Though 81% of Americans want to own homes, 61% express fears that they won't ever be able to. Luckily, rent-to-own homes are a more accessible path toward homeownership that landlords like you can make possible.
Here, we're going to discuss:
- What rent-to-own properties are
- The benefits of rent-to-own leases
- How to offer these homeownership options
Read on to make your rental stand out to the Rogers, Arkansas public.
What Are Rent-to-Own Homes?
A rent-to-own agreement is also called a 'lease purchase agreement.'
These leases let renters pay a monthly rental rate just as they would on a normal rental unit. However, the lease also incorporates terms that let the renter try to buy the property in the future.
Tenants:
- Pay a normal rental monthly rate
- Pay an additional premium to put toward their future down payment
- Let a portion of the monthly rent become credit toward the future purchase price
Rent-to-own allows better financial planning for homeowners. It gets rid of the need for traditional mortgage financing. This makes homeownership more accessible to those who want to buy property.
Lease-option contracts make purchase an option rather than an obligation. However, depending on the terms you agree on in the lease, those who choose not to buy despite the landlord following all terms may lose their monthly premium.
There are also lease-purchase contracts, which lock the buyer into purchasing the home at the end of the lease term. This is a surefire way to sell.
How Do Rent-to-Own Agreements Benefit Landlords?
Rent-to-own homes offer several benefits to sellers as well as potential homeowners:
- Avoiding real estate commissions when selling to buyers
- Upfront payments from buyers
- Lower risk since the lease's monthly terms still apply
- Consistent income via monthly rent
- Responsible tenants who follow lease terms to retain their ability to buy
It also lets landlords sell homes in tenuous market conditions. This is because there's a locked-in purchase price that sellers decide with tenants up front. It doesn't change even when the housing market does.
You also may turn a higher profit because of these contracts. If you stipulate that a home will be purchased at market rate, the value of the property still might increase during the rental period. This means the landlord could make more on the sale at the end of the lease.
Preparing Lease-to-Own Homes
Preparing rent-to-own agreements requires the help of a professional property manager. They'll:
- Use expert tools to learn about the Arkansas homeownership market
- Figure out how much your home will sell for
- Determine both monthly rent and premiums
- Find responsible tenants who will become reliable buyers
- Draft a legally-binding lease
- Help you negotiate terms with tenants
- Collect monthly rent and premiums
- Facilitate communication with rent-to-own tenants
This ensures that you'll get all the funds you're due and make a great sale.
Make Money on Your Rogers, Arkansas Rental Unit
Now that you know the ins and outs of rent-to-own homes, it's time to begin making the highest possible profit on your rental unit. PMI Heritage will help you:
- Research the rental market
- Draft leases
- Find tenants
- Maintain properties
Request a free rental analysis to learn how much your Rogers, Arkansas rental is worth!
