Success with the “Rent To Own” model

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133792_1Rent To Own program: The best way to look at a Rent To Own Program is to consider it simply as a lease with an option to buy.  When you offer a Rent To Own Program on your home, you are leasing your home to a tenant for a fixed period of time. The tenant also has right to buy your home during this period of time for the agreed upon option price. Your home isn’t sold when you sign the lease and option agreements! Your tenant has the choice to buy your home at the agreed upon price. In reality, a Rent To Own Program obligates your to sell without obligating your tenants to buy. This is quite honestly how we explain the RTO to tenants when we show home. Your tenant signs a lease agreement and an option agreement.

Monthly rent: During your lease term, you receive a premium rent for your home because the tenant has the option to buy. We typically average over $200 per month in additional rent with RTO.

Monthly credit: Your tenant may be able to earn a monthly credit towards the down-payment of the home at the buyout time. These credits are earned if the tenant pays their monthly rent on time. If the tenant doesn’t buy your home, you keep the monthly credits as rent paid.

Upfront Option Payment: When your give someone an option to buy your home, you are entitled ask for option consideration. The reason you are entitled to option consideration is because your tenant controls your home during the option period. The amount you receive is non-refundable if the tenant doesn’t buy the home. If they do buy the home, you can than apply this amount to the Buy Out Sales Price.

For possible rent to own property Listings

Just One Investment Home Offers Five Profit Streams

Maximum output for minimum input

  1. Appreciation: The increase in value of your property over time without considering sweat equity
  2. Cashflow: The amount of monthly rent left after payment of mortgage, insurance and taxes
  3. Equity Build Up: As your tenant pays your mortgage payment, the outstanding loan value is paid down.
  4. Tax saving: All expenses associated with you rental property can be used against the profit of the property. Often for tax purposes it looks  ike you are loosing money, but in reality you are earning money. If this is the case for you, this tax loss can be used to lower your overall tax liability at the end of the year.
  5. Options Downpayment: The upfront payment you receive from your tenant as option consideration.

For possible rent to own property Listings

Landlord win/tenant win

As Zig Ziglar always says, “You can have everything you want in life, if you just help enough other people get what they want”

Creating a Win/Win relationship with your Tenants to put your Investment on Auto-Pilot.

10 Autopilot Tips to Remember

  1. Receive a higher cashflow during the Rent To Own Program. Rents higher by 20 to 30%.
  2. Receive a large non-refundable upfront option downpayment at beginning of the program.
  3. Huge demand by tenants for Rent To Own Programs makes it easier to pick a good tenant.
  4. Less maintenance and management required as tenant is renting to own. Tenants responsible for the first $200 f repairs in the home every month.
  5. Buyout price by tenant is based upon the future market value before monthly credits are earned.
  6. Trade one home into two homes, which increases your monthly positive cashflow
  7. Tenants must pay on time to earn their monthly credit.
  8. You keep tax benefits rent to own period.
  9. If a tenant doesn’t purchase property, all monies paid are considered rent with no refund of the monthly credit. Start a new RTO program with new tenant with higher rent, a new option downpayment and a higher future buy out price.
  10. Consider a variable rate mortgage when buying an investment. Most often variable rate mortgages save your money over the term of your mortgage.

For possible rent to own property Listings


About me

Alex

I have a lot of experience in real-estate investment. My main focus to invest in Barrie, Hamilton, Thornhill Woods, Innisfil, Cambridge, Kitchener and etc. I implement different investment strategies: Rent To Own, Student Rental, Multi-unit Rentals, and Flipping.

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