A rent-to-own agreement, known as lease option or renting with an option to buy as well, is a deal in which you rent a property for a specific period of time (usually from one to three years), with the option to buy it before the lease expires.

It can be a viable option for renters looking to achieve the property’s ownership, because it allows them to determine the purchase price and move into the house while completing the home’s buying process in the future.

There are many reasons behind the decision to sign a rent-to-own agreement:

2. The buyer does not have the full down payment required to purchase the property, and needs time to collect it. The same if the future owner is waiting for a mortgage loan, because generally lenders require a certain credit history period for its approval.
4. A rent-to-own agreement allows buyers to lock in a purchase price, which can be especially beneficial in a time when home prices are on the rise, or when you decide to purchase in a high-growth appreciation area like the Riviera Maya.
6. Renting with an option to buy also allows tenants to get a clearer idea about the property, the location and the neighborhood before buying it. The buyer who may take advantage of a lease-option is someone who is fairly certain about a neighborhood or home, but wants to be able to get out of the purchase if time proves that the agreement was not a good decision.
8. You are a foreign resident and need time to build up a solid credit history to be eligible for a mortgage loan by a Mexican bank.

You shall be cautious about the content of the contract.

The classic lease-option contract grants the tenant an option (right),  but not the obligation, to buy the rental property when the lease expires, in exchange of a fee (option fee, or option money).  If you decide not to buy the property at the end of the lease, the option simply expires. Therefore, this type of contract consists of two parts: a regular lease agreement between a landlord and a tenant, and an option to purchase the property at a later time.

Unlike the lease-option contract, a lease-purchase contract  includes a standard lease agreement and a purchase contract (not an option to buy).

Therefore, it legally obligates the tenant to purchase the home at the end of the lease.

If you’re not sure whether your rent-to-own agreement is a lease-option contract, be sure you ask a real estate agent for help before signing.

Rent-to-own agreement process

• Create the rent-to-own agreement

The contract should contain several elements:

– Purchase price

What you’ll pay for the home at the future date

– Term

How long you’ll rent the home before you decide whether to buy it (typically one to three years)

– Option fee

The seller usually requires a substantial option fee for giving you the opportunity to buy a home in the future at today’s prices.

Also known as “option money”, it is a one-time nonrefundable upfront payment that becomes part of your down payment if you complete the purchase.

This option fee prevents anyone else from purchasing the home while you’re leasing it. These fees can vary, but they usually total around 1 – 5% of the home’s agreed-upon final sales price.

If you decide to buy the home, some contracts provide that this fee will go to reduce the purchase price.

– Rent

How much you’ll pay in rent each month

– Extra money paid for rent

Additional above-market rent paid to the seller, which becomes part of your down payment if you close on the purchase (typically a 10-15% increase over market rent)

A crucial thing that your agreement should include is who will be responsible for routine maintenance and extensive repairs.

Although in a standard lease the landlord should be responsible for maintenance, repairs and renovations expenses, in this kind of agreement the renter/buyer is usually in charge of these costs.

Most contracts provide that the extra money that you pay above the market rent, and the option fee, will reduce the down payment when you will close your purchase. However, if you choose  not to buy the home after all, or if you otherwise fail to close according to your contract, you could forfeit all that cash you have paid to the seller.

Home inspection and appraisal

Either in a lease-purchase agreement (where you technically buy the home, although at a later time) or in a lease-option agreement (where you have the option to buy), you have to use the same caution as a traditional purchase.

Therefore, it would be better to arrange an independent appraisal on the property before deciding on a purchase price and signing a rent-to-own agreement.

The future home’s purchase price is often agreed upon at the time the rent-to-own deal is signed, and is what you will pay at the end of the lease.

An appraisal will ensure that the tenant is paying a fair price for the home.

Also, a home inspection can determine whether the tenant will need to make future major repairs, and thus whether entering into the agreement is sensible.

Pay the option fee

Usually, the extra money you pay for rent and the option fee will go toward your down payment when you’ll finalize the purchase. However, if you choose not to buy the home after all, you will  forfeit all that cash. So, if you decide to buy the home, the option fee is applied to the purchase price. But if you decide not to purchase the home, the option expires, and you will not get that money back.

What does the Mayan train mean when we talk about investment today there are a variety of options to put your money to work wisely.

Choosing the right investment for your needs and expectations will depend on a set of factors of taste, economy, time and confidence that at the same time meet your investment capital recovery needs, whether in the short, medium or long term.

Speaking on the subject of investments, at present we can highlight among the most popular options on the market, the following:

real estate investments
investments in the stock market
gold
cryptocurrencies

With 15 stations distributed in the main tourist attractions of the southern Maya and modern infrastructure designed with the vernacular architecture of each place.

When we talk about equity, security and profitability, we describe the characteristics that real estate investments offer us.

Throughout history we have witnessed the value that real estate can accumulate over the years.

Apart from value, there are other characteristics such as: Property, Goodwill, Passive Income and Low Risk.

All this, together with the innovative products offered by the real estate market today, make this type of investment one of the best and most recommended options when it comes to investing or diversifying our investment portfolio.

The real estate

They can generate continuous passive income and it is a good investment in the long term, since the value tends to increase over time in a positive progressive way resulting in equity.

As a real estate investor

You must take into account the comprehensive maintenance of your property and perhaps a remodeling investment to be made over the years so that it remains in good condition and avoid devaluation or outdated.

Real estate investment is made through the purchase of a property, be it land, house, apartment, commercial space or office or a physical building, and can offer several advantages over other types of investments, including potentially higher returns, stability, coverage inflation and diversification.

Here are the 6 key reasons you need to know to invest in real estate:

1. The value of the Property will increase over time

A tourist plan that plans to increase the length of stay of visitors for at least 3 days at each of the stations, thanks to the various activities around each of them.

All this without counting the second face of the Mayan train; It will allow anyone to invest in this project since it has a FIBRA financial system (Trusts for Infrastructure and Real Estate), a financial instrument that is listed on the Mexican Stock Exchange, which will further increase the interest of professional investors in the region.

And finally, its long-awaited transportation logistics service, which will place us even more in the eyes of import and export nationwide.

Do you lack reasons to anticipate the second wind of real estate in the Riviera Maya?

Become a visionary of new opportunities and you as professional investors, contact us today to ensure the success of your estate.

Read our article about the reasons why you should invest in the Riviera Maya