Rent to Own Continues Flourishing

What can you do if you don’t have the cash or credit to buy a home right now but want to get in the market before the cost of buying goes higher? You can consider the rent to own market. While this market clearly isn’t as large as the traditional bank mortgage market, the rent to own market remains viable under all market conditions.

When you’re tired of handing over $1,200 or more per month in rent but you get nothing more in exchange for it than a roof over your head, it’s time you start looking at other options available to you. One of the best options when you have a limited down payment and/or less than a stellar credit rating is a rent to own home. rent-to-own

What Rent to Own Does for the Buyer

There are many options available to how you write a rent to own contract that creates a win-win scenario for both you and the seller. Yes, it’s going to cost you a little

rent to own

more to buy with a rent to own contract. However, at least you’re buying and no longer throwing rent money out the window every month.

Rent to own is a great option when you have some money saved that can pay for the purchase option but not enough for the full down payment. Ask the seller to apply the option payment towards the down payment when you exercise your option to buy. When you negotiate a portion of your monthly rent to also apply towards the down payment, you’ll have the full down payment in place in a year or two. That’s when you exercise your option to buy the house.

What Rent to Own Does for the Seller

As the seller of a rent to own home, you can expect a higher sales price to compensate you for not being able to offer the house for sale to anyone else while it is under the lease option agreement. The lease option fee also pays you for not being able to sell the house to someone else for a couple of years. Additionally, you have a serious buyer that will likely be able to complete the purchase if the contract is worded in a way that builds up his or her down payment.

If the deal doesn’t get completed, you’re still well compensated when you keep all of the above market rent that had a portion allocated towards the down payment and the original option payment. Whether the home sells or not, you’re well compensated as the seller when you make it available on a rent to own basis.

One thing you do want to do is set up a separate account to hold all monies that will potentially apply towards the down payment. While many think the rent to own option heavily favors the seller, this can be the buyer’s only option under today’s tight market conditions. It may cost the buyer a little more but at least he or she isn’t still throwing rent money out the window.

House For Sale – Flipping is Back

If you want to put up a house for sale to make a 30% profit in 30 days, you need to look at today’s house flipping a market. According to RealtyTrac, a house for sale through a flip hasn’t been this profitable for many years. A 30% profit is the average for the first part of this year. RealtyTrac calculates the number based on the buying and selling prices on a house for sale that closes within 30 days of the original purchase.

house-sidingHouse for Sale at a Good Profit

A 30% profit on a house for sale through a flip isn’t guaranteed. That’s an average, your deal could easily be north of 40%. The impressive earnings are due largely in part to a more stable housing market, decreased inventory, fewer foreclosures, and a slower than expected new-home building market. RealtyTrac data shows that houses for sale as a flip are down to just 3.7% of the market. This means less competition and more profit when you have a house for sale as a flip.

The flipping market contributed to the real estate bubble that we’ve now recovered from. As prices skyrocketed, in the past, many investors jumped into the house flipping market for fast and easy profits that didn’t always materialize when the market over-heated. Today’s market is acting in a more rational manner.

Always Know Your Market When You Have a House for Sale

Real estate is always about location, location, location. Flipping houses in the Pittsburgh is commonly seeing returns on investment of 100%. The Philadelphia area is seeing returns in the neighborhood of 50%. However, the markets in Charlotte, Houston, Tampa, and Indianapolis are seeing loses.

Keep in mind, those returns on investment numbers are raw data. They only look at the cost to purchase a house and what a house for sale goes for 90 days or less after the purchase. The cost of renovation isn’t known or included in the data.

House for Sale But the Type of Flip Counts

Renovating houses comes in many different flavors ranging from nothing more than a fresh coat of paint to multiple building permits for a major remodel. Just sprucing the house up with a fresh coat of paint and maybe some new carpet typically results in the least profit when the house for sale quickly goes back on the market. The bigger money is made for major renovations. Something like taking a large old-fashioned 1960s style house and remodeling it to bring it into the 21st century.

Today, no one in the retail market wants to buy a 3,500 square foot house with one bathroom, a closed room design, and having old appliances and no dishwasher in the kitchen. These houses go cheap because there is no market for them. However, when you do a major remodel to add a second or third bathroom, open the room design, and update the kitchen, the house becomes worth much more. Of course, before you’ll have a house for sale, you’ll put substantial money into this type of remodel.