Travis Daggett with Cornerstone Properties, talking today about lease options. We’re gonna do a number of videos about this, because it’s something that’s not brand new, but it is new to a lot of people, maybe even most people. First of all, what are the benefits of the lease option? Starting with the owner of the house. So, maybe you’ve wanted to sell your house. You had it listed with a real estate agent. It didn’t sell. Or you’ve had it listed for sale by owner. It hasn’t sold. Or maybe you have it now up for rent, because you weren’t able to sell it. Or you just have it rented out, or you’re looking to find another tenant, but you’d consider selling it. So, here are the benefits for you as the homeowner.
Benefits of Lease Options
First of all, when you use a lease option, you have a tenant buyer, so not just a tenant, but a tenant buyer. So, generally speaking, especially if you have somebody that knows what they’re doing, like us, to screen that tenant buyer and to work with them on repairing their credit and getting a loan, et cetera, you have someone with a homeowner mindset, rather than a renter mindset. So, one of the concerns people often have is what if the person trashes my house? Well, that’s normally not going to happen, in fact it’s never happened with us, where you have a tenant buyer trash the house, because it’s their house. If anything, they generally improve the property, because a lease option means that upfront you, as the homeowner, are agreeing to give them the option to purchase the property at a certain price after a certain period of time. Let’s say at a year.
Let’s say you have somebody who has good income, but there’s something on their credit that’s going to fall off in about a year. So, they’re already involved in credit repair. They’re working with a lender. They know what they will qualify for. They’ve got the down payment or they will have the down payment. It’s just they need to wait for a year. So, that person now is able to know that they’re going to be able to buy that house for that price. You, as the homeowner, know you’re gonna be able to sell it for that price in the future. You also know that you have it rented out during that time. Again, could they move out? Of course. But is it likely? Very unlikely. They have a homeowner mentality, again. They’re planning on buying it. Everything is pointing towards them buying it. Very rare that they don’t.
So, you, as a homeowner, those are the big benefits for you. You have a tenant buyer in place paying you rent every month. They have a homeowner mentality, so generally less maintenance, repairs, dealing with vacancies, any of those kinds of headaches. Then you have it sold after one year, or two years, or three years. They have the option. Of course, they don’t have to, but again, they usually do. Now, if the market goes up, yes, you could possibly be selling it for less, but also the market could go down or just stay flat, so you may end up selling it for more. Nobody can predict the future in real estate, at least among us mortals, so that really could go either way. I generally don’t find that to be a big deal, but having it rented out, and all the tax benefits, and getting the income, paying your mortgage down, all those are good benefits, as the homeowner.
Next video we’ll talk about what are the benefits if you’re a tenant buyer. Thank. Again, this is Travis Daggett with Cornerstone Properties, talking about lease options.