I found an article a while ago and took some notes on it and wanted to do a post on it since it is something that not everybody has heard of.
How do you avoid the headaches of being a landlord and continuously having to maintain and manage the property? The best way is by selling a home on a rent-to-own buyer. This lets you leave the maintenance issues behind.
When you sell your property on a rent-to-own basis, you don’t get a buyer and you don’t get a renter. You get a tenant-buyer. A tenant-buyer gives you all of the best parts of a buyer, such as a large chunk of money up front, called an “option payment,” an owner mentality to treat the property well, and a hands-off feeling for you, the investor. And you get these benefits without giving up all of the appreciation. Also, because not all tenant-buyers end up buying, you might very well get the chance to sell the property a second or even third time to new tenant-buyers for even more money!
The reasons I like this option in this economic environment is that we face falling home prices and inflationary pressures, which lead to rising rents. One reason why doing the rent to own is favorable, or sometimes called a lease option, is that it locks in the buyer to stay in the place for a longer period of time, typically a year to a few years with the option to buy the house at a set price at the end of the term. What is nice about this chunk of money up front is that not only does it give you immediate cash, but with falling prices for the next few years it almost guarantees that your buyer won’t exercise his option to purchase the place and most likely have them move on once the lease portion of their agreement is up as they don't want to purchase an asset whose value is falling in value each year. This is fine since we could do a rent to own situation again and actually try and sell it in a few years since prices may or may not have actually bottomed out and just repeat the process.
When putting up signs advertising the house you ccan put the rent amount on the sign, but don't put the price. You can tell them the price once they've walked through the house. The following are some examples you can use to advertise your house.
Rent to Own
3 bed, 2 bath House
For Details Please Take a Flyer
Call 888-333-1212 ext. 6
Rent to Own!
[space to write in info on house
e.g., 3 Bed, 2 Ba, 1,900 sf, etc.]
Call 888-333-1212 ext. 6
24-Hour Recorded Message
Rent to Own!
3 bed, 2 bath House
Call 888-333-1212 ext. 6
24-Hr. Msg.
Have a detailed voicemail message on the house and try and get groupings of people together to go through the house. This causes a greater sense of urgency and creates competition.
To recap here are six reasons for why Rent to Own works.
1) Rent Credits: Each month a big chunk of your rent could get credited toward the possible purchase
of your home, allowing you to build equity in your home faster than with a traditional mortgage—
no more wasting all of your rent money.
2) Improving Your Property: Because you may own this property soon, any improvements you do
that increase the value of the property may help you build more equity for yourself.
3) No banks to deal with—no more bank hassles!
4) Own Your Own Home: You enjoy the benefits of owning your home before you technically ever
buy it!
5) Flexibility: You have total flexibility: You have the option to buy your home, not the obligation!
6) Your Credit: You are creating a strong credit reference while you are renting to own!
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