Rent to own homes have steadily become more and more popular as the economy has not been at its best in the last few years. This option provides you with a monthly rental income and the promise of getting your home sold after a period of time. This method of selling is gaining popularity for its benefits for both the buyer and the seller.
Opting for a rent to own agreement allows a buyer with poor or low credit get the funds needed to buy a home. This also lets the buyer have a place to live while figuring out his or her financial situation. At the end of the agreement, the buyer is asked to settle a balloon payment so that the individual can rightfully own the property. This arrangement also benefits the seller since they are provided with a stream of income and the potential for a large payout after a certain period of time. If you are a homeowner looking to follow other rent-to-own homes, then you need to draft an agreement.
It is important to include all the necessary information within a rent to own agreement. Nothing should be alluded to or hinted at and everything needs to be spelled out clearly. You need to provide all the vital information such as your name, the tenant’s name, address of the property and the date the agreement is drafted. Next, you need to indicate the contract terms. Include the monthly rental rate, due date, grace periods, percentage of the rent going toward the final sale price, amount of time the tenant has to complete his or her part of the agreement, and other policies of living within the residence.
Rent to Own Fees
You must also record the Option Fee or Option Consideration. This is the fee the tenant would need to pay to ensure that you do not sell the property while he or she resides in it. This fee should not be confused with the security deposit collected in the event of damages. The terms of the Rent Credit should also be specified. This is the percentage of the monthly rent payment credited to the purchase of the house. While this is negotiable, common practice holds 50% of the monthly rate goes to the final sale of the house.
The agreement needs to reflect who is responsible for different aspects of the property. It is important that you include who pays for utilities or takes care of repair and maintenance. Another crucial arrangement that should be included is the penalties awarded if the tenant or owner violates the terms of the agreement. It would help keep the transaction smooth and hassle-free if all consequences are spelled out clearly to avoid confusion and argument.
An agreement for rent to own homes is an essential contract between the tenant and the seller. Everything should be spelled out clearly so that disputes can be settled smoothly over the course of the contract. You should also discuss penalties and fees before signing the agreement to ensure that both you and the tenant are getting the best deal possible.
Whether you are a buyer or a seller, you have come to the right place. LucnarProperties.com is your source for real estate information and assistance. You can purchase homes here or you can sell your home to us. Give us a call and we will give you more details.