At some point in your real estate investing career, there may come a time when you start thinking about selling your rental properties. Rather than cleaning them up and putting up a For Sale sign, though, it may be easier to offer the home to your current tenant(s) either through a Lease Option or a Lease Purchase transaction.
In doing so, you could alleviate the need to pay a realtor commission, as well as taking the time to show the property to prospective buyers. Before you move forward, though, it’s important to understand that – even though they might sound similar – a lease purchase and a lease option are not the same thing.
For instance, with a lease purchase, a price is typically agreed upon up front. A contract is then drawn up and both parties (i.e., you and the tenant/buyer) are bound to the sale (even though the actual closing may not take place for some time).
A lease option is a bit different. In this case, you can still agree on a purchase price (or you can wait and do so at a later time). However, while you are still bound to sell the property, the tenant/buyer is not required to follow through on the purchase.
In either case, the potential purchaser will usually provide the seller with a “down payment” or option fee. A portion of the tenant’s monthly rent could also be used as payment towards the purchase. These funds are generally not refundable to the tenant/buyer if they do not complete the purchase transaction.
Even if your tenant plans to eventually buy your property, if you own rental homes in the Orlando or surrounding Central Florida area and you want to free up more of your time by delegating tenant management and property maintenance duties, hiring an experienced property manager could be a great solution.
Want more information on how the right property management team could make your life much easier? Contact Us and let’s talk!