Common in the UK, a sell and rent back (also known as a sale and rent back) is when you sell your house and rent it from the new landlord. This allows you to free up cash and potentially avoid foreclosure while still residing in your house, even if you are in mortgage arrears.
Is it a good idea to sell your house and rent it back? Let's take a look.
Let's face it; many people love their homes. Who wants to move to another home, or worse yet, to a less attractive home? Well a sell and rent back strategy lets the buyer of your home know, in advance, that you plan to rent it back. This is all worked into the agreement.
Additionally, the buyer of your home will be fully responsible for any existing debt that you may own on your mortgage. The bank that handles your mortgage will be responsible for working out a payment plan to satisfy any back pay owed on your mortgage, relieving you of what may be months of unpaid mortgage payments.
The disadvantages of a sell and rent back are probably minor compared to the risks run by bankruptcy, repossession, and of course, eviction. When you rent back property ideally you avoid all of those pratfalls.
You're also likely to get something far less than you'd normally get for a sale price, as your desperation to sell your home quickly will force you to accept a lower price.
Failure to do so will have the same ramifications on your credit that missing a mortgage payment did. You'll also be signing a rental lease that eventually winds down, meaning that your time spent in your existing home may be limited.
As you can see, the sell and rent back strategy is one where the homeowner attempts to make the most of a situation gone bad. It's certainly worth attempting to pull off if it can be done, as the relief is definitely greater than the damage.
Is it a good idea to sell your house and rent it back? Let's take a look.
Let's face it; many people love their homes. Who wants to move to another home, or worse yet, to a less attractive home? Well a sell and rent back strategy lets the buyer of your home know, in advance, that you plan to rent it back. This is all worked into the agreement.
Additionally, the buyer of your home will be fully responsible for any existing debt that you may own on your mortgage. The bank that handles your mortgage will be responsible for working out a payment plan to satisfy any back pay owed on your mortgage, relieving you of what may be months of unpaid mortgage payments.
The disadvantages of a sell and rent back are probably minor compared to the risks run by bankruptcy, repossession, and of course, eviction. When you rent back property ideally you avoid all of those pratfalls.
You're also likely to get something far less than you'd normally get for a sale price, as your desperation to sell your home quickly will force you to accept a lower price.
Failure to do so will have the same ramifications on your credit that missing a mortgage payment did. You'll also be signing a rental lease that eventually winds down, meaning that your time spent in your existing home may be limited.
As you can see, the sell and rent back strategy is one where the homeowner attempts to make the most of a situation gone bad. It's certainly worth attempting to pull off if it can be done, as the relief is definitely greater than the damage.
About the Author:
Mitchell Pratt is a real estate enthusiast who tries to see the good in every bad situation. He loves to help those in need with free advice at his blog, where he discusses issues such as the sell and rent back strategy and how to execute a quick house sale.
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