This is otherwise known as the Rent-To-Own exit strategy you use to sell your house. It can make all the difference in earning the highest possible returns on your real estate investment. An extremely lucrative alternative to selling your house outright, lease options offer a way for you to earn a higher return on the sale. At the end of the agreement, typically one to three years, they can exercise the option to buy the home or walk away, and you keep the initial option fee that you collect upfront as a down.
Much like having tenants, you’ll be renting out your property. However, these tenants have much more at stake than the average tenants, as they are, in essence, test-driving ownership of the property.
Why Would A Tenant Pay More?
These tenants are willing to pay extra for the chance at living the lifestyle of homeowners while correcting any missteps with their credit or building savings for their down payment on the property. The ideal tenant would have a bad but fixable credit score such as like a bankruptcy or they owe child/divorce spouse support. Or maybe even a job loss. They are expecting that in a couple of years their situation will be resolved. That they will be in a much better financial situation down the road. If they are in a bad situation now it will be difficult to compete in the open market later for housing as it always is. Lenders don’t reward people with bad credit and such. The future buyers loan will potentially cost them more in interest rates. A Rent-To-Own lease gives them hope sort of like a promise to sell if they deliver. So they start thinking differently and then they don’t take care of the home as a renter but as the Owner. With the right tenants and a thoughtfully constructed lease option agreement, many investors learn to appreciate this arrangement’s benefits and begin investing with a lease option strategy in mind. So read on as we explore using a lease option to sell your rental property in Sacramento.
Asking Price
Because you’re in the driver’s seat, you can set the sales price for the property now when you use a lease option to sell your house in Sacramento. Often set above market to account for the appreciation estimated to occur over the contract term, while you take the risk there could be a sudden hike in values, the tenant takes the risk that values drop. So what you want to do is to predict based on the economic out look what things might look like in the end of the 3 years. Normally, real estate prices in Sacramento appreciate about 3% annually. An example of this is if your home is worth 350,000 today and it appreciates 3% annually that would come out to an increase of $10,500 annually. Multiplied by 3 years is $31,500 plus the $350,000 is a projected sale price of $381,500. Now lets look at if the market crashes or there is a recession you will want to have a minimum price that you will settle for.
DarrenBuysHomescash buys homes all over Sacramento. We are cash buyers and close fast, typically in 14 days or less. Consider this an option if your thinking about selling your house fast in Sacramento. We specialize in tenant occupied homes, squatter homes and challenging situations that tenants can impose on their landlord.
Option Fee
Using a lease option to sell your house in Sacramento means that you’ll collect an initial option fee ranging from one to five percent of the sales price, though option fees of up to twenty percent are not unheard of, and the fee is typically non-refundable. With the Price example we used earlier of $381,500. 5% of of $381,500 is $19,075, which would apply towards the purchase if the tenant exercises the option.
Tenants Maintain Your Property
While you’ll still hold the title and be responsible for the taxes and insurance, everything else will fall on the shoulders of the tenant when you’re using a lease option to sell your house in Sacramento. So, for example, tenants typically carry the financial responsibilities of maintaining the home and even making repairs.
If your home is damaged you may want to read the following link ”What do I do when a renter damages my house”https://www.darrenbuyshomescash.com/what-to-do-if-your-tenants-cause-damage-to-your-sacramento-rental/
KEEP IN MIND-Automatic Cleaning charges are prohibited:
As of 1 April 2025 California established several new laws regarding cleaning and deposits.
Its called AB 2801 also prohibits automatic charges for cleaning and/or carpet cleaning unless those charges are reasonably necessary to restore the property to its condition at the beginning of the tenancy.
Some landlords have been charging for cleaning as if it were required every time. I have seen leases with long lists of pre-agreed cleaning charges with tenants. That policy functions as a non-refundable security deposit which is illegal. Landlords should remove that language from their lease.
This does not limit a landlord’s ability to charge for cleaning when it is needed to restore the home to its pre-rental condition (minus normal wear and tear). Here is a link to AB 2801
Above Market Rent
You’ll make above-average rental income using a lease option to sell your house in Sacramento; the portion of rent paid at above-average rental rates is called the rent premium. The buyers would then deduct the amount paid into the rental premium over the contract term from the sales price upon exercising the option. Of course, if there is no purchase, you’ll also keep these funds.
Talk to our highly seasoned professional home buyers at Darren Buys Homes Cash today about your property, with no obligation. At Darren Buys Homes Cash, we want you to know you made the best deal and feel good about working with us long after the closing. That is why at Darren Buys Homes Cash, we’ll compare the numbers of a traditional listing vs. the lease option method and even make you an offer to buy your property directly, as-is, for cash. At Darren Buys Homes Cash, we’re fully transparent, providing the detail of how each number in our calculations so you can make an educated decision about what works best to sell your Sacramento house.
If you feel you have had enough of the rental business and want to retire, call me today at (916) 300-7962. I buys homes cash and fast in all areas of Sacramento. I mainly buy homes cash with tenants inside and still residing in the home. This can be helpful to eliminate vacancies and keep your cash flow to the very end without interruptions. Visit https://www.DarrenBuysSacramentoHomes.com/ or click here to see if selling your home is best for you https://youtu.be/0ULfAybPjCY
SPECIALIZE IN BUYING SQUATTER AND TENANT OCCUPIED, FIXERS, MOBILE HOMES AND HOMEOWNERS EXPERIENCING DISTRESS & STRESS. PRIMARY AREAS ARE: SACRAMENTO, S. SAC, OAK PARK, FLORIN AREA, DEL PASO HTS, NORTH HIGHLANDS, CARMICHAEL, CITRUS HEIGHTS AND ORANGEVALE.
Ready to learn more about the win-win advantages for sellers of using a lease option to sell your house in Sacramento? Call Darren Buys Homes Cash at (916)300-7962.