Mark Reo says he’s in the business of creative problem-solving in a problematic market. The founder and president of Cranston-based Reo Properties came up with his Reo Rent-To-Own program “in response to the need created by the drastic downturn in the real estate market.”
Rent-To-Own gives sellers the flexibility to buy the property they’ve been looking for without having to complete the sale on their existing home, Reo notes. It also allows them to move on without waiting or paying associated expenses.
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“Our clients understand that the market is very, very slow and we need a creative solution,” he said in an interview.
Sellers lease property directly to Reo with permission to sublet, and he personally screens, pre-qualifies and places “tenant/buyers” in the homes. With the success of the program, he currently has about 50 qualified tenant/buyers and not enough properties to put them in.
In addition to a security deposit or other fees, tenant/buyers are required to pay a substantial, non-refundable deposit before moving in. The deposit amount is taken off the purchase price if they buy the house, encouraging them to move toward the purchase.
“The program is designed to sell the house, not turn it into a permanent rental,” he said.
Since the first Rent-To-Own in April 2006, Reo said, tenants have generally closed on properties within three and a half months.
Another draw for sellers is the fact that Reo acts as the “go-between,” handling all rental management issues.
“It alleviates the owner from any management responsibility,” he said. “Most of the time, a homeowner does not have any management or rental experience and doesn’t normally care to. Because we are a property management company and we do a lot of rentals, that’s our forte.”
Reo said that while he didn’t invent the program, his financial connections make it unique. In business for almost 10 years, he has formed strong relationships with mortgage companies and lenders. He helps them recognize that with a Rent-To-Own contract, a seller’s property goes from a liability to an asset as it generates income.
“I invented this concept with all of our support,” he said. “We’ve gotten banks to recognize the program so the seller can move on,” he said.
Tenant/buyers also benefit from Reo’s connections: He reviews their credit scores and knows how to help them qualify for a mortgage in a short amount of time, and get an attractive rate.
“We’re extending terms that are manageable for people,” he said. “This is the ultimate win-win.”
