Smart Move Advantage Guaranteed Lease Review

April 24, 2012 No Comments »
Smart Move Advantage Guaranteed Lease Review

Homebuilder Pardee Homes recently teamed up with Smart Move Advantage in the hopes of selling more homes, while alleviating the concerns of existing homeowners.

It’s called the “Smart Move Advantage Lease Guarantee,” and basically guarantees rent on your existing home for up to three years if you buy a new Pardee home.

Here’s how the Smart Move Advantage Guaranteed Lease works:

Let’s assume you currently hold an underwater mortgage, meaning your mortgage exceeds the currently value of your property.

This would make it very difficult to sell your home, unless you conducted a short sale or brought money to the closing table.

To avoid this, you could buy a Pardee home and get guaranteed rent on your existing home for three years.

The first guaranteed rental payment should coincide with your first mortgage payment on your new home, to ease the cost burden.

During the three years, you would hope that your existing home appreciates in value, ideally to the point where you’re no longer underwater, and can sell for at least a small profit.

Even if Pardee Homes doesn’t find you a tenant, they still guarantee rent payments for up to three years.

So you won’t have to worry about securing a renter. Additionally, if the home is occupied, they’ll cover the cost of utilities.

And they’ll pay up to $1,000 each year for any damages caused by the tenant.

You can even list your home while it’s being rented, so long as the tenant has agreed to allow showings. But if you sell your home, you must set a closing date after the current lease is fulfilled.

After the three years are up, you can continue renting to a tenant, assuming there is one, or you can list your home for sale. Or you can do whatever else you want, as far as it appears.

Downsides to the Smart Move Advantage Guaranteed Lease

While this all sounds pretty cool, there are several negatives with this program.

First off, there will be property management fees, which are typically 10% of the rent each month.

Smart Move Advantage will cover the first year’s monthly management fees, but then you’re on your own.

Additionally, the guaranteed rent they get you may not be as good as what you could get on the open market.

So you could end up with a lot less rent money than you expected.

On top of that, getting a mortgage on the Pardee home may not be very easy.

You must factor in both your current mortgage payment and the mortgage payment on the Pardee home when qualifying (you cannot deduct the guaranteed lease payment).

In other words, the amount of house you can afford will be severely limited.

All in all, it’s not necessarily a bad program if you’re already interested in a Pardee home. But you certainly shouldn’t base your home purchase on this program alone.

You could easily call a property management company on your own and have them handle most of what Smart Move Advantage offers, minus the guarantee.

Or rent out your existing home on your own and keep more of the money.

The program is currently available in Colorado Springs, Denver, Las Vegas, Salt Lake City, Seattle and Southern California.

Tip: How much should I put down on a house?


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