The rent to buy option is quite unique & comes with various benefits for buyer as well seller. Like any other property selling deal, two parties agree to buy & sell a property but after sometime. This ‘sometime’ is decided with mutual consent and till then the property is rented out to the future buyer by the future seller.
The buyer stays in the property and rent paid by him is treated as a part of house deposit. It can be some fixed percentage or whole rent that seller accepts as part of deposit, depending on the agreement. The rest of amount is decided to be paid at the time of actual transaction.
How ‘rent to buy’ Property Benefits Buyers?
Nothing can be better than this, from a buyer’s point of view. You are actually a tenant that holds few rights on a property. You can renovate it according to your needs without fearing of leaving it one day. The monthly rent & money spent on home improvements actually acts like an investment since sooner or later it belongs to the current tenant who is also the future buyer.
Paying rent for one property and saving money to buy other ends with rent to buy option. It’s better than mortgaged property too as that can cost you higher. Rent to buy is good for people with bad credit score as well because they face difficulty taking home loans. Moreover it gives them time to improve the score (in case, it’s bad) till the moment of complete ownership arrives.
What’s in it for Sellers?
The prospects to selling increase as buyers are readily available for rent to sell. The properties that fail to attract buyers’ attention due to bad location, high price or any other reason get easily sold this way. There are many cases when sellers want immediate source of income and cannot sell the property now. Inability to pay for mortgage or renovate a home to sell at better price makes property owners choose this option. No tenants can agree to pay for a house that’s not in a very good condition but if he is supposed to buy it sometime in future and the deal attracts him economically. He may not think twice to choose rent to buy option.
The seller is not entitled to bear the expenses of home improvements & repairs. All such clauses are recorded in the agreement in advance, so there are no confusions regarding it. The option to call-off the agreement is also included in the agreement pertaining to few conditions. Money settlement has to be done then as per the contract. In this case, sellers lose a part or whole of the rent that has been received as deposit.
Cost of Property
It is determined on the basis of current assessment & future assumptions (with mutual consent) while the contract is made. Hence, it’s beneficial for both buyer & seller as neither a hike nor any decline in prices can affect their deal.
Don’t hesitate, if you are convinced with the rent to buy/sell option. Go for it after consulting a real estate attorney or agent who can guide you about its legal course & implications. If not, then talk to National Realty Investment Advisors LLC for finding better options of property investments.