In a study put out by the Gershwin Group on Monday, investors with investment real estate were found to be utilizing rent to own homes over all other methods of long term holding as the fastest way to cash flow their investment properties.
The study highlighted the three methods of retaining properties for long term capital appreciation and their effectiveness:
- Renting
- Renting via government assistance ( Section 8 )
- Rent to own (lease option)
The study was backed by a 10+ year poll of independent investors that answered questions relating to their success or failure of each methodology.
Overall, renting to own a home lead the pack with 78% of respondents saying that the method was the most successful long-term. The effectiveness of renting to own was clearly beneficial over other methods because in most cases the monthly mortgage and related expenses were entirely covered. Only as few as 12% of the renters ended up actually excising their option to purchase and they were found to pay on average a staggering 17% higher than normal price for the home. To further compound the benefits, investors received larger down payments, $5,625 on average and properties were maintained better by the renters. Much of the improved maintenance stems from the renters hope of future ownership. 14% of tenants were found to improve properties on the order of at least $25,000.
Overall, we see the use of rent to own homes by savvy investors to increase. With foreclosures amplifying, the market for tenants will continue to grow. This is an excellent time to own rental property but smart investors will consider a rent to own option instead.
For sellers interested in renting to own you should see the following nationwide rent to own company, which provides free listings and a wealth of lease option information.
If you need help with refinancing an investment property for superior cash flow or wish to obtain a purchase money mortgage give me a call.
Jeremy Stayton / Luxury Financier
Luxury Mortgage Group
Office: (702) 444-0400
Cell: (702) 308-7567
Jeremy@LuxuryMortgageGroup.com
Tags: · best way to invest in real estate · lease option · lease purchase · option to purchase · Real Estate Investing · real estate rentals · rent to own · rent to own homes ·
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