Selling property using a lease to own agreement is becoming increasingly popular with homeowners in Connecticut! We all know that interest rates have been going up and going up fast and sellers are still wanting high prices for their homes. This make a lot of home un affordable! Just think a $300,000 30 year fixed loan 2 years ago with an interest rate of 2.5% would have a monthly payment of $1,185. Today that same mortgage would be $2,067. That is $882 more for the same house. But we all know that housing prices doubled in the last 2 years! How is someone going to be able to afford a new house?
One option is Lease To Own. The process is underutilized and can be beneficial for both the buyer and seller when structured properly. Learn more about how to do it in our latest post!
When you are selling your house in Connecticut you may not think first hand about a lease-to-own sale, but in the right circumstances, it can prove to be a valuable choice. By embracing a lease-to-own agreement, you have the potential to attract a fresh pool of buyers, broadening your market reach and exploring the numerous advantages this alternative approach offers.
How Does It Work?
In a lease-to-own arrangement, the tenant or buyer commits to paying a monthly lease for a set duration. This period is typically accompanied by a down payment made to the property owner as a means of securing the agreement. At the end of the lease term, the tenant has the choice to either secure a loan to complete the full purchase of the property from the buyer, extend the agreement for a set period of time, or opt out of the deal, resulting in the forfeiture of any deposit funds they had initially invested.
Term of The Contract
When entering into a lease-to-own agreement, both the homeowner and tenant must establish various terms before signing the contract.
Lease Term
Determining the length of time the tenant can lease the property before finalizing the purchase is crucial. There is no set duration for this lease period. We typically do 10 year terms but we have accommodated sellers with 7, 5, or even 3 year terms..
Down Payment
To secure the contract and demonstrate commitment, tenants often provide a down payment to the homeowner. While this amount is usually lower than a traditional bank loan down payment, it binds the agreement showing that the buyer is acting in good faith to potential buy the property.
Monthly Lease Payment
In a lease-to-own agreement, the seller extends a favor to the buyer by allowing them to lease before officially purchasing the property. Although this benefits the seller in many ways, it also provides the buyer flexibility by letting them pay in installments
Maintenance
Generally, tenants are responsible for property maintenance during the lease period. It is crucial for the buyer and seller to discuss and outline these responsibilities in detail within the contract.
Taxes
Property tax payments are often shouldered by the tenant, which alleviates a significant cost for the homeowner.
Credit
Many buyers and sellers negotiate separate agreements for additional payments will go towards the down payment when they are ready to purchase the house with a traditional loan. These agreements are entirely optional but they can help the tenant build credit and accumulate funds towards the purchase making them better able to purchase when the time comes..
What Are The Benefits?
Get Your Asking Price
By opting for a lease-to-own contract to sell your house in Connecticut, you can get a better price for your house because as a buyer, Next Door Properties will pay out in installments allowing us to keep some of our cash in reserve and offer a high price
Monthly Payments Without Hassle
When you have your houses under a lease to own agreement you are collecting a monthly payment from Next Door Properties. It’s like having a renter but without the hassle of worrying about pets, property damage, repairs, or complaints. We like to While some of these funds may be used toward the tenant’s down payment on the home, you will still be able to see great profits, as well as the security of having a tenant in place throughout the duration of the lease term.
Deposit
In a scenario where a tenant defaults on an agreement, the deposit and the amount paid in the lease as well as any addition amounts paid toward a down payment are yours to keep. You might be back where you started, but you will be there with a lot more cash in your pocket.
How Do I Get Started?
If you are ready to sell and want to get started now, we at Next Door Properties would be happy to work on an agreement that is a win-win for us both. We will draw up an agreement detailing every aspect as mentioned above. Have your lawyer review the agreements to ensure everything is in order. Next Door Properties can make the entire process of offering to lease to own your property simple and profitable.