If you own a home and are open to waiting out the term of a lease option as an exit strategy, typically ranging from one to three years, it can be a beneficial approach. Similarly, if you find it challenging to sell a particular property, a lease option can serve as an excellent sales method, offering the potential for profitability. By utilizing this strategy, you can combine the advantages of a flip, receiving a substantial option fee at the contract’s outset, with the benefits of having long-term renters.
Naturally, ensuring thorough tenant screening is of utmost importance when dealing with lease options. It’s crucial to conduct a rigorous review to attract highly qualified tenants who adhere to all local, state, and federal guidelines governing tenants. Once you have the right property and suitable buyers in place, you can capitalize on this advantageous method of selling real estate. So, let’s delve into the workings of lease options for your house in Belleville.
Sales Price
Opting for a lease option can prove highly advantageous when selling your Belleville house, as buyers often show a willingness to pay extra for the perks of homeownership while having the time to ensure the property suits their preferences, repair credit, or save for a down payment. One of the key advantages is the ability to set the sales price above the current market value by estimating the property’s future market value. Although there is a potential risk of market prices soaring significantly higher, you can mitigate the impact down the road by cushioning the sales price at present. On the other hand, the buyers take the risk of home values declining, which could potentially leave them owing more for the property than its market value.
Through the lease option arrangement, both you and the buyers can benefit. Buyers have the opportunity to secure a property they intend to own eventually, while you can set a higher price and enjoy the financial benefits of a sale. This mutually beneficial setup provides a win-win situation for all parties involved.
Option Fee
Utilizing a lease option to sell your Belleville house offers the potential for a significant cash influx, presenting an attractive benefit for sellers. The option fee, typically ranging from two to five percent of the home’s sale price, serves as an additional source of income for the seller. To illustrate, considering the average home sales price reached a record high of $400,000 in May of 2022, the seller could potentially receive up to $20,000 from the buyer exercising their option for the exclusive right to purchase the property.
Furthermore, the option fee is typically non-refundable, ensuring that the seller retains the fee regardless of whether the buyer chooses to exercise their option or not. This non-refundable aspect of the option fee provides the seller with a level of financial security within the lease option agreement. Overall, a lease option proves to be an advantageous strategy for sellers in Belleville who seek to sell their house while also generating additional income through the option fee.
Rent Premium
Lease options can also provide increased monthly cash flow for sellers of Belleville houses through higher rental rates. With a portion of the rent payment applied towards the eventual down payment, sellers can charge a rental premium above the market average. This premium amount must be above the market average for many lenders to consider it for the down payment. Therefore, it’s important to check with mortgage lenders about the terms of the lease agreement. By charging a premium, sellers can generate additional monthly cash flow while also helping the tenant build equity towards the eventual purchase of the property. Overall, a lease option can be an advantageous strategy for sellers looking to generate additional income and provide an attractive option for buyers looking to own a property.
Eliminate Holding Costs
Essentially, lease options work for your Belleville house by delaying the sale while your tenant covers your mortgage payments and utility costs that you would have paid monthly to hold the property. In addition, depending on the agreement, the tenants are also responsible for maintaining and repairing the property as if it were their own home. However, some contracts have shared responsibility for more significant repairs exceeding a specific amount, such as $500.
The local professional home buyers at Cardinal Creek Properties understand how lease options can work to your benefit for your Belleville house. Our full-service in-house network of professionals can help you handle everything, from locating the perfect property to selling through a lease option to property management and everything in between. At Cardinal Creek Properties, we have the connections and the team to do the job. Let us help you earn the highest possible returns on your real estate investments because we win at Cardinal Creek Properties when our investors win. Let the seasoned professional home buyers at Cardinal Creek Properties help you. And don’t forget to ask about our current inventory of the best lease option properties available in Belleville. Call Cardinal Creek Properties at (314) 467-8137.