Rent To Sell Method In Maryland
Five Reasons To Utilize The Rent To Sell Method In Maryland
Trying to sell your house in this Maryland buyers market is proving to be more than a challenge. A lease option may be the perfect solution to ensure you get top dollar for your home and maybe even generate some extra income off the sale. Lease options, in which you lease/rent your property to a potential buyer who has the option to buy the property at the end of the lease term, can allow you to tap into a huge pool of people who want to buy a home but who, for one reason or another, aren't quite ready to make the purchase yet.
Here are some of the advantages:
I. Higher Rent: You can ask for a higher rent payment because you are flexible on your financing terms. One of the main reasons for charging a higher rent is because part of the rent goes toward the purchase price of the house. Decide how much of the lessee's monthly payment will be credited toward the option. Anywhere from 0-100% of the monthly payments can be credited toward the purchase price, although the amount is sometimes subject to state or local laws. In general, the monthly payment will be calculated at fair rental value plus a set amount that will go toward the purchase price. This, like the initial option money, will either be credited toward the down payment or the purchase price or, if the tenant doesn't buy, will be forfeited to you.
II. Minimum Risk: The non-refundable option deposit is kept by the seller should the renter default or decide not to buy. Decide on the term of the lease. Lease options typically run anywhere from 6-24 months. Less than six months usually doesn't make sense for the buyer, and more than 2 years (sometimes more than 1 year) may cause tax or legal complications. Shorter lease terms generally result in sales more than longer terms, simply because there are so many variables over the long term, but the length of the lease should be adequate to ensure that the lessee has time to get his or her financial ducks in a row. Keep in mind that if housing prices appreciate quickly, you may be getting a bad deal on a long lease, since you're obligated to sell at the agreed-upon price. If housing prices decline in Maryland, however, you may be getting a good deal, but if they've declined significantly, the lessee is unlikely to buy the house. You still get to keep the option money, however.
III. Don't always need a real estate agent: The most attractive feature of this kind of deal is that the agreement is based on a mutual understanding between both the buyer and seller and therefore the terms are flexible. The period within which the rent to own option has to be exercised is open and both could discuss and decide upon what the time period should be to give the buyer the option of buying the property in Maryland. Unless the seller lists the rental with an agent which could be helpful to attract attention, the seller is selling the home by owner. This will save on fees and advertising costs in the long run. An alternative to listing with an agent is to hire an attorney who will help to navigate the legal landscape.
IV. Better tenants: You have to look at potential buyers in Maryland as potential tenants, and you don't want to do a lease option with somebody who you wouldn't rent to. Look for someone with good references, a steady source of income, and the ability to pay the rent plus, if applicable, the additional monthly option money. As far as the applicant's credit history, you probably don't want someone with serious credit trouble, but at the same time you may want to be somewhat lenient. Many buyers in Maryland who choose lease options do so because they have some blemishes on their credit and want to improve their profile before applying for a loan. Renting out your home can be stressful because some Maryland renters can be hard on your home particularly when they don't plan to be there long. However, because you are renting to someone who has a long-term interest in your home, there's a better chance they'll take care of it.
V. Less stress: A homeowner who opts for the rent to own in Maryland option is able to secure both his present and his future through this deal that tends to work out quite well. The buyer also benefits by being able to live in their dream home and eventually purchase it after a short period. For sellers in Maryland, this is less stressful than just renting out your home due to the higher quality renters in Maryland and how much they care about the home.
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