Rent to Own vs Rent
Rent to Own is actually a pretty interesting strategy. While it may not seem like it is worth it from a landlord point of view it, considering you risk having to sell the property and all, it actually can be well worth it.
First of all for those of you who don’t know let’s look at what exactly a rent to own contract is. This is a contract that the renter and landlord agree to which allows the renter to eventually buy the house at a certain price.
For example you may enter into a rent to own contract with a tenet on your $90,000 house. You might agree to sell the house at $110,000 5 years into the future and they would agree to put some money up front to keep that agreement. Then the tenet rents out the property until the 5 years are up. After which they can choose to buy the property from you at $110,000 or to just walk away.
Now this definitely has its advantages.
1. Late Payments Are Less Likely
Someone who rents to own a property cares about the agreement much more than a simple renter. As such they are more likely to keep paying then to stop all of a sudden and risk breaking the contract. If a renter is kicked out they just got a couple months of free room and board. If a rent to owner is kicked out they just lost a house.
3. Take Good Care Of It
One other advantage is that a rent to owner will actually keep the house in good condition. Someone who rents a property will not care about a property as someone who sees it as their house and is working to pay it down.
3. Tons of Demand
Everyone wants to own their own house yet not everyone can afford to do it right now. There are plenty of people who would be willing to get into a rent to own contract as opposed to just being a renter.
A rent to own contract simply works over the long term.
For more on the rent to own agreement or for more on real estate visit Shaun’s beginning real estate investing page.. Free reprint available from: Rent to Own vs Rent.
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