Real estate investors and private sellers are turning to lease options in order to sell property they no longer want. It can be a practical, efficient and lucrative way to sell. So the question is, how do lease options work in my market . Learn more about how it works in our latest post!
Are you feeling stuck trying to sell your home ? Have you tried listing it without any reasonable offers coming in? Did you know that With lease options, you can sell the house for the price you want, while making an extra income until the house closes. Keep reading to learn more about how to set it up, as well as the pros and cons it can offer you!
What Is It?
A lease option agreement gives the tenant an easy way to lease your house with the option to buy at the end of the lease term. It’s often a win-win situation that benefits both the buyer and seller of the home. It’s not the first thing property owners think of when deciding to sell their home.Keep reading to see the number of benefits to consider.
What Are The Benefits?
With lease options is unlikely that your tenants will consider breaking the lease. The tenants usually have a real strong interest in the house and will be paying a higher rent plus a deposit that they can lose if they decide to leave the property. If they choose to default on the lease, the contract agreement is voided and they are out the extra money that has been spent.
Higher Than Average Rent Payments
There are cases where a portion of the monthly rent payments can be used towards the down payment of the house. And in many other cases, the higher rent is pure profit depending on the equity of the property. The inflated price is the cost of letting the tenant postpone the purchase by allowing them to lease.
Sell For The Price You Want
When the tenant is more eager to buy, you likely won’t have a problem with them agreeing to pay the price you want for the home. As long as the house is worth the price you want, your tenant will pay. If you list the house with an agent on the MLS, you won’t have any guarantees of getting the price you are after for the property. In many circumstances you’ll even have to lower the price and deal with negotiations if it doesn’t sell right away.
When the tenant has a larger interest in the house, they’ll do more to take care of it than the average renter. They often treat the house as if it were their own, going out of their way to keep things nice and clean.
What Are The Drawbacks?
Locked In Price
There are no negations at the end of the term because, the price is negotiated form the beginning, so if your home value jumps up 20% during the agreement, you will still have to sell for the pre-negotiated price.
You Won’t See Your Cash Right Away
You should only do a lease option agreement if you don’t need the funds from the sale right away. While you will receive a deposit and higher rent payments, the balance owed to you won’t be paid for a couple of years.
How Do I Set It Up?
Setting up a lease to own agreement is similar to setting up a rental agreement but with an option to buy at the end of the lease term. As with any real estate agreement, the terms of the deal should be made very clear to both parties. Both the tenant and the owner need to know what their roles and responsibilities are in relation to the home. For example, in most cases, the tenant will be responsible for the repairs, maintenance and even the property taxes on the home during the duration of the lease period. Working with professionals such as Three Brothers Investments LLC can help you to ensure the agreement is handled correctly.