After the economy crashed in 2008, Benny Andrews and his wife closed their Tampa direct-mail business, paid off all their bills and lived by cash only.
It was a smart way to stay out of debt. But it wasn't so good when they began to think about buying a house.
"We didn't have credit cards, we didn't have car payments, we didn't use credit for six or seven years so basically our credit score was too low to get a (mortgage) loan,'' Andrews said.
Then, the couple heard about a company called Home Partners of America, which had an enticing pitch: Find a home you like in a good school district. Home Partners will buy the house, rent it to you and give you five years to decide if you want to buy it at a preset price. The Andrews family jumped at the chance and are now in a four-bedroom Land O'Lakes home they hope to purchase if their credit improves.
Rent-to-own deals have been around for decades, some of them scams that suck in low-income tenants who then find the onerous terms impossible to meet. The houses themselves are often in iffy neighborhoods and in rundown condition.
Chicago-based Home Partners is tapping a different market — potential buyers who want to "try out'' a neighborhood before purchasing or those like the Andrews family, who have credit issues but make enough money that they likely could qualify for a mortgage soon.
"The neat part about our program is that it is a resident-led program that lets the consumer select a home that's for sale on the marketplace,'' said Ayoub Rabah, a Home Partners senior vice president. "That gives them the choice and control and flexibility they are looking for.''
Founded in 2012 by a former Goldman Sachs executive, the privately held Home Partners is now in 36 metro areas in 17 states. It entered the Tampa Bay market a little more than a year ago and, so far, has bought and rented out more than 200 homes in Pinellas, Pasco, Hernando and Hillsborough counties.
"What we look for is a good, solid growing market, and the Tampa market really has all those fundamentals,'' Rabah says. "From a job perspective, from a home price appreciation perspective, it's a fantastic market.''
Home Partners is selective about what and where it buys.
The homes must be single-family houses or townhouses in good condition, priced between $100,000 and $550,000 and in a community with a high school ranking in the top half of area schools as measured by standardized test scores. Most of the Tampa Bay homes the company has bought are in more suburban areas like Wesley Chapel, Seminole, East Lake, Palm Harbor and Riverview.
To qualify, tenants must pay a $75 application fee, have stable jobs, a household income of at least $50,000 and no evictions or pending bankruptcies. Move-in costs are a prorated first month's rent, a deposit equal to two months' rent and a fee for any pets. Home Partners takes care of major repairs and pays the taxes, property insurance and homeowners association fees, if any. Tenants pay for renters' insurance and minor repairs such as painting scuffed walls.
During the first year, the tenant can buy the house for a preset price that is 5 percent higher than what Home Partners calls its "acquisition costs'' — the amount it paid for the house plus added expenses like new appliances. For the next four years, both the rent and purchase price go up a predetermined amount each year.
If tenants don't want to buy, they can walk away after the lease is up each year.
Home Partners won't say how many of its Tampa Bay tenants have purchased the homes they rent. Public records show that at least four families have, including Darrin Rogers, a disabled veteran, and his wife, Deborah.
The couple and their two children, who moved from Naples in 2013, initially rented a house in Hillsborough's Lithia area, but wanted to find a nicer place when their lease was up. Rental choices were "pretty dismal,'' Deborah Rogers said, until they learned about Home Partners through a real estate agent.
"We heard that we can go pick the house, which was so exciting, and we wanted to make sure we liked the neighborhood before committing,'' said Rogers, who sells insurance. "For virtually the same rent we were paying for a place that was falling apart, we got a much newer, bigger home in a better neighborhood.''
In January, Home Partners bought the four-bedroom house with a pool and fireplace for $378,000. It agreed that the Rogerses could purchase it in the first year for $408,4000 — 7.8 percent more than the company paid. Last month, the couple bought it for that amount using a VA loan.
The price was "a little higher than if we went shopping,'' Rogers said, "but we didn't have to move, we didn't have to redecorate, we were already living in it so it was kind of a wash. We saw new-home prices higher with less upgrades.''
Lisa Johnston also had trouble finding a decent single-family house to rent until a Realtor told her and her husband about Home Partners.
"This program was out of the sky from nowhere, but it was exactly what we were looking for,'' said Johnston, a purchasing agent married to a mechanical engineer.
Last summer, the couple chose a three-bedroom, two-bath house near Wesley Chapel. Home Partners bought it for $212,000 and rented it to them for $1,800 a month. In May, they bought the house for $231,000, about 9 percent more than what Home Partners paid.
As the Johnstons found, one potential downside to buying from Home Partners is that its sale prices are firm. That can work to the tenant's advantage when home values rise fast, but can be a disadvantage if the house is worth less than the agreed-upon price.
"That's the only negative I'd say about the whole thing,'' Johnston said of her experience with the company. "When the appraisal came in, it came in at $219,000. The contract stipulated $231,000 and they would not budge from that. We had to pay the $231,000 if we wanted it, but I felt the value was going to be there.''
Home Partners has no lawsuits or Better Business Bureau complaints against it in the Tampa Bay area, although there have been grumblings that it tries to low-ball sellers when buying houses. Linda Durham, an agent with Coldwell Banker in Tampa, said the company kept demanding costly repairs on one house she had listed, but eventually agreed to take a $1,000 credit instead.
The sellers, though, "were happy to get it sold, and so quickly,'' Durham said.
Home Partners markets itself through Realtors, including those at large companies like Coldwell Banker and Century 21. Louie Talacay, a Coldwell Banker agent in Tampa, calls it a "great little program'' for larger families that have trouble finding rental houses in good school districts. Because the company pays cash, it can quickly buy the house a family wants and get them in.
Talacay introduced Home Partners to the Andrews family, who moved to Georgia after closing their direct-mail business, but wanted to return to the Tampa Bay area. Andrews and his wife, who have new jobs, are renting the Land O'Lakes house for $1,780 a month and can buy it before next April for $232,400.
That would be 8.3 percent more than Home Partners paid for the house. Still, they are happy with an arrangement that put them and their three children in a nice house in a good area while building up their savings and credit.
"That's what gave me confidence,'' Andrews said of Home Partners. "We were looking for these rent-to-own programs and some of them were very sketchy. They put you in bad areas and maybe you're paying somebody, but they don't make the payments on the house and the bank forecloses. This allowed us to look for a home in a neighborhood we like.''
Contact Susan Taylor Martin at [email protected] or (727) 893-8642. Follow @susanskate