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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: David Jones who wrote (17279)	2/13/2004 4:39:15 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

My area has had some version of zero down for years and years. It's how various property owners have gotten rid of properties that are impossible to rent in the rental market. They advertise them as "rent-to-own" or "buy like rent". It costs the person the same amount as if they were renting to get into them, two months rent. The owner finances the buyer using a 30 year with a five year balloon. When the renter, oops I mean "owner", defaults or can't refinance when the balloon is up, they then take back the house and do this all over again with the next person. It keeps them from having to do any maintenance while the person is in the house and sometimes it gets them out of a negative cash flow house that they might have picked up for the tax lien. A small percentage of individuals will make the loan payments on time and be able to refi in 5 years when the balloon comes due but these guys almost count on the fact that they won't. Also, believe it or not, there are lots of individuals who will buy up these types of mortgages, at a discount of course.