Success For The Sell And Rent Back Real Estate SchemeSuccess For The Sell And Rent Back Real Estate Scheme

In real estate, many opportunities exist for making money but one in particular was devised in 2006, known as the sell and rent back scheme, as a means of helping out homeowners at risk of losing the property. The concept was to get away from repossession or foreclosure by selling and renting the home back. For instance, the homeowner having trouble making payments could work with an investor to have a quick sale done on the home but instead of moving out, the homeowner would remain in the property but pay rent to the investor that purchased it.

This scheme continued for about a year at which time it evolved into a different type of plan for helping the homeowner. People that had owned property for years usually had a significant amount of equity and with homeowners not wanting to lose this money, the sell and rent back scheme headed in a new direction. At that time, the homeowner having financial issues would have the option of buying their home back after getting debt under control, which meant most of the equity was untouched.

While this sounds great, homeowners interested in this type of plan need to use caution. Below are several problems that might arise from this type of arrangement so anyone considering a sell and rent scheme should know how to identify and avoid them.

Fees

With this particular real estate scheme, associated fees would be the responsibility of the buyer, which might include things such as inspection, solicitor expenses, and surveys. Since the buyer pays these and other fees, if the now renter were ever asked to pay for something, they should be wary in that if the sale were to fail, fees would never be recouped.

Rent Increase

Obviously, the buyer and now renter would sign a contract but all of the information needs to be carefully read before anything is signed. For the rent contract, close attention should be on monthly rent payments. If the contract states that the buyer can increase rate twice a year, this means they are taking advantage of this situation. Unfortunately, dishonest buyers or companies will set rent payments for six months and then increase them so high that the renter cannot afford the payments, forcing them to move.

Home Sale

The new homeowner would have right to sell the home if wanted, which would again put the renter in a bad position of needing to move with little notice. If the sale of the property were covered in the sell and rent back contract, then certain restrictions need to be outlined. This way, the buyer would not be allowed to sell the home unless the renter provided written authorization.

For the sell and rent back scheme, negative aspects exist, but there are also positive features of this situation too. Most importantly, the homeowner at risk of losing the home to foreclosure would be safe. While the owner could put the house on the market, the challenge there is with the current economy and real estate market, prices are low and property is moving slowly. Therefore, the homeowner should put pen to paper, looking at the numbers to determine if a normal sale makes sense.

In addition, the homeowner is not at financial risk for this kind of scheme since the buyer has the responsibility for paying fees. This transaction is private, a situation that could save the homeowner embarrassment. Since the homeowner would remain in the home as a renter, nosey neighbors would have no idea that a sell and rent back scheme had occurred.

Sadly, in the past two years, millions of people have lost homes to foreclosure. While not for everyone, the sell and rent back scheme does protect homes, making it a possible solution. However, anyone in this situation should not wait until things have become too bad, instead taking action.
by Allison Clarke
References and Bibliography
Allison Clarke is a real estate investor based in Texas. He is a former estate agent and writes widely about issues related to real estate and finance. He is currently studying the latest developments in the UK national home buyers market and how it's been progressing during the recession.
Rated:NR/0 Votes
4 Views
Add To My Article Reading List
Add To My Article Reading List
Print Article
Print
More Article By Allison Clarke
More Article by Allison Clarke
Share
More Articles From Real Estate
More Articles From Real Estate
Related Articles and Readings
Selling Homes With the Power of the Internet By: Thomas Stevenson
Sadly, the economy and real estate market is currently in bad shape People that have lost homes to foreclosure or even newly built homes have literally been sitting for a year or more - ...
Making a Hobby Out of Investment Rental Property By: Allison Clarke
With today's economy, many people are looking for options to create steady income An excellent opportunity is with rental property ...
Vital Information For Buying Rental Property By: Frank Hendrickson
Becoming an owner of rental property is a serious decision, one that requires careful research and knowing all the facts While there are certainly benefits, such as making a good income from the investment, you need to learn all the facts before ...
Top 3 Tips on Buying a New Home-Use the First Time Home Buyers' Stimulus By: Tony Mandarich
Top 3 Tips on How to Buy a New Home-Use the First Time Home Buyers' Stimulus Buying a house is a stressful experience There is an enormous amount of information bombarding new home buyers regarding credit report scores, loans, mortgage rates, down ...
Is 2009 the Right Time to Buy a Home? By: Frank Hendrickson
Without doubt, the current economy and housing market are struggling The good news is that reports coming out of the National Association of Estate Agents show home buying and selling is improving primarily from improved interest rates, although ...
The information provided in this article and/or the comments is the sole responsibility of their respective authors and does not necessarily reflect the opinion of ezinepost.com. ezinepost.com  does not endorse any article and/or comments published by our web users unless otherwise noted. 

Member Panel

login to submit articles and more

StatisticsEZINEPOST.COM

  • » Active Categories: 419
  • » Active Articles:251893
  • » Active Authors:32244
  • » Active Members: 31843
  • » Statistics Updated:
    - Sun Apr 1st, 2018 06:13PM EST