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Rent to buy

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  • Rent to buy

    Hi all

    Just new to this forum and I would like to here some opinions about rent to buy. I am looking for some information and advice about whether or not it could be the right path to take in the property market, especially the way it is now. I am currently Involved in BMV property, but don't know much about rent to buy.

    Any feedback would be apreciated.

    Wullie

  • #2
    Rent to buy? Or did you mean buy to let?

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    • #3
      Hi Brian

      I did mean rent to buy. As far as I am aware you can exchange agreements which allows you to take over mortgage payments and charge a rent so the owner can move on or stay. With an agreement that you will purchase/hand the mortgage payments back, between 1 and 5 years down the line.

      While the mortgage is in your hands you will make a passive income on the rent.

      I think that is roughly how it works, but don't know the full ins and outs of it, Hence why I am looking for people who may know about this, who might share with me how it is done

      Cheers

      Wullie

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      • #4
        Ah, I think I see - so you're basically talking about exploring the SARB - sell and rent back - market?

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        • #5
          Hi Brian

          Its sort of that, however the sell and rent back can be done with the bmv properties. This is slightly different as you don't acctually buy the property you just have an agreement that you will take over the mortgage payments. then charge a rental income. This way you do not lay out any money but still achieve a passive income. It is more suited to those that do not have enough equity in thier property to sell it below market value.

          Wullie

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          • #6
            Hi Wullie

            As an experienced buyer - BMV, SARBS, Refurbs, land development, and also building other peoples portfolios - the Sell and Rent back will only work if they can afford to pay rent. If they are having difficulty in paying a mortgage, how will they manage a mortgage + your rental difference. Having said that the only way it could work if the 'vendor' was in a high fixed rate mortgage and you could negogtiate a new mortgage - but in reality you would have to take one out which means buying the property. The 'rent to buy' I do involves an exchange with the purchaser and a build up of a 'deposit' - a great way of first time buyers to secure a property and buy at a later date. You have an exchange subject to a mortgage and banks are generally happy with this arrangement - whilst renting at a higher level. BUT make sure the applicant is credit worthy!
            Regards
            Baggy
            Last edited by Bhagvunt; 13-08-2008, 01:23 PM.

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