Now is the best time to buy your dream home! Mortgage rates, and consequently your purchase price, are very reasonable. However, in order to sell your existing home, the price on that home also needs to be attractive to potential buyers. There is a solution! Until the seller’s market rebounds, you can take advantage of this hot buyer’s market by purchasing your new home while renting out your existing home.
STEP ONE: Purchase your new Redstone home.
STEP TWO: Let Redstone rent out your existing home. Redstone will review your financial situation relative to your existing home and provide you with the following: A projected monthly cash flow analysis, an income tax impact analysis (prepared by a certified public accountant), and an inspection summary regarding any safety issues, repairs, or improvements that should be made to your existing home.
You will enter into a Property Management Agreement with Redstone, and they will turnkey manage your existing home. Redstone will find a qualified tenant for your home and prepare a Lease. Redstone will then collect the rent, pay the mortgage and any additional expenses, set aside a replacement reserve if requested, and issue a monthly check of the remaining funds to the landlord. The landlord will receive monthly financial statements and report any activity at your property. Redstone will maintain the property and manage the tenant. Redstone will receive a fee of 6% of the gross rent (the current market rate is 7% to 9%). This Agreement will be valid for up to ten years, but the landlord has the right to terminate the Agreement at any time and simply sell the property.
At the end of the lease, Redstone will inspect your existing home and make the necessary repairs and improvements so it is ready so sell. Any costs that are incurred will be paid by the homeowner (generally paint and carpet are needed), but a replacement reserve could be established for such repairs.
If you purchase a “dirt built” Redstone home, you can list your existing home while construction on your new home is taking place. If your existing home sells, that is great! If not, the Redstone rental program can serve as your backup.
Generally, this program will work best for those who have a nominal mortgage balance on their existing home or no mortgage. This rental program likely will work very well in the condo world since many condo buyers meet these qualifications. If a buyer can purchase a new Redstone Home, obtain a mortgage, and use the net proceeds from their rent to fund the mortgage on their existing home, then this program will work well. (Typically, rentals of higher value homes (greater than $350,000) are more challenging, although the demand could be very strong, especially if the higher end home is located in a very good school district.)
To buy your new home and find out more about this exciting rental program, contact Redstone Homes’ Vice President of Sales, Tom Clement at (616) 403-6106 or email him at tom@redstone-group.com.
