The exit strategy you use to sell your house can make all the difference in earning the highest possible returns on your real estate investment. An extremely lucrative alternative to selling your house outright, lease options offer a way for you to earn a higher return on the sale. At the end of the agreement, typically one to three years, they can exercise the option to buy the home or walk away, and you keep the initial option fee that you collect upfront as a down.
Much like having tenants, you’ll be renting out your property. However, these tenants have much more at stake than the average tenants, as they are, in essence, test-driving ownership of the property. These tenants are willing to pay extra for the chance at living the lifestyle of homeowners while correcting any missteps with their credit or building savings for their downpayment on the property. With the right tenants and a thoughtfully constructed lease option agreement, many investors learn to appreciate this arrangement’s benefits and begin investing with a lease option strategy in mind. So read on as we explore using a lease option to sell your house in .
Because you’re in the driver’s seat, you can set the sales price for the property now when you use a lease option to sell your house in . Often set above market to account for the appreciation estimated to occur over the contract term, while you take the risk there could be a sudden hike in values, the tenant takes the risk that values drop.
Using a lease option to sell your house in means that you’ll collect an initial option fee ranging from one to five percent of the sales price, though option fees of up to twenty percent are not unheard of, and the fee is typically non-refundable. With the national median listing price for active listings being around $450,000 as of May 2022, 5 percent would be $22,500, which would apply towards the purchase if the tenant exercises the option.
Tenants Maintain Your Property
While you’ll still hold the title and be responsible for the taxes and insurance, everything else will fall on the shoulders of the tenant when you’re using a lease option to sell your house in . So, for example, tenants typically carry the financial responsibilities of maintaining the home and even making repairs.
Above Market Rent
You’ll make above-average rental income using a lease option to sell your house in ; the portion of rent paid at above-average rental rates is called the rent premium. The buyers would then deduct the amount paid into the rental premium over the contract term from the sales price upon exercising the option. Of course, if there is no purchase, you’ll also keep these funds.
Talk to one of our highly seasoned professional home buyers at Tristate Holdings 167 Inc. today about your property, with no obligation. At Tristate Holdings 167 Inc., we want you to know you made the best deal and feel good about working with us long after the closing. That is why at Tristate Holdings 167 Inc., we’ll compare the numbers of a traditional listing vs. the lease option method and even make you an offer to buy your property directly, as-is, for cash. At Tristate Holdings 167 Inc., we’re fully transparent, providing the detail of how each number in our calculations so you can make an educated decision about what works best to sell your house.