Every component of the Strait Path system is important, but Compassion- ate Financing is the engine that makes it all run. Compassionate Financing is a rent-to-own program similar to lease options and other seller-financing programs.
It’s a powerful and highly profitable system for the following reasons: 1) it incorporates the best elements of lease options while eliminating the flaws, 2) it relieves investors of the time and effort required to maintain rentals, 3) it generates much higher profits than either rentals or flipping, and 4) it provides substantial benefits to tenants.
Leasing: The Benefits Without the Flaws
Almost everyone wants to own a home, rather than rent, but there are many who are unable to qualify for traditional financing. A lease option gives renters the opportunity to purchase a home within a specified period of time and if certain conditions are met.
Renters like the lease option because it offers a gateway to home ownership. Investors like the lease option because it allows them to collect an option consideration (down payment) and receive a higher lease payment than they would otherwise receive in rent.
Unfortunately, lease-to-own options are risky for many homebuyers because of the way in which greedy, misguided investors apply them.
These investors collect large, nonrefundable option considerations and stipulate a short time period for the lessees to purchase the home. Then, when their tenants are unable to get traditional financing, they boot them out of the home and begin the process all over again with someone else. Many actually hope their tenants will be unable to purchase the home. One of the key elements of sustainable investing is service to individuals, communities, and society.
But this uncompassionate type of investing does not exist to serve, and is therefore unsustainable. It might make a handful of unscrupulous investors good money, but it weakens communities in the long run.
In contrast, the end goal of Compassionate Financing is for tenants to purchase our homes.
We deliberately do everything in our power to ensure that they do, even providing financial coaches and assistance with credit repair. We’ve implemented a number of revolutionary elements into our contracts to reduce risk and create a more equitable arrangement between investors and tenants. Interestingly enough, this approach typically makes us more money than most investors who use traditional lease options earn. It’s a triple-win scenario — we win, our tenants win, and the community wins.
