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Redeemable Rent
Redeemable rent refers to leases with purchase options whereby the rental paid by the tenant over a period of tenancy can be used to offset the purchase price of the property should the option be exercised.
While such options to purchase can be favorable to tenants who eventually turn out to love the property, landlords who voluntarily include then in leases tend to be eager to sell it.
Thus, granting such attractive terms to tenants.
Because if for example, a rental is $1,000 a month and the purchase option is $150,000 in 12 months, the seller would effectively be forgoing $12,000 in rental revenue just to let go of the property.
It might be hard to sell the particular house. Which is why the seller wants a tenant to grow emotionally attached to it, and eventually buy it.
The redeemable rent can be an amount equal to the total rental paid, a percentage of that, or a per-determined amount agreed by both parties.
Tenants are advised to look at all factors of buying a house instead of putting the sole focus on price or a “discount” on price.
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