The strategy employed when selling a property greatly impacts the potential profits of a real estate investment. Lease options present a highly advantageous alternative to direct house sale, enabling property owners to attain higher returns on their investment. These options typically span one to three years and provide the option for tenants to purchase the property or opt out. In the latter case, the initial option fee collected upfront serves as a retained down payment.
Similar to having tenants, you will be renting out your property. However, these tenants have a higher level of commitment compared to the average tenants, as they are essentially test-driving ownership of the property. These tenants are willing to pay a premium in order to experience the lifestyle of homeownership, while also using this opportunity to improve their credit and save for a down payment. By selecting the right tenants and carefully crafting a lease option agreement, many investors come to appreciate the advantages of this arrangement and start incorporating a lease option strategy into their investment plans. Continue reading to discover how a lease option can be used to sell your rental property in Illinois.
As the seller, you have the liberty to determine the sales price for the property when employing a lease option to sell your house in Illinois. It is common practice to set the price above the market value to include the projected appreciation over the duration of the contract. However, it is important to acknowledge that there is a possibility of sudden increases in property values, which entails assuming some risk on your part. In contrast, the tenant bears the risk of potential declines in property values.
Utilizing a lease option for the sale of your property in Illinois entails receiving an upfront option fee that typically varies from one to five percent of the sales price. In certain cases, option fees can reach up to twenty percent, and these fees are usually nonrefundable. Considering the current national median listing price for active listings stands at approximately $450,000 as of May 2022, a 5 percent fee equates to $22,500. This fee would subsequently contribute towards the purchase price if the tenant decides to exercise the option.
Tenants Maintain Your Property
As the property owner, under a lease option arrangement in Illinois, you will retain the title and remain responsible for taxes and insurance. However, all other obligations will be transferred to the tenant. This includes the financial burdens associated with home maintenance and repairs.
Above Market Rent
By utilizing a lease option to sell your property in Illinois, you have the opportunity to generate rental income that is above average. This additional sum, referred to as the rent premium, is determined by the higher rental rates you can secure. When the buyers decide to exercise the option, they have the liberty to deduct the accumulated amount paid towards the rental premium from the final sales price. It is important to note that in the event that no purchase is made, you will still retain these funds.
Contact one of our highly experienced professional home buyers at Cash Offer Partners today to discuss your property, without any obligations. We understand the importance of ensuring that you are satisfied with your decision to work with us, even long after the transaction is completed. That’s why, at Cash Offer Partners, we take the time to compare the financial aspects of a traditional listing with our lease option method. Additionally, we are prepared to make a direct, as-is, cash offer to purchase your property. We pride ourselves on our transparency, offering detailed explanations of all calculations involved so that you can make an informed decision about selling your house in Illinois.
Ready to learn more about the win-win advantages for sellers of using a lease option to sell your house in Illinois? Call Cash Offer Partners at 312-818-4472.