Here are some of the most common real estate questions:
1. What happens if I can’t rent my house?
Well, the most probable answer is that you are asking too much for rent for your home. Perhaps your condominium or townhouse is simply not appealing or lacks curb appeal or security. Another reason is that the rent you are asking may be too high for the interior finishings.
Simply put, you need to adjust your rent. If you are charging too much for rent, even by $100, and you miss one month’s rent, that could be $1200 that did not flow into your bank account. This money could have been used to pay off your mortgages or other debts. That’s why it’s important not to hold out on the extra $50, $75 or $100. Simply adjust your rent quicker, so that you can find proper tenants. Don’t hesitate – lower the rent and get your home rented as fast as possible. You’re going to be screening the tenants until you find the right one.
2. What happens if my tenants don’t pay their monthly rent on time?
We all have friends or have heard of people who don’t pay their rent. You have to evict them. The process will take time and probably cost you some money. Your property managers may have to hire somebody to go in and evict your tenants or you can obtain a court hearing. Realistically, this doesn’t happen very often. However, it does happen, so you need to be prepared.
Make sure your property manager stays on top of all your rentals, and if you’re property managing, make sure your rent arrives on time each and every month. Be fair and firm. You need to do that.
3. What happens with maintenance and repairs to the home?
Well, it’s like any home where people live. You will have to make some repairs, even if your house is brand new. However, if you buy the right property, you can minimize those repairs. With the right tenants, on move-out, there’s a good chance you’re going to need to repaint the home, and possibly add some new flooring.
By all means, you certainly have to clean it. When you’re looking at an investment rental property, look for a property with newer windows, a newer roof, a newer furnace and possibly air conditioning. These items will cost you a lot of money if you have to replace them, so you want to minimize those expenses, especially in the first year or two after purchasing your home.
4. What happens if the tenant buyer doesn’t buy the home at the end of the lease?
In most cases, your tenant buyer is putting down a monthly credit towards the down payment and, ultimately, the purchase of the property. In addition, they have given you a non-refundable deposit. They have literally thousands or tens of thousands of dollars on the line, so they will do everything possible to buy the home.
If they don’t buy the home, the lease agreement purchase option stipulates that all the monies paid will be considered rent, and the credits are non-refundable. After the tenant moves out, you start your new rent-to-own program, adjust it to the new prices in regards to your asking price, and you move on to the next tenant buyer.
5. Does the tenant buyer understand that they will lose a lot of money if they don’t buy my house?
Yes, that’s all explained right at the very beginning. We take the time to screen your tenant buyers and ensure they’re 100% committed to buying the home at the end of the lease. We tell them if they aren’t 100% committed, they probably shouldn’t get involved and should consider a straight rental. The upfront money they pay is non-refundable because you’re taking your home off of the market for two years. In fact, you co-own that property with your tenant buyer over that two to three-year period. The money that they paid is compensation for the loss of two years where you could have sold the property to someone else.
6. Do I want somebody to buy my home at the end of the lease period?
Absolutely! You want somebody to buy your home, you have a forced appreciation, you pocket that appreciation, you take it out and you’re ready to move on. Besides the upfront money, what is the tenant bringing to the deal? Well, he/she is going to be paying you rent as well as option credits. Now, that is usually blended into one large payment, with a portion of that monthly credit put towards the ultimate down payment. If the tenant doesn’t buy your home, all of the money is considered rent and is non-refundable.