Should You Rent your House? Need Higher Rental Income? Try Rent to Own

The credit markets are making it very hard for people to buy homes. Large down payments and good credit scores are the order of the day. But what to do if you can't sell your house? Can you rent it? Is it too much of a hassle to deal with tenants? Not if you use a lease-purchase agreement.

What is a lease-purchase agreement?

A lease-purchase agreement is a combination of two legal contracts. The first is a standard lease agreement with a refundable security deposit. The second contract is a purchase option agreement which give the tenant the option to buy your property at some specific price by a certain date. If the option does not buy the house , they lose the option money.

What are the benefits of a lease-purchase?

For the seller there are several benefits. First, you will get more money upfront before the tenant moves in. Second, the type of tenant to use this type of lease is more likely to have an "owner mentality" and more willing to take care of the property. My leases actually include wording making the tenant-buyer responsible for minor repairs. If you offer the tenant-buyer a rent credit you are also more likely to get the rent paid on time.

For the buyer the lease-purchase offers a time period when they can live in a home and repair their credit, accumulate money for a down payment and evaluate the problems the house has.

What is the best way to market a lease purchase?

Actually, the best way to market the property is not with the words lease purchase. Use the strategy of marketing the property as a "rent to own" home. The term "rent to own" has thousands of web searches every day. People are familiar with the concept and demand is high.

I have found that simple "rent to own" signs are the best form of advertising, followed by Craigslist.

What is the best type of property to use this strategy?

Obviously, this is a strategy for single family homes. It works best for starter homes, not million dollar estates. It also works best when you have a positive cash flow and can get more rental income than your PITI.

Over the next few years it will be difficult for marginal buyers to qualify for a home loan. This will create a high demand for rent to own homes and will give you an opportunity to get the best tenants at the best rates to fill your property.

For more information see this site:

Use a rent to own strategy to market your home
Marketing your property as a rent to own will give you better tenants and higher income with fewer headaches