Rent to own this option actually works.

The rent to own contract is a benificial way for people to purchase ahome that they may not be able to qualify for from a traditional lender.

The current economy state has caused the real estate market to go through a phase where there are a number of properties listed; these properties have been in the market for a long time causing frustration among the home owners who want to sell off their properties. As a result more and more home owners are putting up their houses on the rent to own policies to attract buyers.

Actually for most home owners planning to sell off their homes, rent to own can be a good way to earn money from various avenues. At first you will be able to receive payment from the prospective buyers, and then you can also receive a certain amount of money in the form of rent every single month from the tenants. Finally, when the property is purchased it will hopefully bring in a certain amount of money with it.

In a rent to own contract the buyer s called the tenant /buyer because of the fact that at the beginning of the agreement he is a tenant and after the lease ends he has the potential to become a buyer.

Most of the tenant buyers are individuals with not so good credit status or in some cases they are people who do not have the proper pre requisites to qualify for a mortgage loan. With the help of this rent to own facility such individuals can repair their credit and prepare for the responsibility of buying a house t the same time.

A typical rent to own contract will consist of an initial legalization of the Standard Rental Agreement, where the tenant promises to pay the rents at stipulated intervals of time. On the other hand there will be another agreement which will be actually an Option to Purchase contract; this contract usually has two parts.

The first part of the agreement requires the prospective buyer to pay a non refundable down payment of about 2-5% of the price of the property, this money acts like security deposit which takes the house out of the listing.

The first part paves way for the second part which bestows upon the buyer an Exclusive Right to Purchase the property. This provision gives the buyer the complete freedom to decide whether he will go forth with the purchase or not. In case the person wants to buy the house he can obtain a mortgage loan and purchase the house from the seller at the original agreed upon price.

The rent to own option helps the buyers to get into the house or get possession of the house almost immediately and thus has great benefits in store for the buyers. On the other hand the real estate investors can make a lot of profit in the course of three years by accumulating the rent of the house, the sellers are provided with a regular source of income with the help of this rent to own policy.

At the end of the lease contract the tenant buyer obtains the finance for buying the house and thereby both the seller and the purchaser gain benefits by this policy.

For more related articles read these pages

  • No money down... fact or fiction
  • Reviewing a real estate sales contract
  • Rent to own, you may be able to cash in on the recession
  • Making Money In Real Estate.

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