Selling your property via a rent to own agreement is an excellent way to easily get the price you want for your Chicago house. The process is simple and you’ll likely be able to find a buyer right away, even your current tenant! Learn more about how to set it up in our latest post!
There are many reasons why homeowners in Chicago are choosing to sell their properties via a rent to own agreement. If the cash isn’t needed right away, there are many financial benefits to selling your house in this manner. Below, we outline 7 steps to sell your property via a rent to own agreement in Chicago!
Step #1 – Find The Right Tenants
When entering into a rent to own agreement with a potential buyer, you’ll want to make sure it is someone you know and trust. If you would like to ultimately sell the house, you don’t want to have to worry about the deal not going through when the lease period is up. You are delaying the receipt of your funds in order to get the price you want, make sure you are working with someone who is worth it! If you have a great, long-term tenant, they are the first place you might want to look when trying to find the right people to move in.
Step #2 – Run The Numbers
As a seller, you are sacrificing immediate cash for a long term gain, so you will want to make sure it’s worth it. How much will you need upfront as a deposit? What about an option fee? You’ll need to figure out what you’ll need to charge in rent each month in order to make it worth it for you. You’ll need to determine which costs will be passed on to your tenants and which costs you will still need to manage. As you will still technically be the owner of the house during the lease period, you’ll ultimately be responsible for taxes and insurance. Make sure the monthly rent you are changing can cover these amounts!
With a rent to own agreement, the sale price is typically locked in at the time of purchase. However, in some cases, a tenant will agree to purchase at the market value at the time of the actual sale. While you run the risk of your home value dropping, you might also be able to get a higher price when all is said and done. If your tenant agrees to this, it is something you will want to consider!
Step #3 – Agree On Terms
There are many things a buyer and seller must agree to before executing their rent to own agreement. Before the buyer and seller sign on the dotted line, make sure to have an attorney look things over. Even the smallest mistake in your contract could have a huge impact on your ability to sell on the terms you had planned on.
A few of the financial details you will want to cover include:
- Will there be a down payment?
- How much will the rent be each month?
- How much if anything, will go toward the buyers down payment?
- How long before a purchase is required?
- Who will be responsible for taxes, maintenance?
- What happens with a default?
Spelling everything out as clearly as possible from the get-go will save you from any disagreement and frustration during the lease process and when it’s time to officially sell. When handled correctly, a rent to own agreement is a great way for a homeowner to sell their house in Chicago.