The Art Of Selling Houses Rent To Own

Rent to Own is a creative selling strategy that allows you
to rent and sell an item or property quickly and receive
three income streams. Rent to Own has many names: “Lease
Option”, “Lease Purchase”, and “Lease with Option to Buy”,
to name a few.

The use of the Rent To Own strategy has been around for a
long time. Have you ever heard of RAC (Rent A Center)?
It’s a business that allows customers with bad or no credit,
to rent New Brand Name electronics or furniture with the
option to own it in a year or two as long as they make their
payments on time and take care of it.

We’ll use a Big Screen TV as an Example: The customer puts
down a small payment, pays a monthly payment, and at the end
of a year or two they have the option to pay off the Big
Screen TV or return it back to store. Most people that have
had that Big Screen TV in their house for the last year
want to keep it. The best part is that the buyer will pay
more than what the equipment or furniture is worth because
RAC is taking a chance on them. RAC is trusting they will
take care of the Big Screen TV and either buy it or return
it in good condition.

Apply it to Real Estate, the buyers are for Rent To Own
Properties. They are people with less then perfect credit,
people who are self employed or maybe just people who want
to try owning a house before they actually buy it.
These people may not be able to qualify for a mortgage now,
but over the next year or two you help them clean up their
credit in order to become homeowners.

They are called Tenant Buyers (T/B). The reason they are
called Tenant Buyers is because you have them sign a rental
contract as a tenant and a separate Option to Purchase
contract that will make them a buyer in the next 12 to 24
months. (An Option gives the Tenant Buyer the Exclusive
Right to Purchase but not the Obligation). The real benefit
is that you create three income streams for the property.
Let me explain:

1. Market your Property “Rent To Own.” When you find a
Tenant Buyer, you collect 3% to 5% “up-front money” called a
Non-Refundable Option Payment, which you record on your
“Option to Purchase Contract.”

2. They sign a Standard Rental Agreement for 1 to 2 years,
giving you a monthly cash flow, typically around $125 to
$250 or more. However, it can be much more. It could be
several hundred dollars depending on what the Market Rents
are and what you can negotiate with the Tenant Buyer.

3. When the Tenant Buyer exercises their Option to purchase
the house, at the price you had agreed on when the original
contract was signed, you can make anywhere from $10,000 to
$30,000.

Profits Explanation: Let’s say you’re doing a 60-Month
sandwich lease option from a Motivated Seller for a $10 Non-
Refundable Option Payment. The Motivated Seller owes
$75,000 with a Monthly Payment of $750. (P.I.T.I.) Note:
You do
not need to do a sandwich lease - you can use the Rent To
Own Strategy to sell any property you own or control.

You collect from the Tenant Buyer a $3,500 up front Non-
Refundable Option Payment (You subtract it from the purchase
price) plus $200 a month, monthly cash flow (No Rent
Credits) and a $95,000 selling price.

You make the following from the spreads over two years:
1.Rent: $200 x 24 = $4,800
2.Price: 20,000 (minus closing costs)
3.Up front: $3,500
——————————————————–
Total Profits: $28,300

Note: If you negotiate 4 deals a year, you’ll make over
$110,000 from your investments in the next 12 to 24 months
without all the maintenance headaches of being a landlord.