Rent to Own is actually a pretty interesting strategy. While it may not seem like it is worth it from a landlord point of view it, considering you risk having to sell the property and all, it actually can be well worth it.
First of all for those of you who don’t know let’s look at what exactly a rent to own contract is. This is a contract that the renter and landlord agree to which allows the renter to eventually buy the house at a certain price.
For instance if you own a $100,000 house and a tenet wants to do a rent to own contract with you, they might agree to say buying the house at $120,000 5 years in the future. Now they have to give you some money up front and rent it out for the 5 years first. Once the 5 years are up they can choose to but the property at $120,000 or to not. If they do it you will have to sell the house and they will have to come up with the $120,000 to buy it.
Now this definitely has its advantages.
1. Less Late Payments
Someone who rents to own a property cares about the agreement much more than a simple renter. As such they are more likely to keep paying then to stop all of a sudden and risk breaking the contract. If a renter is kicked out they just got a couple months of free room and board. If a rent to owner is kicked out they just lost a house.
2. Take Care Of It
Not all renters will actually care about the property. It doesn’t matter what happens to it because after all, it’s just a rental right? So they put a hole in the wall it just means that they don’t get their deposit back and the landlord has to fix it. But when someone rents a property to own it they feel more like it is there and are more likely to take care of it.
3. The Demand is There
There is also a lot of demand when it comes to rent to own contracts. More demand means you will be able to fill it faster and it also means that you will be able to charge more money each month, which is also a bonus.
Entering into a rent to own contract can be a great alternative to renting a property.
For more on the rent to own agreement or for more on real estate visit Shaun’s beginning real estate investing page.. Also published at Rent to Own vs Rent.
