amount of home inventory to choose from, the real estate market has remained strong thus far for 2019. While catching up on some of my real estate reading, I came across this most recent article that talks about a loan option where an investor takes out a loan for the home with the intent to lease it back to the buyer that wanted to purchase it, but could not qualify. A portion of the lease payment goes towards the loan and within a few years of leasing they can then likely purchase the home. If the investor pays cash, then I don’t see a problem with what they do with their money, BUT if they take a loan, I see potential big problems! Like if the market changes and the value goes down and the tenant/ buyer walks away and the investor is held holding a loan they can’t pay…… and maybe for multiple properties??!! Can the investor carry the loan payments until the home sells? What if the buyer decides after living in the home for the 3 years they don’t want it anymore? Yes, they lose the money that went into the equity, but will they care based on current conditions, life situations, etc. ? Read more of the article here.
Do we dare venture into this sort of “alternative lending” and risk another potential housing crisis?
