TLC offers home-buying assistance for renters

TLC Properties, which manages more than 2,200 apartment units and plans to add another 700 by early next year, is offering the TLC American Dream program to long-term tenants who want to become homeowners.

“We obviously believe in real estate investment,” said TLC Properties owner Sam Coryell Sr., “and the first investment all of us need to make is in our own home. We started talking about ways we could accomplish that, and this way we can reward people for longevity of tenancy by helping them get into their first home.”

The details

Renters who sign a two-year lease at any TLC location can sign up to have 3 percent of their gross rent set aside to be put toward the down payment on a home at the end of the lease. Renters who sign three-year leases get 5 percent of their payments. For example, a renter in one of TLC’s most expansive apartments – currently at $1,250 a month at The Abbey – could get as much as $2,250 toward a first-home purchase if they sign a three-year lease and choose to participate in the program. Other TLC multifamily developments include Battlefield Park, Coryell Crossing, Orchard Park and Sherwood Village.

Coryell said no one has yet signed up for TLC American Dream, which was launched in August. Most of TLC’s renters sign leases in early summer, so Coryell said the real test of the program’s popularity will come next year.

While the program was originally intended to help young couples and families looking to buy their first place, Coryell said it’s open to any TLC renter who wants to sign up.

“If we can keep people for a longer period of time, it helps us because we don’t have to change that unit out every 12 months,” Coryell said. “It helps them if they can have a tangible reward at the end of their tenancy, which they can put toward a home purchase.”

Gary Wilson, a Realtor of A.R. Wilson Realtors and past president of the Springfield Apartment and Housing Association, said he’s not aware of any other apartment managers in Springfield offering a program like TLC’s, but he’s not surprised by the idea.

“As our market dictates how creative landlords have to get, we may see more of this,” Wilson said. “We all have to do what we have to do to benefit our own company … and this sounds like a very good idea.”

TLC American Dream is new to TLC, but helping renters buy is not a new idea in the Ozarks.

Morelock-Ross Properties has offered a similar program for at least 15 years for its rental homes, according to Property Manager Jerri Mitchell.

Mitchell said Morelock-Ross allows renters to put part of their monthly rent toward purchase of their leased Morelock-Ross-built homes.

Mitchell noted that the company doesn’t offer its lease-option program continually, but it will resurrect it as an incentive to fill vacant rental homes. There’s not a set amount set aside for program participants, but Mitchell said it’s usually between $100 and $200 a month.

“Besides giving them money from their rent to go toward a down payment, we build the house for them and we finance it, too,” Mitchell said, noting that about 50 renters have participated in Morelock-Ross’ program. Coryell said TLC’s renters can choose their own builders.

Jacob Harvey, TLC director of marketing and public relations, said tenants have 180 days from the date the lease ends to close on a house and notify the company. Down-payment funds aren’t placed in a special account, but the company keeps track of the amounts accrued, and when a home purchase closes within 180 days, will cut a check to the home buyer at closing. Harvey said that if the renter doesn’t close on a home within the allotted time, the renters forfeit the money.

Financial help

The program appeals to more than just potential tenants; it could also make those tenants more attractive to lenders.

“From a lender’s perspective, it would make the potential home owner more qualified, because they’d have funds for a down payment – and in this market everybody needs to have a down payment,” said Marita Thomas, head of residential lending at Empire Bank.

She noted that current economic conditions necessitate borrowers contributing some of their own money – at least 3 percent for Federal Housing Authority-backed loans and between 3 percent and 5 percent for conventional financing.

Thomas added that while a tenant’s credit may not be directly improved by successfully making monthly payments on a long-term lease – most landlords don’t report to credit bureaus unless tenants miss payments – she said it could indirectly improve a borrower’s credit outlook.

“If a potential borrower needs to be manually underwritten, meaning we have to go out and find sources, a good solid lease history is very important,” Thomas said. “That would be considered a reference or a trade line that we could go out and investigate.”[[In-content Ad]]