Option to Purchase with Owner Financing Keeps Tenants Motivated

July 1st, 2010

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A long term lease to own agreement has many benefits for the property owner. One of the main benefits is that the option keeps the tenants highly motivated to become a homeowner with the owner’s help. The first step is to find tenants who are motivated. Then the key is to keep them motivated throughout the term of the rent to own contract.

There are several things that you, as the landlord, can do to give your tenants incentive and motivate them to continue with the long term lease to own agreement. Just giving the tenant the option to purchase the property at the end of the lease term is the biggest motivator of them all.

Offering a monthly rebate to the tenant that goes towards their down payment is another good motivator. The longer the tenants are into their lease agreement, the more their rebate has accumulated. This means the tenant is less likely to walk away from the agreement or to not maintain the house.

Another good way to keep your tenants motivated is to provide them with an owner financing opportunity. The tenant’s payment history during the entire lease term, which is usually 3 to 5 years, becomes the main *credit* or foundation for your trust. This means the tenant will have incentive to make timely monthly rent payments and maintain the property; so you will feel comfortable carrying a note or mortgage for them during the sale.

You can report your tenant’s payment history to all three credit bureaus monthly. This will help your tenant to build their credit history. It is also incentive to keep them motivated to pay on-time. We covered this option in this blog “Help Your Rent-To-Own Tenants Build Credit”.

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