When you’re investing in real estate, selling your homes with a lease option is a great way to make a considerable amount of money. Of course, there are other ways to make excellent money in real estate, but if you’re using the strategy I teach, you’ll see just why I sell with a lease option so often.
Some of this information is very general and you will want to double check how these strategies apply in your area.
What are the benefits of a lease option?
Top of market rent – Lease options have an extra benefit that ordinary rentals do not. They offer an opportunity for people with poor credit, or who cannot secure a bank loan, with the opportunity to achieve their dream of home ownership. Given this opportunity, lease option tenants are typically happy to pay top of market rent for the property until they are able to purchase it.
Non-refundable deposit – You get to require a non-refundable deposit on the home, that in if they walk away from the property a year later, you don’t have to refund them that deposit. Say you require a 3 to 5 percent down payment and later they decide not to purchase the home. That money stays in your pocket.
You have a contract for sale – A great benefit of a lease option is that you get to have a contract of sale for a later date signed by the tenants.
Appreciation and tax benefits – Because the deed is in your name on the property, you get to take the depreciation and enjoy tax benefits on the home.
Less repair costs – In your lease agreement, because you’re going to state that the tenants are responsible for minor repairs, you’re going to save time and money. This will keep your phone from ringing with tenants concerned about minor issues because they’ll take care of it themselves.
Tenants likely to pay their rent – Tenants are less likely to stop paying rent because their focus is on eventually purchasing the property and they don’t want to lose out on that opportunity.
You have higher demand – There are lots of people out there looking to purchase a home with a lease option, so you’ll have a good number of prospects. Selling the home with a lease option offers an advantage over simply renting the home month to month, giving you more demand in the market.
Wonderful tenants – Most tenants that are purchasing a home with a lease option will treat the home better and with greater care than regular tenants. Why? Because they know, one day, the home could be theirs and they want to take care of it for the long haul.
Do you see why it’s so easy to sell homes with a lease option? If you’re new to selling homes with this option, you might not feel very confident, but know that once you do it a couple of times, that confidence will come. I also teach in depth about how to sell with a lease option in Module 10 of my Foreclosure Investing Mastery Course, so if you haven’t gotten that course yet, I encourage you to do so.