Affordable Rent to Own House in Bacolod

Thinking of investing in a rent to own property? Read this first.

Unlike renting or buying, a rent to own is an arrangement allows a buyer to rent a home or a condo with the option to purchase the property within a time frame agreed upon by both buyer and seller.

What makes traditional financing channels such as banks and lending institutions different from the rent to own set up is that the owner of the property is the one offering to finance to the potential buyers; thus, the rental fees are higher than the going market rate. This is because a portion of that amount goes to the property down payment, should the lessee decide to buy the property. If the lessee opts to move somewhere else, he or she forfeits the down payments made.

A win-win arrangement

Rent to own houses is sought after as it offers a win-win solution for both buyer and seller. Cash-strapped buyers have the chance to buy a property at flexible terms and they can move in right away. Sellers, especially those with houses or condos that have been in the market for a while, are able to generate income to cover for mortgage and taxes.

Pros and cons of rent to own

Like any financing option, the rent to own arrangement has its advantages and disadvantages.

Lessee/Buyer Benefits:

• Buyer has the opportunity to "test drive" the house or condo and is free to walk away and look for another property before the specified purchase date.
• Buyer is able to lock-in the price at today's prices, even if the purchase will take place years from now.
• Armed with the option of acquiring the home or condo within a specified amount of time, there's less pressure to move every so often.

Lessee/Buyer Risks:

• If the lessee opts not to purchase the property, all rents paid will be forfeited.
• In the event that the home or condo depreciates, the lessee has to pay rental rates way above the actual market value.
• If the lessee falls behind on his or her rent payments, he or she might be evicted and forfeit all previously paid rent.
• If the lessor fails to pay mortgage fees, rents paid might be forfeited and the lessee will no longer have the option to buy the property.

Seller Benefits

• If the property doesn't have to be sold right away, the seller can still earn from rental payments.
• Sellers can ask for a higher price in a rent to own arrangement; lessees, after all, are paying a premium for the option to buy the house in the future.
• Sellers are attracting lessees who are “invested” in the property and are keen to keep the property in its best shape.

Seller Risks

• If the property's value appreciates faster than expected, the seller would not be able to charge higher as the price is locked in at the current rate.

Because rent to own transactions can be complicated (with locked-in rates and other things to consider, it's easy to get lost amidst the nitty-gritty details), it's best to sit down with a seasoned real estate attorney to make sure you understand the terms of the contract and that these are to your best interest, whether you're a buyer or a seller.

There are no limits to what terms you could include in the contract. Aside from the standard clauses on monthly rental payments, purchase date, and selling price, both buyer and seller can draw up rules regarding pets, the number of tenants allowed and property maintenance.

Keeping these in mind will go a long way in preventing disputes in the future.

Rent to own houses is available for property seekers in Bacolod City. A one-bedroom, 30 square meter home is at P840,000 while a 46 square meter, a two-bedroom bungalow can be purchased for P1.1 million - ideal for couples planning to start a family. Two-storey, three-bedroom properties are likewise available.

Visit Lamudi's website to check rent-to-own properties in Bacolod City; there are options for every life stage (and budget) you're in.