If you’re thinking about investing in rent to own properties, make sure you read this blog post all the way through because it will give you 4 reasons why rent to own homes is a sound real estate investment.
Owning investment real estate is a smart idea. But what kind? Should you flip houses? Should you own a rental property? Well, one method of investing that is gaining attention is called “rent to own”. It’s similar to owning a rental property except that your tenants work toward buying the property from you instead of moving on to a different rental.
This type of investment is a compelling way to invest, so it’s no surprise that it’s becoming increasingly popular.
4 Reasons Why Rent To Own Homes Is A Sound Real Estate Investment
Reason #1. Great Returns
The first reason that this is a sound investment is because you get great returns – of both cash flow and the larger deposit of money when the house sale is complete.
Depending on how the agreement is structured, you likely get a deposit at the beginning, then the cash flow from the rental itself, and finally the purchase price (or the remaining portion of it) when the tenant gets a mortgage.
So, not only do you typically get a great return, you also get it as a combination of larger deposits and cash flow.
Reason #2. Not Permanent
The second reason is that this investment is not permanent. With some investments, you hold onto them for a long time but with rent to own, you only hold onto them for a period of time – perhaps a few years. That way, you get the return on investment and you can exit the investment and invest in something else.
Reason #3. Protection
With some investments, you can take on a lot of risk. For example, if you flip properties, you might buy the property and put a lot of work into it before putting it up for sale… only to find out then if someone actually wants to buy it! That’s a lot of risk.
But with rent to own, you reduce some of the risk because you earn cash flowing rental income while the tenant is in the house.
Then, if they choose not to buy, they leave and you keep the house and get rental income from a new tenant, or, they choose to buy and you get the rest of the purchase price of the house!
Reason #4. Long-Term Tenants
One of the biggest challenges that many landlords face is short-term tenants who might be in your property for a few months or a couple of years before leaving (and sometimes they leave in the middle of the night!) But with rent to own, your tenants are typically thinking about buying the house so they’ll tend to stick around and take care of the property.
Summary
Rent to own properties can be a great investment. You’ve just read 4 reasons why rent to own homes is a sound real estate investment – you get great returns, a non-permanent investment, protection, and long-term tenants.