| Real Estate Seller's Market Slow? Rent-To-Own Is | | | | • Less cash required-compared to |
| the Solution! | | | | conventional financing, the lease-option has a much |
| By | | | | lower up-front cash requirement. |
| Jack Sternberg | | | | • Try-out period--Buyers can try out the |
| The market is slow in your area…oh, so slow! | | | | house before buying to see if they really like it, and it |
| And you have a property just sitting there gathering | | | | meets their needs. |
| dust, not income! So, what's to be done? | | | | • Ease and convenience--buyers can move |
| Rent-to-own, that's what! | | | | in within a day or two of signing the lease |
| What Is the Rent-To-Own Strategy? | | | | agreement. There are none of the complications |
| Simply put, it's a process whereby you lease your | | | | associated with conventional real estate deals. |
| property to a buyer for a stated period of time while | | | | Disadvantages for the Buyer |
| giving them an option to buy the house at the end | | | | The rent-to-own method has the following |
| of that period. It's also known as the "lease with | | | | disadvantages for buyers: |
| option to buy" strategy. | | | | • Lack of tax deductions. |
| What's Involved? | | | | • Higher monthly rent. |
| Once you approve renters, you provide them with | | | | How Long Before a Buyer Exercises an Option to |
| two agreements. One is the standard rental | | | | Buy? |
| agreement (or lease agreement). The other is an | | | | On average, a buyer occupies a home for three |
| option agreement, which is the buyer's right to buy | | | | years before deciding to buy or move on. |
| the property. You'll require the buyer to provide | | | | Do You Need a Lawyer to Help Out with the |
| upfront money ("option money" which typically is 3 | | | | Process? |
| to 5% of the home's purchase price, depending on | | | | Yes, unless you're very experienced and |
| the area). This secures their option to buy the house | | | | knowledgeable about lease options. Be sure to |
| at a later date. | | | | choose a lawyer who specializes in real estate, not |
| Advantages for You, As the Seller | | | | one who's a "general practitioner." Think of the fee |
| As the provider of the lease option, you'll receive | | | | you pay the lawyer as headache prevention medicine! |
| many advantages, but here are three great ones to | | | | How Do I Advertise a Rent-To-Own Property? |
| whet your appetite for this strategy: | | | | Advertising a rent-to-own property is a simple |
| • Immediate cash flow-you're getting | | | | process. All you need to do is run an ad under |
| income from a property that was producing none. | | | | "Homes for Rent" or similar section in the local and/or |
| • Higher monthly rent-you can charge | | | | neighborhood newspaper(s). Don't forget the |
| buyers more for the privilege of a great house and | | | | Internet, either! There are local and national services |
| an option to buy. | | | | available specifically designed for the rent-to-own |
| • Save money and hassle--tenants may be | | | | market. |
| made responsible for basic maintenance and repair | | | | What Mistakes Should I Avoid? |
| tasks so you don't have to bother with such items. | | | | If you're not experienced in this field, don't attempt a |
| Disadvantages for You, As the Seller | | | | "do-it-yourself" or "one size fits all" lease agreement. |
| Every real estate deal has its disadvantages as well | | | | You'll just be setting yourself up for trouble. As I |
| as advantages, and you should be aware of them: | | | | stated earlier, find a lawyer who specializes in real |
| • Cash sale dependent upon exercise of | | | | estate. A second mistake is to not negotiate with |
| option--you don't get a cash sale until the buyers | | | | the buyers for the price they'll pay once they decide |
| exercise the option. But, remember, you've got rent | | | | to exercise the option. Most likely, you'll want them |
| money coming in during the period of the lease! | | | | to pay the market price. After all, it's likely the house |
| • Potential hassle-if you don't qualify the | | | | will appreciate and why shouldn't you benefit from |
| buyers carefully, there's always the possibility they | | | | that appreciation? Of course, the buyers will want to |
| may prove troublesome tenants in terms of rent | | | | lock in the price at the time they sign the agreement |
| payment and/or house upkeep. | | | | to avoid paying more. So, don't forget to hone your |
| Advantages for the Buyer | | | | negotiation skills! |
| Home buyers also get several advantages from the | | | | My Last Words of Advice |
| rent-to-own arrangement, but here are three that will | | | | If the market is slow in your area, don't wait... do it |
| tempt people to take up your offer: | | | | now! |