Do you have a property you want to sell in the Chicago area? For many homeowners, using a rent to own agreement will be the most profitable way to sell their home. Learn more about how it works and what you need to do to sell your house using a rent to own agreement!
Many sellers don’t consider the benefits of a rent to own agreement for their Chicago house. While the terms of every contract are different, there are some great perks that you will see across the board. If you don’t need the cash from the sale immediately and are comfortable renting out the house for an above average amount each month, selling your house via a rent to own agreement might be the best way to sell your Chicago house!
#1 – Cash Upfront
With most rent to own agreements, the tenant is required to make a downpayment to the seller. While this may be much less than with a standard loan, it should be enough to ensure the tenant won’t back out of their debt. You can also utilize an option fee, which is non-refundable and provides the tenant with the option to buy. This is usually about 1% of the sale price. In most cases, this option fee and a portion of the monthly rent will go toward the tenants down payment when the official sale occurs.
#2 – Generate Passive Income
So long as you have a tenant in the home, you will be generating income on the property. Many times, a tenant will pay above average rent, with a portion of the funds going toward the eventual downpayment to the bank. Your tenant isn’t going to want to risk default, losing their deposit and option to buy. Knowing this you can almost rely on a continued tenancy from your tenant for as long as you own the property.
#3 – Get The Price You Want
Tenants using a rent to own agreement typically aren’t able to qualify for a conventional loan. Whether they don’t have the down payment, the income to qualify, or the credit score required, buying via a rent to own agreement will allow people to purchase who may not have been able to in the past. As such, by having the opportunity to buy, these folks will likely be willing to pay your asking price for the property, as long as it’s fair.
Keep in mind that the value of the house could go up or down while the agreement is in place. The negotiated sale price will remain the same.
#4 – No Risk If The Tenant Defaults
With most agreements, if the tenant defaults, the seller is able to keep all monies paid. Sure, you will be back at square one, but you will likely be ahead financially and have the option to sell outright or find a new rent to own tenant. The amount you can profit here may be in the thousands when you include the raised rent and down payment.
#5 – Increase The Number of Potential Buyers
There are kinds of wonderful people out there who could afford to buy your house, people who would never default on their loan. However, they may have a blemish on their credit report or insufficient down payment, making them unable to buy a house at the moment. They want to buy but are being held back due to something on paper. With a rent to own agreement, you will be able to open the door for many people who may not have been able to buy otherwise.