fionamw

It's something we're considering however the mechanics are beyond me at the moment - a website I've just looked at says 375,000€: 30,000€ up front, 800/month for two years splitting into the 100%. That's too much of a bargain!
How does it usually work & does it actually end up as a 'cheaper' buy as well as being guaranteed income & ultimate sale for the vendor or not?

snikpoh

I'n not sure I understand the Math (and I thought I was a mathematician).

What do you mean by "splitting into the 100%"?

800/month for 2 years is 19,200, plus deposit of 30k = 49,200€. Where did the rest go?

Mitzyboy

The way this normally works is that you buy, say 50%, with a mortgage or deposit or cash and then pay rent to the other "owner over the period of the mortgage.
The figures you have there dont quite work out

SueG

We prepare them in the office for clients but basically the details are usually sorted out between the two parties of how it is to work - but most times a 10% deposit is paid down.

fionamw

I know the figures don't work, hence one of my questions. Probably just bad explanatory notes on that particular website. However I always thought that by doing this method, the ultimate purchase price was lower because the vendor/landlord had a guaranteed income and then a more likely purchaser. So, for example, the property may be for sale at 375,000€ OR for rent with option to buy, say for sake of argument 1000/month over two years, maybe even paid all up front, with the option then to buy at a discount.
So there's no standard format for this kind of arrangement?

Mitzyboy

In Spain I dont know. In the UK when we were looking for our daughter we saw 25%, 50% & 75%. All basically the same in that you had to pay rent, but it was normally for a period set at the outset, and not really any cheaper than buying in total. We eventually discounted the idea and bought a complete property.

JLFS

The explanation I was told by a friend that was thinking about this option was:

That the price is agreed 200k

A deposit is paid 40k

rent is to be paid 1k per month for 2 years,

At the end of the 2 years, the mortgage is then given to the buyer for the remainder of the purchase price.
Which would be around 140k, to be paid in the usual way.

The advantage to the buyer is that, they can still live in the property and go ahead with the purchase, even if they have not got the full deposit needed.

Because the 1k per month rent they are paying for the 2 years, is almost all discounted off the price, and they do not have to pay rent elswhere so they can save up.

I may be wrong but was his take on the scheme and the way he explined it to me, and to be honest it does make sense.

fionamw

So that way would actually be very slightly more expensive for the purchaser.. not what I'd anticipated. Anyway, it's still an option to explore, even if it means different things to different people. All about being sure what you're signing up for, as with most things I guess.

leckytech

Im in one of these just now and for me anyway its quite simply rent for a certain period, if I decide to buy the money paid in rent will be deducted from the purchase price.

Madridboy

This is what my OH told me what happened when we were talking about it recently.

JLFS

Oh no, dont get the wrong end of the stick, I just made the numbers up as an expample, I have no idea of the actual figures.

I just wanted to illustrate a point, Fiona
Please dont let what I have written put you off, coz it does not sound a bad deal to me.


I dont think I have explained myself very well, but if you need to get in touch.

spainrico

I have a contract with my tenant which has an option to buy at a pre-agreed sales price and a monthly rental amount.

If he decides he likes it enough to buy the property he pays me the agreed price minus an amount equal to the rent he has already paid.

If he walks away I pocket the rent and thats the end of it.

Simple.

JLFS

Is there no deposit upfront?

spainrico

Yes 2 months rental - its a rental contract with option to buy.

fionamw

I knew it'd come to me in the end! That's the clincher - cos depending on the figure you agree, with house prices plummeting at the moment in most places, it could be a good deal for the purchaser. How did you reach your figure & was it done through an agent? Cos of course I reckon with these websites I'm looking on they'll get their pound of flesh too making it less attractive for both owner & prospective purchaser.