Do you have a property you want to sell in the Cleveland area? For many homeowners, using a rent to own agreement will be the most profitable way to sell their home.This option gives you the seller, a larger pool of cash buyers to pick from, while giving yourself a larger pay day in the future and generating passive income. Learn more about how it works and what you need to do to sell your house using a rent to own agreement!
Many sellers don’t consider the benefits of a rent to own agreement for their Cleveland house.Most sellers only think one way,” Sell my house fast” which isn’t wrong. However,if you are patient and intentional and determined you can use those monthly payments to restructure your life. You can change your perspective and relationship with money! Having that passive income helps to reduce the temptation to create more debt and allow you to see it as “you”creating savings and “you”freeing your monthly income by paying down and eliminating your monthly bills.One more HUGE BONUS...your creating a habit of eliminating and saving that will last for a lifetime!
While the terms of every contract are different, there are some great perks that you will see across the board. If you don’t need the cash from the sale immediately and are comfortable renting out the house for an above average amount each month, selling your house via a rent to own agreement might be the best way to sell your Cleveland house to home buyers,like real estate investors or people with challenged credit and on the road to reform with professional credit repair team/person in place,and a host of other types of people.
#1 – Cash Upfront
With most rent to own agreements, the tenant is required to make a down payment to the seller. While this may be much less than with a standard loan, it should be enough to ensure the tenant won’t back out of their debt. You can also utilize an option fee, which is non-refundable and provides the tenant with the option to buy. This is usually about 1% of the sale price. In most cases, this option fee and a portion of the monthly rent will go toward the tenants down payment when the official sale occurs. With the investor home buyer, you have a greater chance of a more secure and experienced person in place. This investor or tenant home buyer is responsible for complete maintenance repairs and upkeep of the property.You are responsible for receiving monthly payments (mailbox money) and deciding how much to save or invest.
#2 – Generate Passive Income
So long as you have a tenant in the home, you will be generating income on the property. Many times, a tenant will pay above average rent, with a portion of the funds going toward the eventual down-payment to the bank. Your tenant isn’t going to want to risk default, losing their deposit and option to buy. Knowing this you can almost rely on a continued tenancy from your tenant for as long as you own the property. With the investor it works a little different,they are still completely responsible for all of the same things as the tenant buyer,except the tenants agreed upon responsibilities. The investor is responsible for paying you and managing the tenant…you decide how much to save or invest with the investor in place and no emergency calls from tenants or tenant disagreements,or excuses about non-payments!
#3 – Get The Price You Want
Tenants using a rent to own agreement typically aren’t able to qualify for a conventional loan. Whether they don’t have the down payment, the income to qualify, or the credit score required, buying via a rent to own agreement will allow people to purchase who may not have been able to in the past. As such, by having the opportunity to buy, these folks will likely be willing to pay your asking price for the property, as long as it’s fair. With investors same concept,they may have funds tied up with another project or another investment this allows the investor to purchase now and have the option to make a large payment in the near future,usually 2-10 yrs. This will of course depend on the sales price and down-payment.
* Keep in mind that the value of the house could go up or down while the agreement is in place. The negotiated sale price will remain the same.
#4 – No Risk If The Tenant Defaults
With most agreements, if the tenant defaults, the seller is able to keep all monies paid. Sure, you will be back at square one, but you will likely be ahead financially and have the option to sell outright or find a new rent to own tenant. The amount you can profit here may be in the thousands when you include the raised rent and down payment from your now former tenant home buyer and with your new mindset you should have money saved and or decreased your debt.
#5 – Increase The Number of Potential Buyers
There are kinds of wonderful people out there who could afford to buy your house, people who would never default on their loan. However, they may have a blemish on their credit report or insufficient down payment, making them unable to buy a house at the moment. They want to buy but are being held back due to something on paper. With a rent to own agreement, you will be able to open the door for many people who may not have been able to buy otherwise.
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” When is the best time to buy investment property for Cleveland Ohio Investors – 3 tips”.