Who isn’t sick of not understanding certain concepts when two people are talking? Aren’t you tired of pretending to be an expert when you don’t really have a clue? It’s time to increase your wisdom, dear friend! Especially in the real estate sector. Especially when somebody tells you something about rent to buy. Does it sound familiar? Of course it does. Nowadays this operation is more than common. It can become the best choice for you, because it’s been a while since you began looking for a house and now you are valuing the possibility to buy it. But it could also be the best alternative for you. Yes, you. Aren’t you interested in selling the house to the tenants that have been living there so much time? It’s time to think about it.
In Persquare we want you to know the whole process for those properties for rent to own:
HOW DOES IT WORK?
In order to give a clear explanation, we could say that we are in front of a double contract, a document that includes the option where the tenants can buy the house they have been living in, paying the rent till that moment. When the time of becoming the owners arrives, a part of the monthly payments that the tenant has made will be discounted. This way, the payment of the rent is considered an investment for the future. Not that bad! It’s a process that satisfies both parts, suitable for all audiences. Like a Pixar movie! In this case, the parts that are benefited after the arrangement are the tenant and the landlord.
WHAT EXACTLY IS?
As we said before, it’s a double contract. That means that in the same contract there must appear two different documents: one that refers to the rent and another to the the sale and purchase. Let’s see what cannot be overlooked:
Rental contract
- Amount to be disbursed every month to pay the rent
- Time during which the tenant can be paying the rent
- Date when the tenant can buy the property
- The responsible for paying the expenses related to the administration and possible renovations
Purchasing contract
- Price that the tenant must pay at the beginning of the procedure so that he can buy the property later.
- Percentage of the rent that will be discounted from the amount of the sale of the property.
- The owner must express the intention of selling the house to the tenant
- Amount that the tenant must pay in order to buy the house
This kind of operation brings a range of additional benefits to both, the tenant and the owner. We’ve said it before: everybody benefits. Nobody loses and everybody wins.
Adavantages
- The owner begins to receive money from the first moment when he finds a tenant. After that, he can sell the property. Two birds with one stone.
- Another advantage that the owner can enjoy is the tax benefit when he decides to rent. Likewise, he feels protected from payment defaults.
- The tenant must be intelligent. He or she must take advantage on the financing support that can exist when having the chance of buying the house. Being informed is essential, and we live in the era of “information overload”.
- The person who is paying the rent is no losing money, is investing. He must plant this in his head so that he doesn’t hold back. He must repeat that to himself: paying = investing.
- Banks have in account that the tenant has been paying a rent that can be useful in order to buy a house. Talk to these institutions can’t be synonymous with talking to a brick wall.
We are sure that now we are not going to show a question mark face when you here those words. And we are pretty sure too that you are going to considerate the process if you want to sell or buy a house.
Photo from: http://www.persquare.com.ph/for-rent/house-lot-ncr-metro-manila-makati/4br-house-lot-for-rent-at-dasmarinas-village-makati-property-id-rr0321782_79453 – Hoopler