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Advantages Of Rent To Own

Updated on March 21, 2013

Rent To Own

Rent to own, or lease options, is considered to be one of the least expensive ways to sell, buy and even invest in real estate. Lease option has many different advantages that you should know about. Below are a few benefits of lease option.


What Is Rent To Own

Rent to own is exactly that. A person rents a place and once the lease is over with, they will have the option to purchase the home.


Landlord And Home seller Benefits

Landlords/sellers who decide to do lease option will be able to get the most money for their property, even if the demand is low. More buyers will be attracted to what you are selling, and they will be more than willing to pay a premium. The reason why is because buyers will be interested in the financing terms that you are offering, as well as the value. You get to decide the terms of the financing, and you can decide what kind of value a buyer will get for their money.

A landlord/seller will be able to maximize their profits by demanding more rent when they do a rent to own option, and this is because of the finance terms that are being offered, as well as the value that the buyer will receive. If you want to be able to demand more rent, and you want to increase your cash flow, then you should consider allowing potential buyers a lease option.

You could even receive option money that is non-refundable. This means that deposit that the buyer gives you is yours, regardless of whether or not they decide to default on their terms and conditions of the contract or even if they decide that they are not interested in buying the property. This is a win-win situation for you, because you get to make money when the buyer gives a deposit, as well as make their rent payments.

One of the main reasons why you should consider a lease option for buyers is the amount of money that you can save on fees. In matter of face, you could end up saving thousands on dollars on fees, because you will not be forced to pay a percentage of the money to a realtor. Most realtors charge around 10% of the sale price of a home, and they take that as part of their commission. Also, many realtors charge for advertising fees, but you will also save money when you choose to do a lease option because your home will likely sell quickly.

Landlords will also be able to lower their risk. Basically, when you just rent a piece of property, then you are taking a risk on tenants. Some tenants will not take good care of your property, but when you do a rent to own option for a tenant, then they are more likely to have the same mindset that a homeowner will have, especially if they are serious about buying the property when the lease is done.

Finally, another advantage for a landlord is they will usually not have to provide any maintenance. This is because the tenant will try to take great care of the property because it will be theirs in the future. Many tenants will even decide to do some maintenance of their own, and they will likely make improvements to the home as time goes on.


Benefits For Tenants/Buyers

Buyers will also be able to enjoy many benefits of renting to own. The best thing about renting to own is that the tenant's money is actually going towards something. If you simply rent a place, then your rent money is just going into the pockets of the landlord. However, if you take advantage of a rent to own option, then each payment that you make is going towards the purchase of the property.

Another benefits that is worth discussing is the fact that you will probably not have to pay anything at the time of closing. The reason why you will not have pay anything, or pay close to nothing, is because your monthly rent payments will be credited and the deposit you made will also be taken into consideration.

When you choose to do a rent to own option, then the chances are you will only have to pay a little bit of money upfront, and then you can move into the property. However, when you choose to just buy a home, then you will need to put a down payment. Usually the down payment is around 5%, which means that you will likely need thousands of dollars. When you do a lease option, the usually you will only need to pay the first month's rent, and you will usually need to put a small deposit down. This option still works out cheaper than just buying a place.


Investors Can Benefit Too

Even investors can benefit from rent to own. Investors who decide to invest into a piece of property will enjoy the same exact benefits that landlords enjoy, as well as the same benefits that buyers enjoy. When you invest into a piece of property, by doing a rent to own option, then you will not have to go through the banking process, which includes finding a lender or going through a very long loan application process. When you invest into properties the traditional way, then you will usually have to wait weeks and weeks before you can finally acquire the piece of property that you are interested in. As an investor, you will be able to drastically increase your cash flow, and this is because rent to own contracts are very easy to use, so you will be able to sell and buy property very quickly. This means that you will be much more productive. If you are wanting to get into investing in properties, then try to do a rent to own option.


Conclusion

As you can see, rent to own offers many advantages to buyers, sellers and even investors. If you are given the chance, then try to get your hands on a rent to own property.

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