Credit Repair -- Part 2

It probably doesn’t surprise you that consumers find more than 13 million inaccuracies on their credit reports each year. These inaccuracies can cost you the purchase of a home, a car, interest rate increases on credit cards, denial of loans, etc. While consumers are certainly empowered to dispute inaccurate items, most of them don't know the best and fastest way to do it.

Most people believe that to get an inaccurate item corrected, you must personally dispute it with the credit bureaus and allow them 30 days to verify the accuracy of the information before they will correct or remove the item.

This isn’t true! While this is certainly the lease expensive method (it's free if you do it online), it is also the most frustrating and time intensive. If you are looking to make a major purchase of a home or a car, or refinance them, there is a better way. Mortgage lenders and car dealerships have direct access to the credit bureaus through their credit report provider. Credit reports can be updated in as little as two hours utilizing a little known vehicle called a "Rapid Re-Score". This service costs $25 per trade line per credit bureau. So, if an item is reporting incorrectly on all three bureaus, it will cost $75 to correct that account. All that is required is documentation from the lender with a contact name and number indicating the correct information. Upon submission, the information is verified, the credit report is updated and a new credit score is generated. Standard turn times run 48-96 hours but as previously indicated, it can happen in as little as two hours.

Myths About Credit Repair --- Part 1

Not a day goes by that I don’t get questions about Credit Repair. I should be used to it by now, but it never ceases to amaze me how much BAD INFORMATION is out there. It shouldn’t be such a mystery, but it is!

I’ve been involved with banking and finance since 1993. I’ve processed loans, been an underwriter, credit manager and Mortgage Broker. I even started a Mortgage Company. Because of this, I’ve picked up some insider information regarding credit repair. I thought I would share it with you over the coming few posts.

One of the biggest myths that people have is that if they pay their credit cards off every month that the cards will show a zero balance on the credit bureau, and their score will be as high as it could be. This is completely FALSE!!!

The truth is that if you utilize your credit cards every month and pay them off on your due date, your credit will NEVER show a zero balance. Because the credit card utilization is such a big part of your score, this can have a huge negative impact! Most people aren’t aware of this and think they are doing the right thing.

The truth is that credit card companies report balances owed on the date they generate your monthly statement.

So, to “beat the system” you have to change the date you make your monthly payment to precede the statement date. In other words, if your statement is generated on the 13th of the month and your due date is the 22nd of the month, every month you will need to go online around the 10th, get your balance and pay it to allow for time to process and register with the credit card company’s internal accounting system. Then, on the 13th when your statement is generated, your statement will show that you owe nothing and the credit card company will report your account with a zero balance owed.

I have seen shifts of over 50 point by implementing this simple technique. This is especially true with people who use American Express, or have only one or two cards that they max out and then pay off.

Stay tuned for more credit repair tips!!!

Should You Sell With a Lease Purchase or Lease Option?

This is a question I get all the time.

Personally, from a psychological standpoint, I would prefer to promote lease purchases because it suggests that the buyers are committed to buying the home.

The unfortunate part about inexperience with real estate law is that most people don't understand that a standard lease purchase can convey equitable interest in a property to the point that if you get a wise guy tenant who knows the law, he can default and require you to foreclose on him first and then evict him (even though title never changed hands).

This process can last longer than 18 months in the state of Georgia, all the while without you receiving monthly lease payments. (Believe it or not this happened to a friend of mine.)

A straight lease does not convey equitable interest and the eviction process can be accelerated.

This is why we promote Lease Options for both our sellers and our own investments. The bottom line is that the risk of the Lease Purchase is not worth the psychological advantage.

Success With Lease Options!

The tightening mortgage market has forced many consumers to consider options other than a traditional mortgage. Although Lease Options have emerged as a viable alternative, history shows that most Lease Options fail. Here are 5 Key considerations to ensure success.


