How to Sell Your Sun City Home in a Rent-to-Own Way

There are several ways to sell a house- As they say, several ways to skin a cat - although I don't know where in the world that saying came from. But, one of those ways could be a lease or rent to own option.

Is this the best option?

You first have to decide if that option works for you and is the best option. A lease or rent to own option isn't ideal for everyone. You may need money from the sale of your property and opting for a rent to own deal is not going to give you straight out cash. It's also important to know that the majority of rent-to-own options are not fulfilled, meaning that at the end of the appropriated time chances are the renter is not going to purchase the home. However, you will have gotten the rent that is yours, free and clear during that time.

A good reason to consider a rent to own option is that you no longer can keep up with the maintenance of the home or you've tried to sell for some time in the property simply will not sell. This either could be due to the condition of the property, location, price, or the type of buyers it's attracting.

You also need to know that the buyers that will be attracted to a lease to own option usually means that they do not qualify for typical financing. They could have low credit histories, damage to their credit reports or a past bankruptcy or foreclosure. Of course, not all of these applicants will be detrimental to your situation but it is something to consider. Rent-to-own applicants will naturally be a higher risk.

Can you officiate a rent to own deal and still owe money on your mortgage?

Yes. However, the responsibility of the mortgage is still put on the owner to make the payment each month regardless of whether the renter makes their payment. There is usually a "due on sale" clause in which the owner can sell or transfer an equitable interest in the property without the lender's approval, which the lender usually does not approve, and then the lender can immediately call the loan. As long as you keep paying on the property is unlikely that the lender will foreclose on the property, but it could happen if they realize that you are doing a rent to own option. Using a real estate agent that is familiar with lease options is the best way to go about setting it up.

If you do plan on going with a rent to own option, terms should be at least four or five years. This gives the renter or tenant adequate time to accumulate the money they'll need to secure a loan and eventually by the house when the term is complete. When renting, there may be a higher price than the mortgage for its type of property and location considering that some or all those funds are going towards the purchase price. For instance, if the rent in your area is currently $1000 a month, the owner may choose to require $1200 a month on the lease to own option putting that extra $200 away for the tenant to buy back the property. At the end of four or five years, the tenant could have $4000-$5000 towards the purchase price of the home.

If at the end of the term the tenant is unable to purchase the property or simply chooses not to, they can either re-up the rental agreement or move on. All of the additional fees collected by the owner towards the purchase of the property will be forfeited by the renter.

If you plan on going this route the lease should be written up with specific details in place. It should spell out exactly who is responsible for maintenance, improvements, remodels, or changes to the property in any way.

Also, the end selling price should be evaluated and agreed upon when the lease is constructed. An appraisal should be done either by the owner, the tenant or both and if there is a difference between the two, the price can be split down the middle.

One of the biggest things to remember is to put everything in writing. Not just the terms of the lease but what happens should one default, decide not to purchase, or the owner changes their mind in the future.

Again, for the absolute clarity in this type of situation contact a real estate agent that is proficient in lease-to-own or rent-to-own options. For the Sun City Texas area, contact me anytime. I can help with the decision-making process of whether or not this is a good plan.

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