Sale and Rent Back - What You Need to Know

Sale and rent back is one of the common avenues used in various transactions that have to do with real estate companies or properties. It is a form of property transaction involving the prompt sale of an owner's residence or property to a landlord or investment company and renting it back from the new owner.

In a more simple language, Sale and Rent back refers to the sale of an assets followed by rental. The vendor sells his or her asset and rents is back from the buyer immediately after the sale thereby raising cash and allowing a tax deduction (if you are liable). There are some points you need to know about Sell and Rent back: some of these points include:

• The reasons
• The basic process involved
• The pros and cons involved

The reasons

There are usually cogent reasons why a property owner would like to engage in Sell and Rent back. Such reasons include: a pending repossession order, marital separation, relocation to another far area and so on. Whichever is the reason, you also need to be aware of the basic process involved and how to go about the transaction.

The basic process involved

In most cases, the property involved is usually sold and rented back to the previous owner. Usually the purchase price is generally below market value. Really this is not a venture you just do on your own. You must have to engage the services of property experts in order to follow due process required and also to make good cash out of the process

You need to have proper discussion with the investment company you are dealing with. In most cases, the company will then carry out through research conce
ing the property you want to sell and rent back. After the survey of your property, the company also determines the realistic market value suitable for the property. After the necessary inquiries, the company calls you for proper negotiation which is followed by the signing of the contract for the speedy execution of the sale.

The pros and cons involved

The Pros:

Sale and Rent back could be very beneficial sometimes. For instance, the value of your property could be released in a shorter time frame. You can raise enough cash immediately for other needs you may have.
Again, the rent back option involved negates the option to move the property entirely.

The Cons:

The ugly aspect involved is that in some instances, the tenant who buys the property is only provided with a limited tenure tenancy. Sometimes, this could be as little as 6 to 12 months. At the end of this, the landlord may seek possession of the property with only 2 months notice or thereabout. In addition to the short tenancy involved, the future of the rent charged could be uncertain.

In conclusion, Sell and Rent back will always remain a viable means to gain a lot from your property. However; always involve investment companies to make the most out of it.