Selling your house in Georgia with a rent-to-own agreement can have many benefits. If you are having trouble selling your house, try this trick.
Why rent to own a house you are selling? Everyone wants to sell their Georgia house for cash the day it goes on the market, but that is not always realistic. For some Georgia house sellers, that is not going to happen, no matter how hard they try. Your next option would be to rent the house.
Many people have a fear of becoming a landlord. The fear of dealing with tenants and evictions is enough to keep them from ever renting their house. However, the rewards of selling a Ga house rent-to-own can be much greater and will not require all the unpleasant duties of being a landlord.
Sell your house Fast, Be the Bank
Selling your house rent-to-own makes you more of a lender, not a landlord. When was the last time your bank sent someone out to fix a toilet or replace a roof? You will only be a landlord until they qualify to buy you out or you sell them the house and take back a note. (Read: rent-to-own vs. Owner financing)
The next question on your mind is the same as everyone else, “What if they tear up the house and then default?”. Their down payment or option fee will cover that, but more on this later.
More Qualified Buyers
If your using a rent-to-own agreement to sell your house in Georgia, why do you have more buyers? The house buyers that want your house can’t buy a house any other way. They will gladly give your asking price if they don’t have to go to a bank for a loan.
Selling a house rent-to-own is not just for people with bad credit. There are many reasons a buyer can not get a bank loan. For example;
- Self-employed professionals that don’t get a formal w-2 (Attorney’s, freelance bookkeepers, contractors, truck drivers, etc.)
- Employees that have not been at their job very long
- Young people that have not established credit yet
- And yes, people with bad credit
These people are more than able to pay for a house, they just don’t look good to a bank.
Faster Sale of Your House
Offering a house with rent to own financing brings in more buyers. On average, you bring in 50% more buyers then you would with just a cash sale. This creates more competition and makes your house sell faster. For many people, you are the only choice they have because your offering financing.
A down payment or option fee is often required with a rent-to-own sale. We usually ask for 10% up front. Remember that if your buyer is having trouble coming up with a down payment for a traditional mortgage, they might have trouble coming up with a large down payment for you. Keeping this fee low or asking for multiple small down payments over time can help you attract more potential buyers to your property.
That said, you do want to include some sort of option fee to make sure your buyers don’t simply walk away from the property. You want them to have “skin” in the house. This will also pay for any damage if they do walk away and don’t buy.
Get Your Asking Price
Rent to own sales bring in people that don’t have the “gold” (he who has the gold makes the rules). If they are getting terms they can afford, you should get the asking price.
Properties that sell in the traditional manner put much less in their pocket than they were originally listed for. Once the repairs and negotiations are completed, homeowners will often find they aren’t making anywhere near as much as they expected. Bank fees, agent commissions and required repairs by the bank can take up to 30% of the sales price from the seller.
If you are the bank, you get to keep a lot more of that money and get interest off it too. Most owner financed houses for sales deal directly with the homeowner, so there is no agent commission. That’s another 6% in your pocket.
Consistent Income Each Month
If you don’t need the money right away, selling your Georgia house rent-to-own will provide a steady income you can live on. Since you are probably selling the house with a portion of the rent going to the purchase of the house, that means your getting more for the house then just the asking price.
A rent-to-own agreement with a tenant/buyer can be lower risk for you too. I mentioned before, qualified tenants intend on buying the property. They want to keep the house as nice as possible as they will eventually be the rightful owner. If anything, you are likely to find your tenants fixing up the property as opposed to wearing it down. If the buyer defaults on their payments, you may lose your tenant/buyer, but the down payment should be enough to pay for the foreclosure. Simply take the house back and sell it again.
We love to buy houses with owner financing. If you have a house you are willing to sell rent to own, contact us.
Read more about Georgia housing ideas at our blog.