When selling your house in Santa Clarita with a rent to own contract, selling your house can be much easier. Also, selling via rent to own has a number of amazing benefits that many home owners don’t realize. In this article, we’ll discuss some of these great benefits.
Selling your house in Santa Clarita via a rent to own agreement can be an excellent way to sell your house. Rent to own has many benefits to the home owner. When selling via rent to own, you have a larger buyer pool so you have a higher chance of getting your asking price. Also, selling your house through a rent to own contract turns your house into an investment property that provides you with consistent income each month. If you’re trying to sell your house in Santa Clarita don’t rule out a rent to own contract. Rent to own could be the perfect solution for you!
Set A Realistic Down Payment
When selling through a rent to own contract, it is common practice to take an option fee, this is similar to a down payment. The fee is because they are paying for the ability to buy your house after they’ve rented it. This fee needs to be reasonable because many people that will buy a home on rent to own terms may not be able to qualify for a loan due to not having the money for a sizable down payment. However, you definitely should charge an option fee because it makes the rent to own buyer a.k.a. tenant buyer more invested in the property meaning they will take better care of the property and feel as it is their home from the beginning.
Use A Comprehensive Agreement
Just like any contract or agreement, there are many things that need to be covered in a rent to own agreement. It’s important to have a well written and detailed contract that covers the common situations that may arise between a tenant buyer and the seller. If you use a solid contract from the start you will avoid many of the disagreements and disturbances that have yet to come. This is not a comprehensive list but here’s a few things we feel you should have in your agreement…
Repairs & Maintenance – It’s important to specify who will be responsible for what. In a rent to own scenario, it is common for a tenant buyer to be responsible for small maintenance issues and minor repairs. The reason this is the case is, when they buy the home, they’ll be responsible for all the maintenance and repairs. So, this makes it feel like it’s already their home. However, if something major comes up, that will usually fall on the property owner because typically major repairs were something that was already wrong with the property. For example, if the water heater busts a week after move-in, that shouldn’t really be the tenant buyer’s responsibility.
Taxes – Although this is up for negotiation, property taxes are the responsibility of the person on the deed. However, if you negotiate it in, you can sometimes receive a credit or reimbursement from the tenant buyer for the taxes.
Lease Terms – Some agreements last a year others last a few years but as the homeowner, you get to choose. Some homeowners are just doing a rent to own because they couldn’t find a traditional buyer so, they want it to sell as soon as possible. Other home owners enjoy having an investment property and the income it provides. Especially, if the property is free and clear. These people don’t mind having a longer lease because in the end they’re making even more money when you look at monthly income and the sale price together.
Contingencies – A good agreement will offer contingencies for both parties. For example if during their lease, the tenant buyer discovers something fundamentally wrong with the property that wasn’t previously disclosed, they can’t be expected to buy the property.
Foreclosure Process – In most cases, you won’t have to deal with this because you screen your tenant buyers and require an option fee but your agreement should outline the foreclosure process and what would put the tenant in violation of the contract. Hopefully this never happens but this way there won’t be any discussion on the process it will be in writing.
Miscellaneous Situations – Every home is different so, we can’t list everything that should go into your contract but here are a few miscellaneous situations that you may need in your contract.
- What happens if tenant violates HOA rules?
- What happens if they modify the home without following through on the lease?
- What happens if a natural disaster destroys the house?
There are lots of different situations that can arise. By anticipating them ahead of time, you’ll be able to avoid conflict with your tenants down the road.
References and Background Checks
While rent to own gives you a larger pool of buyers, you don’t want to lease to just anyone. You will want to do research on your potential buyer. You should run background checks, check references, previous landlords, their employment. You basically just want to make sure, they are a responsible person and will be able to pay you each month until they are able to qualify for a mortgage to buy their new home from you.
Consult A Pro
Arranging a rent to own sale and agreement can be difficult. So, hiring a professional company such as SK Home Buyers can be crucial in successfully selling your house through a rent to own contract. We can help by drafting the contract, finding the right buyers, answering all your questions, and making sure everything is handled legally and ethically. By utilizing our experience and connections, you’ll finally be able to sell your house at your asking price and even be able to take a step into the real estate investing world by creating an income producing asset for you and your family.