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I just got off the phone with Michael Shin, founder of National Home Buyers Assistance. He’s started a unique business that offers a way for people with really bad credit to buy a home. One of Shin’s local franchisees will acquire the house for the would-be buyer and rent it to them with an option to purchase. Hopefully at the end of a year the renter’s credit has improved enough that he can purchase the house from the franchisee, at a mark-up of 10-12%. The rents work out to be a little more than market rents too, but, to give the tenant some incentive at the end, the franchisee rebates half of the rent back—if they buy the house—to help with closing costs and a downpayment. Shin says he’s out to help folks buy homes in what’s become a pricey environment. “There’s nobody like us,” he says. “We are a missing link in the real estate industry.”
Shin, a longtime Century 21 broker, says he's got 111 franchisees in thirty states and could have 10,000 some day. He started in 2003. On top of an initial $30,000 franchise fee, the local operators pay Shin what works out to be 2.5% of the cost of the home. For that they get access to a single lender, PrimeLending of Dallas, and the benefit of his national advertising to generate leads. I have no idea if this concept works so if anybody has any experience with it please let me know.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.