Appreciation post: My neighbor told me his 'credit repair house' was just a cheap flip with new paint

Honestly, I heard him bragging about buying a place in Mesa for 80k, doing 10k in cosmetic work, and calling it a credit repair strategy. Tbh, that just seems like flipping with a misleading label, and it might give people the wrong idea about what actually rebuilds credit long term. Has anyone else seen this kind of thing marketed around?

5 comments

5 Comments

paige1662mo ago

Ask him what happens when his clients need to apply for a real mortgage later. Does he explain that a rent-to-own deal on a flipped house doesn't build a credit history the same way a standard loan does? I worry these schemes just set people back when they try to buy a car or get a credit card.

paul_ramirez2mo ago

That's a really good point from @paige166. A lot of those rent-to-own contracts don't get reported to credit bureaus at all, so you're paying for years with nothing to show for it. Seen it happen where someone goes to get a car loan and the bank acts like they've never paid a bill on time. The real kicker is when the "option fee" doesn't even go toward the down payment like they promise. Makes it way harder to save up for a real mortgage later.

lucasw847d ago

So what actually happens to that option fee when someone walks away? Does the seller just pocket it and call it a day or is there some kind of legal fight that can get it back?

alicer532mo ago

Paul_ramirez is right, no credit history built at all.

stella_scott967d ago

Exactly. The whole "option fee" thing is a trap. @paul_ramirez hit it - that fee never actually counts toward the down payment, it's just a pure profit grab. What nobody talks about is how these deals mess with your tax situation too. If you walk away, the IRS treats that lost fee like a capital loss you can't claim. So you're out thousands and cant even write it off.