Many companies and investors prefer that you don’t succeed Sadly, many of the nation’s top investment gurus teach a system that is designed so that the tenant will fail. Their plan is simple --- collect option money from the tenant upfront, do nothing to ensure they are in position to purchase the home and then set the price so high that even if they do everything right, they still can’t buy the home because no bank would finance it! They keep the option money, the tenant is forced to move and they repeat the process with someone else
Another common reason for failure is simply procrastination on the tenant’s part. They intend to repair their credit….some day. The truth is that repairing credit takes time. Usually more than a year. It is IMPERATIVE that credit repair begin immediately. Ideally, the tenant should work with both a Loan Officer and a reputable credit repair company.
Along the same line, a lease term that is too short can spell disaster. Working with someone who understands mortgage qualifications will help ensure that the tenant qualifies when it is time to purchase. A 12 month lease term, unless the tenant’s credit is already fairly good, will almost always lead to failure.
Another common issue is not saving for a down payment. Yes, ideally the rent credit will be sufficient to cover the down payment. But the reality is that no one knows what the banks are going to be doing two years from now. It is better to be safe than sorry---save, save, save!
Almost no one would accept a mortgage that didn’t report to your credit. Why accept a lease option? The mortgage market is tough enough as it is. Almost everyone needs all the help that they can get. Two years of on-time payments will cause a huge boost to a credit score. It isn’t that difficult for a landlord to set up and it shows commitment on both sides.

Lease Options can be good for both buyers and sellers, but they MUST be done right!

Why Use A Lease Option Company?

"Man, you aren't going to believe this!".















This is how the conversation began when my partner called me to explain the situation on one of our homes we have available for lease option. To which I responded, "Brother, I have been through so much stuff in my life that I promise you, I will believe anything you tell me.".

He just laughed, knowing from some of our business experiences together that this was true. I had the first hint that something was wrong when I sent a lease option client to view a home and she called me back upset because I had sold the home. Caught completely off guard, I asked her what she was talking about. She indicated that when she got to the property that I sent her out to see, she met the current tenant who indicated that he had purchased the home two days prior and had moved in with his wife and ten children (yes, that is ten with a one and a zero).

It was one of the few times in my life I truly didn't know what to say.

I asked her if she was sure she had gone to the correct address, she said yes, she printed out the photo of the home and it matched the home and address she had been to. At this point, I had no explanation and I indicated that I would have to call my partner and ask him if he had sold the property without telling me (we work together in a variety of capacities and this particular home he personally acquired and controlled). I called my partner, explained the situation and he too was dumbfounded.


After a little digging, here's what we discovered:

My partner acquired this particular property via a short sale negotiation. The property had been vacant for several months. The owner who owned the property BEFORE the owner that he acquired the property from had given a key to the neighbor across the street, presumably as a backup in case she ever got locked out.

Seeing an opportunity to make some fast cash, this neighbor then entered into a lease option agreement with the gentleman with 10 kids. He took money for the lease and a security deposit and allowed him to move in. If you are unfamiliar with the short sale process, short sales are negotiated on properties that are headed for foreclosure to be sold on the courthouse steps. So, the opportunist neighbor allowed the gentleman, his wife and 10 kids to move into a property that was in foreclosure and if short sale negotiations were unsuccessful, would be sold and the tenant would be evicted by the bank even though he had executed a lease and paid his lease payments.

What makes this story even more heart wrenching is that this particular property happens to be on a lake in Conyers and is almost 6000 sq ft and it was leased to the gentleman for $1500 a month. This property currently has a fair market value of $500,000. The gentleman, his wife and 10 kids believed that their luck had changed when they were able to acquire such a home for such a nominal amount.

After a little explanation of his rights, the gentleman went down yesterday and swore out a complaint to have the opportunist neighbor arrested. With any luck, we will help him get his money back from the opportunist neighbor as well as money to move. Though our first instinct was to work a deal with the gentleman to help keep him in the home, he unfortunately cannot afford it and doesn't want to live across the street from the opportunist neighbor who swindled him (though my guess is that the opportunist neighbor may be taking up a new residence courtesy of Rockdale County in the very near future). In any event, my partner and I have agreed to help cover the cost for this gentleman to move and are giving him the time he needs to make necessary arrangements. The moral of the story, "Caveat Emptor, Let The Buyer Beware".

If you enter into a lease option agreement, lease purchase agreement, rent to own agreement, contract for deed, land contract or owner financing deal, be sure to check the county tax records to see who the owner of record is to ensure that you have a legitimate deal in place.

Should I Buy in Atlanta Now or Wait?

