GoHuman Blog

In this blog I want to share a potential mutual solution for both frustrated home seekers and fed-up landlords.  It’s called Rent-to-Own, and it’s a real estate investment model that has worked well for me and several of my friends over the years.

The benefits of Rent-to-Own for renters:

• They can become homeowners if they have income, but poor or no credit.
• If something changes and they need to move out, there are no penalties, and no effect on their credit rating.
• They can lock in a purchase price to protect themselves against rising housing prices.
• They can renegotiate the purchase price when the market goes down.
• It is great for small business owners as renting vs. paying down a mortgage is good for their debt-to-income ratio.

The benefits to investors:

• They will get renters with an owner mentality vs. a renter mentality.
• They can typically ask for full-market or slightly above market price, as there is not much competition for homes that can be rented with the option to purchase.
• When providing the rent-to-own option, homes typically move much faster than ordinary sales. My own experience (and that of some of my friends) is that homes that may normally stay on the market for 6 months can move in 1 to 2 months.
• The renter takes care of maintenance and repairs, minimizing the time and energy required to manage a property. (No phone calls Saturday night at 11 o’clock complaining about a clogged toilet).
• In some states like Tennessee, the income is considered passive and therefore not subject to corporate income tax, if you have an LLC that is owned by your family. (See your lawyer/accountant for details or your state’s appropriate tax form: TN Tax form FAE 183.)

If you like the sound of these benefits, stay tuned, as we’ll explore how this all works in more detail in future blogs. In the meantime, check out the Real Estate section on GoHuman.com (update to your zip code)!