The real estate market is best described as diverse. There are so many ways to earn from this, and so many ways through which one can acquire property for use in whatever purpose that have in mind.

For instance, one can decide to purchase a condominium unit, especially in Thailand, if they are looking for a place to live in within a developed or urbanized locale. If they want to live farther away but still remain close to the city, they could purchase or lease an apartment. Of course, there’s also the option of straight buying a property.

Now, have you ever heard of the rent to own option? It’s one of the new ways through which one can acquire property, or earn money from it. Find out more about this technique in investing and selling real estate.

Explaining the Concept

As its name suggests, the rent-to-own technique involves initially renting a house before the owner transfers the title over to the renter. This is a very convenient way of acquiring a property for several reasons, and it’s also a very lucrative means of earning money for a property owner. Because of its very unique attributes, it’s easier to facilitate transactions between renter/buyer and the seller.

The Contract

A typical rent-to-own contract is very simple. It will stipulate that the renter will be paying the seller a fixed amount every month as rent for a specific amount of time, but a certain portion of it will go towards the total contract price as agreed.

Thus, if a house is valued at $20,000 and the parties agree to rent the house for $300 a month for 3 years with 10% going to the total contract price, $1080 will be deducted in total from the purchase price. Thus, the balance will be at $18,920 by the end of the renting period, and that is what the seller will receive when the purchase option is exercised.

Advantages of Rent to Own

This arrangement is advantageous for both parties. The buyer gets to earn income from the monthly rent for 3 years, and then receives a lump sum at the end of the renting phase. The excess from the monthly rent is usually enough to address the personal needs of the seller until he or she receives the balance.

On the other hand, renters also benefit from the arrangement. If they need a house of their own but is still unable to do so because of financial concerns, a rent-to-own contract gives them enough time to get their finances in order in time for the exercising of the purchase option. They could start saving or they could at least clear some obligations before they would be obligated under the contract to make the purchase.

The rent-to-own arrangement is both a lucrative means of earning money from a property, and a very convenient way for people to acquire one of their own. No wonder this kind of real estate transaction is picking up traction currently.

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