[Porsche-O-Phile]

Well, I'm asking from actually two sides:

1. As a prospective buyer, I think this might be a very nice/convenient/easy way to sidestep the entire credit mess B.S. that's likely to take many more quarters or years to sort out before some kind of sanity returns to mortgage lending.

2. My in-laws currently are sitting on three properties back on the east coast that they can't move (or more correctly won't sell at the price required to move them). If I can do some good, solid research in this area and/or find out the initial legal moves to make to do this, perhaps they could secure themselves a good position for the time being, make some decent rent off the places and if they are (or I am) really savvy, they can do exactly what berettafan says - get people who will either default or not exercise their purchase options at the end of the contract term, ensuring they're always breaking even or coming out ahead on these places without the burden of conventional landlord/tenant crap to deal with.

I agree a lot of it might be betting on the market. The "best" position to be in (as a buyer anyway) would be to get in at a negotiated price & payment schedule for X months, then have the value go up, exercise the option to buy and immediately flip/dump it for a profit. Then you're sitting pretty on a nice pile of cash. Unfortunately I don't see a likely market for this happening for at least a few years - but I want to learn now so when it does come, if it makes sense to take a shot, I can.

The big question (either as a buyer or seller) concerns financing. Who sets up the financing? If you go to the end of the "rental" contract period and want to exercise the option, do you have to then come up with 20% down (on top of the who-knows-how-much-down you've already come up with to enter into the agreement in the first place) to a bank/lender to initiate a mortgage to buy? Or do you work this out with the owner's bank in the first place and get their "okay" to take over the note at the termination of the contract period if desired? Or is this simply a case-by-case point of discussion?

There's precious little information online about this.