Why might using a rent to own contract for selling your house in Minneapolis be a good idea?
Using a rent to own contract is often overlooked by homeowners looking to sell a house in Minneapolis. There are fears associated with being a landlord; however, the rewards can be much greater than renting to someone who’s not interested in buying your home. The tenant is more likely to treat the property with respect. You are more likely to get your rent on time. If you don’t need such a large amount at closing time, don’t dismiss the possibility of entering into a rent to own contract when selling your house in Minneapolis before you run the numbers and find out what selling this way can mean for you.
A Fast Sale
Using a rent to own contract to sell your house in Minneapolis opens up your property to a whole new pool of buyers. Many people out there are eager to buy, and will have no problems paying you. Of course there’s probably something that’s been holding some of them back from obtaining a traditional mortgage. While some people simply lack the funds for a down payment or the credit to qualify for a loan, there are many other situations that can affect a persons ability to buy a house in the traditional manner. For example:
- Recent self-employment causes inability to qualify for a mortgage
- They were forced to spend their down payment on something else, but they still want to buy right away
- They have another mortgage, making it more difficult to obtain a second
- Other debts make them look bad on paper
- Previous bankruptcy or eviction
Almost everyone gets into a difficult spot at one point or another. By selling your house via rent to own contract, you receive great benefits for yourself and help someone reach their dream of homeownership.
A down payment or option fee is often required by the home seller in rent to own transactions. This fee varies by contract, but it can be anywhere between 2-7% of the purchase price. Remember that if your buyer is having trouble coming up with a down payment for a traditional mortgage, they might have trouble coming up with a large down payment for you. Keeping this fee low will help you attract more potential buyers to your property. That said, you do want to include an option fee as a sort of security deposit to make sure your buyers don’t simply walk away from the property.
Get Your Asking Price
While a traditional home sale price is often negotiable when you work with a buyer using a rent to own contract, the seller will often have the upper hand. Most buyers will be willing to pay what you’re asking in order to get a chance at buying a home. Properties that sell in the traditional manner are often sold for much less than they were originally listed for. Once the repairs and negotiations are completed, homeowners will often find they aren’t making anywhere near as much as they had hoped.
Consistent Income Each Month
Selling your house via a rent to own contract will provide you with consistent, guaranteed income each month. Your lease will specify the terms of the agreement, but for the next couple of years, you will have a guaranteed rental income that you can rely on. Your tenant is much more likely to pay their rent on time because they are invested in wanting to make this their own home . The rent charged each month is often greater than standard rental properties in the same area.
In many contracts a portion of the rent is designated to the buyers future down payment. if your tenant/buyer defaults on the agreement, the option fee, and the increased rent are yours to keep.
A rent to own contract carries very little risk for homeowners. Tenants who rent to own have a genuine interest in the property, making them more careful to not cause property damage to the house or to skip required maintenance. People working harder to own than the average will take pride in the home and most likely work on improving the property. If the buyer defaults on their payments, you may lose the buyer, but you will have gained income as opposed to just letting the house sit on the MLS. All monies paid toward the house will belong to you, and the house will be back in your hands. You might be back where you started, but you won’t have taken any hit financially.