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Different Options to Make Money with Your Property in Pekin, Illinois - Local Records Office

Written by Posted On Thursday, 08 February 2018 10:49
Different Options to Make Money with Your Property in Pekin, Illinois - Local Records Office Different Options to Make Money with Your Property in Pekin, Illinois - Local Records Office Local Records Office

LOCAL RECORDS OFFICE - When you receive a call from your job and they want you to relocate. Your financial sole provider passes and you are unable to afford the mortgage. You and your spouse get a divorce and are unable to live together. The list of reasons to move is an endless list of possibilities and this stressful situation than turns into making irrational decisions that either turns into a financial burden, or loss. Here is a list of options to make money with your property and to help assist homeowners in making rational decisions that makes the most financial sense.

Lease-to-Own

Rent-to-own or lease-to-own a home gives the buyer the option – not the obligation – to purchase the home at the end of a lease period. As the end of the lease and the buyer cannot secure financing, or the option simply falls, the buyer forfeits with any money paid up front and must vacate the property.

What is a lease-option?

A contract where the landlord and tenant agree the renter may buy the property at the end of a specified period. The tenant pays rent and an additional amount each month. And at the end of the lease, the renter can use the cumulative extra payments as a down payment.

Also known as:

Rent-option

Lease-to-buy option

Rent-to-buy option

Lease-with-option-to-buy

Lease with option to purchase

Rent-to-own

The Basics of a Lease Option:

  • The buyer pays the seller option money and have the rights to later purchase the home.
  • The buyer and seller agree to a purchase price or buyer agrees to pay market value.

During the term of a lease option, the buyer agrees to lease the property for a predetermined rental amount

The term of the lease is negotiable, however, common length is one to three years

The portion of rent is applied towards the purchase price

Option money is not generally applied towards a down payment

No one is entitled to buying the property during the lease option

Option money is rarely refundable

The buyer cannot assign the lease option without seller’s approval

The buyer must exercise the lease option and purchase the property at the end of a lease option, otherwise the option expires

The buyer is not obligated to buy the property

How is it structured?

Part of your rent is usually credited towards your future purchase. “A rent-to-own contract needs to be devised so that the full rental amount is more than market rate for that size, style, and age of home in that specific neighborhood,” says Marcy Imperi, a Realtor with Century 21 HomeStar in Highland Heights, Ohio.

Who is responsible for the property?

A good lease-option agreement must be put in writing who is responsible for maintenance, repairs and upkeep.

Renters also need renter’s insurance and owners will need landlord’s insurance. “Both renters and owners should keep good records of payments for the lender when you apply for a loan.”

The agreement also should spell out who is responsible for any association fees and utilities.

How is deed transferred?

Buyers need to know ahead of time the deposit needed before the time of purchase, says Jeff Lesley, a broker and Realtor with Century 21 Sweyer & Associates in Wilmington, North Carolina.

Lease-to-Purchase

The Basics of a Lease Purchase

Buyer pays seller option money for rights to purchase property.

Buyer and seller agree on a purchase price, and often is a bit higher than market value.

During term of the option, buyer agrees to lease property for predetermined rental amount

The term of the lease-purchase agreement is negotiable, however common length is from one to three years, the buyer applies for bank financing then pays seller in full

Option money does not apply for down payment

A portion of the monthly lease payment typically applies toward the purchase price.

Option money is nonrefundable

No one else can buy property, unless buyer defaults

The buyer typically cannot assign the lease purchase agreement without seller’s approval.

Buyers are responsible for maintaining the property, paying expenses associated with upkeep, including taxes and insurance

The buyer is also obligated to buy the property

In either circumstance, it is always best to hire a real estate lawyer to draw up the documents and explain your rights, including possession and default consequences.

Renting out your property

When you are in the position to sell your home, renting out your property is also a very good option. I recently watched a movie where the wife’s husband passes away suddenly in a car accident and is forced to either sell their home or move out. Her sister suggests staying up at her cabin and renting out her home for income.

When something really tragic happens in our life, as this example, where the financial sole provider dies and we are pressed to make a difficult decision that will forever change our lives, it can lead us into making a rapid decision, and ends up being irrational or not in our best interest. That it is why it is best to be readily prepared, with a financial backing when going into making a decision, and it allows us to have a clearer conscious that is best suited for you and your family.

Turning your home into a rental can be a great asset now more than ever, with the new tax plan in place. Especially, when you are looking into downsizing and finding a smaller space; it will save you money in the long-run, giving you potential of making extra income, while still keeping your home.

Here is a step-to-step guide to turn your home into a rental in a fast and efficient way, so that you can start a new investment opportunity and be fully prepared before renting your property.

Step 1

Make sure electrical, plumbing and heating system are in good working condition – as a landlord you are required to have the basic essentials of electricity, fresh water, and heat. Hiring a professional is that is qualified will make this whole process run smoothly.

Step 2

Keeping a home insured to protect your investment and make sure your house carries adequate insurance to cover any loss due to the tenants’ negligence, natural disasters, fire or water damage. Also make sure to notify the companies you are renting the property.

Step 3

Decide what appliances you will provide and maintain for the tenant to use. Renting a house with complete appliances will help you gain a better income from rent, depending on repair costs. When your appliances are old or worn out, consider removing them and adjusting your rent to compensate for the trouble of tenants having to provide their own.

Step 4

Make any repairs before showing the house to potential tenants. When presented in the best light, you will be able to rent it out for more money. When you meet certain standards, of curb appeal, to new paint, it will attract a better class of tenants and overall earn you more money each month.

Step 5

Apply a neutral color scheme to make rooms appear bigger, cleaner, brighter and overall more appealing.

Step 6

Install smoke alarms and ensure they are working before renting the units or home out. Take the initiative to protect both your investment and your tenants.

Step 7

Secure a legal lease document, or find a reputable property management company.

Step 8

Determine market value of property and figure out monthly costs, evaluate comparable rental properties.

Step 9

Screen potential clients and ask them to fill out an application listing their name(s), employer, previous landlords and references. Also be sure to get their SSN and get a signed authorization to check credit and criminal history. Know your rights as a landlord and tenant rights.

Renting your home can also be an attractive way to boost your income and make a profit. So it is best to weigh out your options before making that final decision of selling and seeing the different ways in making money with your investment. 

 

 

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Listing Additional Info

  • State: Illinois
  • Address: Pekin, IL
  • City: PEKIN
  • Zipcode: 61554
  • SOLD: no
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