Lock In Big Profits By Offering 'Rent To Own' Deals

Why would anyone accept a lease option, rent to own deal? Why would you, as a seller/investor expression to happen rent to own tenants? How can you utilize this technique to lock IN net income that are much greater than would be establish in a consecutive sale?

Basically, the advantages depend on which of two end consequences occur: either the rent to own tenant finishes on the property, or they don't. You do money either way!

There are many people who have got got got less than sterling credit, might not have a long clip on the job, or not have a short ton of money for down payment, closing, etc. Many people privation to purchase a house - and they anticipate their credit, occupation conditions, down payment amount to better over time. They love the thought of being able to purchase NOW, on a rent to own basis. You can assist these people out, and be paid handsomely for your efforts.

I'll presume a $100,000 property, and you would offer $5-10,000 down, but be willing to take even less, even possibly take monthly payments for the down payment. Because of providing "easy credit", you can increase the terms by an amount of between 5 and 20%, depending on how long the rent to own time time period is, your local market, individual's credit situation, etc.

Lets state you purchase a property for $90,000 that is deserving $100,000 in the unfastened market, and is advertised at $110,000, with 5-10,000 down, and monthly payments of $750 over a 3 twelvemonth period. Note that ALL of these numbers are variable - whatever works for YOU and your rent to own customer. You have got LOCKED IN a net income of $20,000 in 3 old age time, less mortgage wage down, with $750 a calendar month to do any mortgage payments in the meantime. Use a mortgage tabular array (it depends on the interest rate charged) but it wouldn't be any more than than $100 a calendar month that the mortgage is reduced by. Sum net income would be $20,000 less $3600 mortgage paid down, with $750 a calendar month to offset any carrying costs, mortgage, etc - not a bad deal!

Should the tenant be not able to finish on the purchase at the end of the term, you can hold to regenerate the understanding for another period, with a higher purchase price.

That sounds like a very good set up for the vendor, but what if the rent to own tenant bail bonds out on the agreement? The bulk of rent to own understandings neglect to complete, so this is a fairly likely occurence, but can be reduced by picking your tenants well.

In this case, you are left with the down payment of $5-10,000, payments that covered the mortgage and carrying costs for however long the tenant stayed for, and they probably took much better care of the property than a normal tenant, as it was THEIR property!

You can simply publicize for another rent to own tenant, and accumulate another deposit, go on collecting rental amounts, and go on carrying the property at no cost to you.

You can carry a portfolio of places with this method - there are virtually no care demands - its THEIR property, so THEY have got to repair it, cut down it, weed it, paint it, etc - and you can carry as many places as you can get funding for, or even "buy" under a rent to own, rental option type of understanding and then lease out to other tenants at a higher purchase price!

The options are eternal - and it doesn't take a batch of advertisements to happen a short ton of willing rent to own tenants! You can put up the deals however you wish, and you can "give them a good deal" by reducing the sedimentation requirements, or extending the term - you win either way!