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 Belleville.
Asking Price
Using a lease option to sell your house in Belleville can provide you with the advantage of setting the sales price for the property. This differs from a traditional sale, where the market determines the price. With a lease option, you can set the price to account for estimated appreciation over the contract term. However, this does come with some risk. While you take the risk of sudden market value hikes, the tenant takes the risk that property values could drop. As such, it’s important to carefully consider market conditions and set a fair and realistic price for the property to ensure a successful lease option sale. By doing so, you can increase the likelihood of attracting interested tenants who are willing to take the risk of an option-to-purchase agreement. Ultimately, this can provide you with the financial benefits of a sale while giving the tenant the time to secure financing and complete the purchase.
Option Fee
When selling your house in Belleville using a lease option, it’s important to consider collecting an initial option fee from the tenant. The option fee typically ranges from one to five percent of the sales price, although fees of up to twenty percent are not unheard of. It’s worth noting that the option fee is typically non-refundable, even if the tenant decides not to exercise their option to purchase the property. For instance, with the national median listing price for active listings at around $450,000 as of May 2022, a 5 percent option fee would amount to $22,500, which would apply towards the purchase price if the tenant ultimately exercises their option. Collecting an option fee can provide a financial benefit and a level of security for the seller in a lease option agreement. It can also be an incentive for the tenant to complete the purchase and can help ensure their commitment to the lease agreement. Overall, collecting an option fee can be a useful strategy for sellers to consider when using a lease option to sell their property.
Tenants Maintain Your Property
When using a lease option to sell your house in Belleville, the tenant takes on a significant portion of the responsibilities associated with the property. While you, as the seller, will still hold the title and be responsible for taxes and insurance, the tenant will be responsible for everything else related to the property. This includes the financial responsibilities of maintaining and repairing the home, as well as any other costs associated with living in the property, such as utilities and homeowner association fees. This can be a significant benefit for the seller, as it removes the financial burden and responsibility of maintaining the property, allowing them to focus on other things. However, it’s important to make sure that the lease agreement is carefully drafted to ensure that all responsibilities are clearly outlined and agreed upon by both parties.
Above Market Rent
You’ll make above-average rental income using a lease option to sell your house in Belleville; 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 Cardinal Creek Properties today about your property, with no obligation. At Cardinal Creek Properties, 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 Cardinal Creek Properties, 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 Cardinal Creek Properties, 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 Belleville house.
Ready to learn more about the win-win advantages for sellers of using a lease option to sell your house in Belleville? Call Cardinal Creek Properties at (314) 467-8137.