WAIT! Before You Rent That Property Ask Yourself These 5 Questions...

Renting a property you own to a stranger is kind of like adopting a teenager. They are messy, rude and eat up your savings. Obviously, you love them, but still would it kill them to take their car off our lawn?

Renting properties has been the investment vehicle of choice for some investors and has worked well for many.  We have found with rentals that the results are mediocre at best. Personally, I’m not after average results; otherwise I never would have quit my average job. Average is easy. We are after extraordinary results, and seller financing has given us those results. 

Seller financing means that they "own" the property, and the person living in the home now has a significant stake in the property. It has the added bonus that if things do not work out between the new homeowner and the investor, the house reverts to the investor. This rarely happens, however, because the new homeowner is proud they own their home rather than renting it.

Here are some questions to help you better understand the difference between seller financing and being a landlord:

1. Would you rather collect a payment from a tenant with a renter’s mentality or from a homeowner who has pride of ownership?

2. Would you sleep better at night knowing that you collected a small rent deposit from a tenant or $10,000 down from a homeowner?

3. Would you rather sell your home to one person who stays there for twenty years and pays you like an ATM or rent to twenty different families over the same period of time and deal with a steady dose of repair issues and vacancies between renters?

4. Would you rather pay the property taxes and homeowner association dues or have the person living in the house pay them?

5. Would you rather earn an 8 percent yield on your money or a 16 percent yield? 

How did you answer these? Be honest. Do you think it might be time to investigate owner financing?