You are viewing the printer-friendly version of Leasing With Option to Buy

Leasing With Option to Buy

The problem with renting out single family homes is that you could be missing out on a strategy to put more money in your pocket. Although these properties are more desirable, they are more liquid and the tenants sometimes take care of minor maintenance. The biggest drawback is that your tenants may call you in the middle of the night to report a clogged drain or a bug problem. A huge drawback is when the tenant moves out you loose 100% of the income and you may have to spend a lot of money fixing it up for the next tenant. There is a program that is popular with the tenants as it is with the owners: leasing single family homes with an option to buy.

This is the strategy where you offer your tenants the right to buy their home at some future date. It is the option consideration. They might agree to do all repairs, maintenance and upgrades on the home until they buy it. They would do this because you have offered them the opportunity to own the home. They could start fixing it up like they want and they don't have to pay for the home until some time in the future.

You could command up to 10% more in rent than if you would lease the property. You could also get a nonrefundable up front fee of 3 - 5 percent. Your tenants pay more in rent, take care of repairs and if he moves out without buying the home, you keep the option fee. This is very appealing.

Home ownership is the American Dream, and it is out of reach for some people because of credit problems, lack of down payment or other problems. In the meantime these people are renting. They want and need a lease/option agreement that will allow them to improve their credit, build equity and save a down payment, while test driving their future home.

With the lease/options you will be able to raise your standards to get the best tenants. Your phone will not stop ringing for this opportunity. Your phone will stop ringing in the middle of the night for maintenance complaints. Your tenants will be glad to get the chance to buy and they are more likely to take care of the property for you.

Before setting up your program, you need to understand the working of options to buy. It is very crucial that you have well written contracts to cover you in case there is a problem. Learn how to advertise and market your deals. Once you learn how to do it then it's not complicated at all. It is very rewarding.

aa