Top 6 Tips For Various Rent-To-Own Offers

Construction Rent to own (lease option) real estate clients (or yourself) can be difficult. Below are the best six tips for putting them together successfully.

1st Option money (such as written contracts and paid the owner) should be used as a down payment funds (note that both the source and documentation!). The monthly rent credits can be used to pay closing costs or reduce the purchase price of the house.

2nd What about security? Usually there are several reasons why no one. The first is that tenants have only enough money to put down (the possibility of a fee, first month's rent, moving expenses, etc.). The second is that the tenant would be a good treatment at home (but not destroyed), is that they have entered into a contract with the potential to buy it.

3rd What about insurance? For rent to own buyer, I always recommend that the tenant's insurance. It is cheap (about $ 100 per year), and you're really glad you got it, when something goes wrong. The seller, they just have to call your insurance provider and switch from "home" to the "landlord" policy. There is usually no price difference.

4th What about inspections? Blanket, a conservative answer is to get them done before we move house, and then sold "as is" closure. However, is that the tenant will be living at home within a year or two, but the owner pays for any repairs over $ 500, you can look at this on a case by case basis. Whether everything is learned quickly, and it resides.

5th What about the many available "higher lease rates" will hear about that, bike to the same measures to the team? I do not see evidence of this. Does this ever happen? Of course. Does this happen often in highly competitive markets? No. For example, try to list your rental home is higher than the market rate of $ 200 as a "rent to own" and see what your response is. There are a lot of rent to own opportunities at the market rate rent (or below).

6th What about paying for the assessment prior to move-in? I think it's a waste of money. You can simply use the comps, negotiate the price and then wait. When the tenant goes to buy a house, the bank sends projections.

Another note comes from the deduction of their property taxes. These taxes are deductible if they are charged uniformly against all property on the basis of assessed value. Be aware that some state and local districts for special assessments for community improvements such as sidewalks, streets or sewer lines. While these elements are also based on the assessed value of their assets, they may not be deductible.