Rent To Own Part 1

The rent to own exit strategy is one of my favorites. The key benefits are you have cashflow from the property while holding it for 1-2 years of additional appreciation. The tenant buyer takes care of all the minor maintenance thus relieving the owner of those headaches. When the tenant buyer purchases the home the profit on the backend is usually quite good. If the tenant buyer does not buy the home then you find a new tenant buyer and keep the option payment from the first one. The option payment is the down payment you collect when a tenant buyer signs a contract to move into the home. It's best to have them sign two contracts to move in. One is the option to buy contract that sets the price of the home and the length of time the tenant buyer has to exercise the option and buy the home. The other is the lease which sets the rules of occupancy, the monthly rent amount and when the rent is due. It also is where I state the tenant is responsible for all repairs under $200. That amount varies from house to house and the market it is in. It's not a bad idea to have a real estate attorney draw up both contracts. After that is done you have it on a computer disc and re-write it each time you have a new rent to own home. It makes it more affordable that way, as you wouldn't want to have the attorney draw up a new contract each time you get a new rent to own situation when all you need to change is the names, property address, the sales price and the amount of the option consideration.