Now, more than ever, I hear the question “Should I Buy Now or Wait?” My answer: It depends on where you are.

Atlanta residents are fortunate because it is a great time to buy or lease option a home here. In fact, Forbes magazine recently named Atlanta one of the Top 10 Places to buy in the US.

Why? The median price point in Atlanta is still just $170,000, making our city affordable. That, combined with a strong business economy, an abundance of jobs and a competitive cost of living makes our market relatively stable as opposed to other markets, such as Florida and California.

The dramatic increase in foreclosures has created an abundance of opportunities. Because there are fewer qualified buyers than ever, sellers are motivated to work with those who can buy. This is an excellent time to purchase a home with equity in it or to invest in real estate.

But what about those who can’t qualify to buy now? Can they still take advantage of today’s market?

Absolutely! By locking in a Lease Option now, you can begin taking advantage of Atlanta’s steady appreciation and build equity in your home. Because there are so many homes on the market, sellers are more open than ever to consider selling their home with a Lease Option.
As long as you are committed to repairing your credit and taking control of your financial future, you can be well on the way to homeownership within a year!

Either way, there is no doubt: Now is a great time to buy in Atlanta!

Top 5 Benefits of Selling Your Home With a Lease option

Top 5 Benefits of Selling Your Home With A Lease Option

Properly structured, a lease option can provide numerous benefits in selling your home, especially in a down market. Here are the Top 5 Benefits of a properly structured lease option agreement:


1. Sell your home for TOP DOLLAR- Imagine, in what many perceive to be a depreciating housing market, the ability to sell your property for true fair market value. That's what happens when you sell your home with a lease option.


2. Cover all of your existing debt service and cash flow- Hard to believe but true, selling your home with a properly structured lease option allows you to not only cover all of your existing PITI and HOA fees, but can also provide cash flow. This provides the ability to get substantially above current rental rates which, dependent on market, can easily be 50%-75% of the actual debt service.


3. Tenant takes over responsibility for ALL maintenance and repairs- Understandably, a great many sellers want to sell their home and not become landlords. No one wants a phone call at 2AM over a leaky toilet. Properly structured, lease options require the tenant to cover all maintenance and repairs on the property just as if they had secured a mortgage and actually owned the home. This is a huge plus for a seller. It is important to note that the agreement has to be structured properly because state laws can be different and some states, like Georgia, require landlords to provide a habitable residence. There is a way to legally structure the agreement to place this responsibility on the tenant.


4. No Realtor Commissions!!!- This is a huge bonus. Though you have to wait until a future date to close and realize any profit or gain on sale with a lease option, an added benefit can be that you don't have to pay any Realtor commissions. This can equate to up to 7% of your sale price depending on what deal you have negotiated with your Realtor. 7%!!!! That equates to $21,000 on a $300,000 sale.


5. Lease Option Tenant improves the property- Because they enter into the lease option with the intent of purchasing the property, lease option tenants typically will take much better care of a property and in many cases actually improve the property. From the seller's perspective, this benefit of a lease option is huge. Not only does the property not get destroyed, lease option tenant can actually increase the value of the home at no cost to the seller. In the event that the lease option tenant does not exercise the option, the seller got free improvements to the property, an increase in value and someone to cover the debt service.




A real world example:



We recently lease optioned a property for a client who had had the property on the market with a Realtor who lived in the neighborhood for more than 8 months. During that time frame, he had never received one offer on the property that he had done more than $50,000 in upgrades to. Not even one lowball offer. We entered his property into our inventory and began marketing it to our database of lease option prospects on Friday afternoon at 4:20 PM. The property was sold via lease option by noon the following Monday for full fair market value saving $19,500 in Realtor commissions and helping the client cover all debt service, maintenance and repairs while providing positive cash flow. What is important to note is that during the 8 month period of the property being listed, the client burned up $18,000 in debt service on a property that was unoccupied.



In short, selling via a lease option has many benefits, especially in a truly turbulent market climate like we are currently experiencing. For more information on how to sell your property with a properly structured lease option, please visit http://www.financethedream.com/sell_your_home_with_a_lease_option.html

Vincent Polisi & Wendy Polisi
Co-Founders of Finance The Dream
Atlanta's Premier Lease Option Program