Sell on Lease and Contract for Option to Purchase
I believe that Selling on Lease and a Contract for Option to Purchase is a safe way to do Rent to Own
Benefits to the Landlord/Seller
There are many benefits for the sellers, the greatest of which are attitude and behavior.
Other advantages are:
o
Above market income.
Above market income. oLease contract will command a rent about 10% above the market for a similar property.
Lease contract will command a rent about 10% above the market for a similar property. oTenants will pay that with the belief that they will eventually benefit from the higher than average rent.
Tenants will pay that with the belief that they will eventually benefit from the higher than average rent. oRent comparables are not an exact science, and we have always been able to get top market rents on option properties.
Rent comparables are not an exact science, and we have always been able to get top market rents on option properties. oGreatly reduced repair expense.
Greatly reduced repair expense. oThis is a definite benefit for the owner, and we quantify it in an amount of about 30% less maintenance costs than rented houses of the same size.
This is a definite benefit for the owner, and we quantify it in an amount of about 30% less maintenance costs than rented houses of the same size. oThis program definitely does not eliminate maintenance costs, regardless of claims of option promoters.
This program definitely does not eliminate maintenance costs, regardless of claims of option promoters. oTax deferred income.
Tax deferred income. oThe option deposit is not taxable until it is exercised, or abandoned.
The option deposit is not taxable until it is exercised, or abandoned. oThese funds can be applied to additional purchases or anything desired and paid for on closing by normally reducing the selling price.
These funds can be applied to additional purchases or anything desired and paid for on closing by normally reducing the selling price. oLow turnover.
Low turnover. oWe average between four and five years tenancy on option properties.
We average between four and five years tenancy on option properties. When the option expires, after two years, we sometimes extend them, or go to a direct lease.
oThe lessor can always grant another option at market price, in the future.
The lessor can always grant another option at market price, in the future. oWe have been able to average over 100% occupancy on all properties, due to the advance rent and security deposits and the ability to rapidly re-rent properties.
We have been able to average over 100% occupancy on all properties, due to the advance rent and security deposits and the ability to rapidly re-rent properties. oMinimal management effort.
Minimal management effort.oContract for option tenants generally pay well, and cause minimal problems, but certainly not zero. I believe you can manage 35% more option properties than plain rentals, with the same amount of effort.
Contract for option tenants generally pay well, and cause minimal problems, but certainly not zero. I believe you can manage 35% more option properties than plain rentals, with the same amount of effort. oThe tenants have something invested, and intend to own the house up until they lose a job, get divorced, or go bankrupt.
The tenants have something invested, and intend to own the house up until they lose a job, get divorced, or go bankrupt. oFull retail sales price.
Full retail sales price. oAs stated, the selling price at neighborhood retail, is not a contested item,
As stated, the selling price at neighborhood retail, is not a contested item, since the buyers do not have the leverage of a cash buyer, when entering this agreement.
oProperty improvements.
Property improvements. oThe tenants sometimes add improvements for their own use and enjoyment, and we have seen room additions, new carpet, tile, paint, landscaping, storage buildings, and many more installed by tenant optionees.
The tenants sometimes add improvements for their own use and enjoyment, and we have seen room additions, new carpet, tile, paint, landscaping, storage buildings, and many more installed by tenant optionees. oSome of these did not buy the property, and left the improvements without compensation.
Some of these did not buy the property, and left the improvements without compensation. oPre-set rent increases.
Pre-set rent increases. oAs discussed, the 5% increases are part of the initial lease, and may be above or below the market, depending on inflation, but that is our best estimate.
As discussed, the 5% increases are part of the initial lease, and may be above or below the market, depending on inflation, but that is our best estimate. oNo loss of ownership rights.
No loss of ownership rights. oThe contract for option states and restates that an option will be delivered in the future, after the specific performance on the lease and that no right title or interest is passed at the execution of the contract.
The contract for option states and restates that an option will be delivered in the future, after the specific performance on the lease and that no right title or interest is passed at the execution of the contract. oThis concept can be used with any lease, on any kind of property, of any value.
This concept can be used with any lease, on any kind of property, of any value. oThe Rent To Own management system could produce the greatest income per hour invested compared to any other buy, sell, fix, exchange, mortgage or broker skill you could develop in real estate.
The Rent To Own management system could produce the greatest income per hour invested compared to any other buy, sell, fix, exchange, mortgage or broker skill you could develop in real estate. oAny lease can be used with the lease and contract for option.
Any lease can be used with the lease and contract for option. Loading
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