Choosing the right exit strategy is crucial when it comes to maximizing your returns on a real estate investment. Instead of selling your house outright, lease options can provide a highly lucrative alternative. With a lease option, you have the opportunity to earn a higher return on the sale. Typically lasting one to three years, at the end of the agreement, the tenant has the option to buy the home or walk away. Meanwhile, you get to keep the initial option fee that you collected upfront as a down payment.
Much like having tenants, you’ll be renting out your property. However, these tenants have much more at stake than the average tenants, as they are, in essence, test-driving ownership of the property. These tenants are willing to pay extra for the chance at living the lifestyle of homeowners while correcting any missteps with their credit or building savings for their down payment on the property. With the right tenants and a thoughtfully constructed lease option agreement, many investors learn to appreciate this arrangement’s benefits and begin investing with a lease option strategy in mind. So read on as we explore using a lease option to sell your rental property in Harford County, Cecil County Or Baltimore County .
Asking Price
Because you’re in the driver’s seat, you can set the sales price for the property now when you use a lease option to sell your house in Harford County, Cecil County Or Baltimore County . Often set above market to account for the appreciation estimated to occur over the contract term, while you take the risk there could be a sudden hike in values, the tenant takes the risk that values drop.
Option Fee
Using a lease option to sell your house in Harford County, Cecil County Or Baltimore County means that you’ll collect an initial option fee ranging from one to five percent of the sales price, though option fees of up to twenty percent are not unheard of, and the fee is typically non-refundable. With the national median listing price for active listings being around $450,000 as of May 2022, 5 percent would be $22,500, which would apply towards the purchase if the tenant exercises the option.
Tenants Maintain Your Property
While you’ll still hold the title and be responsible for the taxes and insurance, everything else will fall on the shoulders of the tenant when you’re using a lease option to sell your house in Harford County, Cecil County Or Baltimore County . So, for example, tenants typically carry the financial responsibilities of maintaining the home and even making repairs.
Above Market Rent
Using a lease option to sell your house in Harford County, Cecil County Or Baltimore County means that you’ll collect an initial option fee ranging from one to five percent of the sales price, though option fees of up to twenty percent are not unheard of, and the fee is typically non-refundable. With the national median listing price for active listings being around $450,000 as of May 2022, 5 percent would be $22,500, which would apply towards the purchase if the tenant exercises the option.