A Real Estate Midway – Rent to Own
In the real estate industry, properties are either sold or rented. But the recent years, showed a hybrid kind of real estate transaction, midway of rent and owning, which is referred to as rent to own.
A rent to own payment term is the situation wherein the buyer acquires the property through a series of payment like a rent. The payment amount is not standard and depends on the preferences and agreement of the buyer and seller. Normally, the total amount of the property including mark-up is equally divided to a certain number of periods. But there are some arrangements wherein the rent per time period can be lowered by making a big initial payment. An initial cash outlay is usually done to lessen the amount of the rent paid or shorten the length of the payment period. Hence, the larger the initial cash outlay, the smaller the rent to be paid or the shorter the payment period will be. It will all depend on the preferences of the buyer and seller and arrangements made between them.
Any real estate property can be subjected to a rent to own term but usually a rent to own payment term is more advantageous on smaller to medium scale properties. A rent to own payment scheme is not manageable for large real estate properties because the seller would most likely end up waiting for his money for a long period of time or the buyer will have to pay a very large amount of rent because the property has a large value to begin with. Example of good rent to own deals are for apartments and lofts.
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