Why ALL landlords MUST use Rent to Own / Lease Options

Thursday, September 27

 First of all, for those who aren’t familiar with this concept. Rent-to-own, or more formerly called a lease option. This means the tenant is also the buyer, what I like to call a tenant-buyer. They are going to rent the property just like a regular renter but they have a vested interest and plan to purchase the property at, or before the option period is complete. This typically ranges anywhere from 2-5 years. By this time, the buyer has improved their credit, earned a buyer’s credit (typically 25%) and equity in the home. The bank is much more willing to give them a loan, at this point.For most sellers, it sounds like a scary proposition but it is actually a very common practice. In fact it is included in most lease agreements, it’s right beneath the terms of the contract:The screenshot is from a form created with:”Wait a minute” you say, “it sounds like the tenant-buyer has all the fun!” *buzzer sound* Wrong!Here are the benefits to the seller:Low maintenance- 
It’s the tenant’s responsibility up to $300/mo. 
That’s just an example, many people opt for more, or less, it’s up to you!
Less incidents- 
The tenant treats your home like their home so less damage is done to the property, overall.
They settle in and take pride of ownership.
More rent money- 
You are acting like the bank so you set the terms and add interest as you see fit.
They are willing to pay more than market rent because you are doing them a favor.

More upfront money- 
Instead of a refundable deposit, you get an option payment!
This is a non-refundable amount (more than twice the rent) just for considering a RTO.

More backend money- 
Again, you have given the buyer an opportunity they would not have had without you, you can charge what the property will be worth, most people figure 5% annual growth.
All you are giving them is 25% as a buyer’s credit towards the end purchase.
And the list goes on and on…However, I see there are still skeptics out there saying, “I could just sell it for all that trouble.”But, before you settle for that option consider this:Traditional sale-A house is on the market for $100,000. Let’s say it could even sell for that minus 6% for agent fees, 3% for tax and title and another 1% for closing costs. You are at $90K for your $100K home. That’s not even figuring in marketing and the time it takes to sell it.Landlord route-You can rent it for about $750/mo (market rent) depending on where you live. Assuming a 5% annual raise in rent, you’d be getting about $28K over 3 years. You have to fix every little maintenance problem that comes up. Conservatively, you can assume about $5K over 3 years and that’s assuming nothing goes haywire. Now, you netted about $23K minus your mortgage insurance and taxes. You are somewhere around $20K for 3 years and had to deal with a tenant. Heaven forbid, the housing market has taken another dive and your property is upside down, again… Rent-to-Own- You can rent it with an option to buy and your tenant will pay a premium for the opportunity. They will treat it like their own causing you less aggravation and damage. Don’t forget the maintenance is covered up to $300/mo!! No more maintenance! That’s worth at least $5K over 3 years, probably more. Also, you can get $950/mo instead of the market rent of $750. Then, after 3 years of collecting a lot of rent, they cash you out at FULL price! 15% more than it was worth 3 years ago. It’s recession proof!! Let’s add it up: $31200 rent less mortgage insurance and taxes + $1900 option payment + $5000 no-maintenance + $107800 sale less buyer’s credit = $145900!!As you may know, I went to school for a long time but I am not great at math. But rent-to-own adds up to me!! I will choose RTO all day long! Are you a seller?  I have pre-qualified buyers lined up to rent-to-own your home!  Ready to make some money?  Thanks for reading!As always, sharing is caringJen “Doc” Chandler415-SELLIT5LIENon.US


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