Maximize Your Equity with Lease Purchase
If you currently own a home or a commercial property and have any interest in selling or renting it at some point in the future, USA Properties’ Lease to Own Program can literally put tens of thousands more in profits into your pocket.
A lease purchase (rent to own) almost completely eliminates all landlord headaches by shifting all responsibilities, increasing cashflow and freeing you mentally for your next project!
How It Works
First we set up a rental agreement. This looks like your typical rental agreement, except the tenant-buyer (USA Properties) is held responsible for all maintenance and repairs.
The second document we put in place is called an option agreement. This is a separate document that is going to stipulate what the purchase price is, and also in some cases, what the rent credits are. Rent credits are a portion of the monthly rent payment that are credited towards the purchase price each time the tenant-buyer makes an on-time rent payment.
Why Sell via Lease Purchase?
Reason 1: Increased Rent
Many times you can charge above-market rent by offering rental credits on a property. Rental credits are applied towards the purchase price of the property.
Reason 2: Increase Sales Price + No Fees
When you sell a rent to own you can have an increased sales price and because there is no real estate agents involved, you will save on that 6% commission. You can sell your property to us at the top end of what it is appraised for, which is often more than it would sell for in the open market. As mentioned in our latest article, we buy for the future and don’t mind paying a little more now for a great asset.
Reason 3: No Landlord Headaches
When you're a landlord, there is always a fear of something going wrong and needing fixed. With a rent to own, since we will become the owner, we are responsible for most maintenance of the property. We literally promise to pay you what you are currently receiving and buy the property at a higher than market value in the future. We win by increasing the value beyond that mark by renovating the property while we manage it within the time span that we have to purchase and you win by being able to walk away from your property knowing that it’s already sold for your ideal price and that it is being managed at no cost to you until we buy it.
Ethics
There are many arguments of the ethics of a rent to own agreement. If a rent to own tenant does not pay, they are kicked out and you do not have to pay back their up-front option payment. If someone purchases a home from a bank, they are required to put down a down payment. If they do not pay their loan, the house is foreclosed on, and the bank keeps their down payment.
An option agreement is a great deal for a tenant buyer. The price is locked in for a selected period of time, which means if the value goes up, the tenant buyer benefits because the price is locked in from when they first moved in. I think it is fair on both sides; if you do not pay me, you will get kicked out, and you will lose your upfront money.
Almost all End Up Buying
Another major detail with our rent to own programs is that we almost always exercise their option to buy. When we buy, we are buying at the max amount you can sell for, and you do not have to pay any real estate commissions, so it is great whenever they exercise their option. If they don't, you have still made more than you would have traditionally by saving on management costs.
Rent Credits
Rent credits help the tenant buyer build some equity and pay down the purchase price. If the price is $100,000 and a tenant buyer puts down a $5,000 down payment, they now owe only $95,000. If they are paying rent on time and earning say $200 in rent credits a month , that is $2,400 a year. This money is applied towards the purchase price, so that when it comes time to purchase, they owe less. This is absolutely fantastic for people serious about renting to own single family homes.
Quick Tip
Rent credits don't always apply in every state, so study up on your state laws. In cases where rent credits don't work well for you, you can offer rent credits when they first move in, on the condition that their payments are on time.