Why Selling Houses Rent To Own is the Easiest Way to Make Money in Real Estate

Rent to Own is a creative selling strategy that allows you

to rent and sell an item or property quickly and receive

three income streams. Rent to Own has many names: "Lease

Option", "Lease Purchase", and "Lease with Option to Buy",

to name a few.

The use of the Rent To Own strategy has been around for a

long time. Have you ever heard of RAC (Rent A Center)?

It's a business that allows customers with bad or no credit,

to rent New Brand Name electronics or furniture with the

option to own it in a year or two as long as they make their

payments on time and take care of it.

We'll use a Big Screen TV as an Example: The customer puts

down a small payment, pays a monthly payment, and at the end

of a year or two they have the option to pay off the Big

Screen TV or return it back to store. Most people that have

had that Big Screen TV in their house for the last year want

to keep it. The best part is that the buyer will pay more

than what the equipment or furniture is worth because RAC is

taking a chance on them. RAC is trusting they will take care

of the Big Screen TV and either buy it or return it in good condition.

Apply it to Real Estate,the buyers are for Rent To Own Properties.

They are people with less then perfect credit, people who are

self employed or maybe just people who want to try owning a

house before they actually buy it. These people may not be able to

qualify for a mortgage now, but over the next year or two

you help them clean up their credit in order to become


They are called Tenant Buyers (T/B). The reason they are

called Tenant Buyers is because you have them sign a rental

contract as a tenant and a separate Option to Purchase

contract that will make them a buyer in the next 12 to 24

months. (An Option gives the Tenant Buyer the Exclusive

Right to Purchase but not the Obligation). The real benefit

is that you create three income streams for the property.

Let me explain:

1. Market your Property "Rent To Own." When you find a

Tenant Buyer, you collect 3% to 5% "up-front money" called a

Non-Refundable Option Payment, which you record on your

"Option to Purchase Contract."

2. They sign a Standard Rental Agreement for 1 to 2 years,

giving you a monthly cash flow, typically around $125 to

$250 or more. However, it can be much more. It could be

several hundred dollars depending on what the Market Rents

are and what you can negotiate with the Tenant Buyer.

3. When the Tenant Buyer exercises their Option to purchase

the house, at the price you had agreed on when the original

contract was signed, you can make anywhere from $10,000 to


Profits Explanation: Let's say you're doing a 60-Month

sandwich lease option from a Motivated Seller for a $10 Non-

Refundable Option Payment. The Motivated Seller owes $75,000

with a Monthly Payment of $750. (P.I.T.I.) Note: You do

not need to do a sandwich lease - you can use the Rent To

Own Strategy to sell any property you own or control.

You collect from the Tenant Buyer a $3,500 up front Non-

Refundable Option Payment (You subtract it from the purchase

price) plus $200 a month, monthly cash flow (No Rent

Credits) and a $95,000 selling price.

You make the following from the spreads over two years:

1. Rent: $200 x 24 = $4,800