Suppose you own a home and can wait out the term of a lease option to exit the property, typically from one to three years. Or perhaps you have a property you’ve had trouble selling. In that case, a lease option is an excellent sales method that can be pretty lucrative—combining the benefit of a flip by receiving a hefty option fee at the beginning of the contract with the benefit of long-term renters.
Of course, tenant screening should always be top-notch with lease options. First, you’ll want to perform a rigorous review to bring in highly qualified tenants, staying within all local, state, and federal guidelines governing tenants. Then, with the right property and the buyers in place, you could cash in on this advantageous method of selling real estate. So read on as we discuss how lease options work for your Michigan house.
Lease options work for your Michigan house because buyers are willing to pay extra to enjoy the benefits of homeownership while you allow them time to make sure they like the home, repair credit, or save towards a downpayment. In addition, because you must estimate the future market value of the property, you can set the sales price above the current market value. So while you risk prices soaring far above this number, you can mitigate taking a hit down the road by cushioning the sales price now; the buyers, on the other hand, risk home values falling and owing more for the property than the market value.
A large influx of cash is always a nice bonus, with the fee for the option typically ranging between two and five percent of the home’s sale price; this is another way lease options work for your Michigan house. With the average sales price of homes reaching an all-time high of $400,000 in May of 2022, you could collect up to $20,000 for the exclusive right to buy the home by exercising the option. In addition, the option fee is typically nonrefundable.
Increased monthly cash flow is another way lease options work for your Michigan house in the higher rental rates you can charge, with a portion of the rent payment to apply towards the down. The rental premium amount must be above the market average for many lenders to consider it for the downpayment, so be sure to check with mortgage lenders about the terms.
Eliminate Holding Costs
Essentially, lease options work for your Michigan 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 Providence Homebuyers understand how lease options can work to your benefit for your Michigan 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 Providence Homebuyers, 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 Providence Homebuyers when our investors win. Let the seasoned professional home buyers at Providence Homebuyers help you. And don’t forget to ask about our current inventory of the best lease option properties available in Michigan. Call Providence Homebuyers at 3132171075.