Realty Source by Plethora

he loves to help and serve his community

Desire to live in convenience, connectivity and accessibility.🌃🌇

Located at Q Abeto St. Mandurriao, Iloilo City is The Southprime Flats. Yes! Iloilo's 1st SMART HOME Condo is here💕

Only 4 min away from Iloilo Business Park, Festive Walk Parade and just beside J7 Plaza Hotel, this property is up for grabs🤗

🌼Floor Area: 22 sqm
🌼Standard high-quality finishes
🌼Smart home inclusive
🌼Super affordable monthly equity/amortization
🌼Low density at 18 units per floor
🌼Good rental income is assured
🌼No hidden charges, equity inclusive of legal and misc fees💯

Message us for details and showroom tours.😉

LTS No. PLS-06-062

How Does Rent-to-Own Work in the Philippines?

Many real estate properties are emerging in the market today, which makes it difficult for sellers to find potential buyers for their property. There are also times when cash-strapped buyers, who take out a mortgage, find it challenging to secure a loan for one reason or another. Thus, failing to purchase the home they want.

In today’s tough market, engaging in a rent-to-own scheme may be the best option for both buyers and sellers.

Rent-to-own (RTO), or lease-to-buy, is an agreement that gives an individual the option of purchasing a leased property from its owner within a specified period of time. This simply means that a buyer is allowed to rent a home with an option to purchase it during the rental period or until the term of the loan expires.

But how does the rent-to-own scheme work in the Philippines exactly?

At the start of the arrangement, both parties will have to specify the monthly rental, purchase date, the sales price, and other clauses such as the interest rate. Once they have agreed on the terms, a contract is drafted and signed.

Unlike traditional financing, however, rent-to-own is owner financed, which means that the owner is the one offering financing to buyers. As a result, lessees pay rent that is slightly above market rate. This is because a portion of it will go to the down payment for the property in the event that the lessee decides to purchase it. In such case, he or she must arrange for financing, either through a bank or other lending institution, to pay for the remaining balance. If the lessee decides to walk away, all paid rent stays with the lessor, which is his’ or hers’ incentive for taking the home off the market while it was being rented.

In terms of the sales price, bear in mind that whatever price is stipulated in the contract is final and cannot be altered regardless of any increase or decrease in the property’s value during the lease period. So before signing any contract, make sure you fully understand what you are agreeing to.

What are the potential pitfalls?

For buyers, a downside is if they choose not to purchase, all paid rents will be forfeited. Another is that if the home value depreciates during the rental period, the renter would end up having to pay for a property that is way above market value. A third disadvantage is if the lessee falls behind rent, this may get him or her evicted and would lose the down payment and all previously paid rent.

And because a rent-to-own agreement is tricky and unusual, it would help the lessee and lessor to review RA 9161 or the “Rental Reform Act of 2002” to fully understand the laws covering RTOs in the Philippines and avoid any unheard-of violations.

𝚆𝚊𝚗𝚝 𝚝𝚘 𝚜𝚑𝚊𝚛𝚎 𝚊𝚗𝚢 𝚑𝚎𝚕𝚙𝚏𝚞𝚕 𝚘𝚛 𝚛𝚎𝚕𝚎𝚟𝚊𝚗𝚝 𝚛𝚎𝚊𝚕 𝚎𝚜𝚝𝚊𝚝𝚎 𝚌𝚘𝚗𝚝𝚎𝚗𝚝? 𝚆𝚎 𝚠𝚎𝚕𝚌𝚘𝚖𝚎 𝚌𝚘𝚗𝚝𝚛𝚒𝚋𝚞𝚝𝚘𝚛𝚜 𝚠𝚑𝚘 𝚊𝚛𝚎 𝚎𝚡𝚙𝚎𝚛𝚝𝚜 𝚒𝚗 𝚝𝚑𝚎 𝚏𝚒𝚎𝚕𝚍, 𝚛𝚎𝚊𝚕 𝚎𝚜𝚝𝚊𝚝𝚎 𝚙𝚛𝚊𝚌𝚝𝚒𝚝𝚒𝚘𝚗𝚎𝚛𝚜, 𝚊𝚗𝚍 𝚝𝚑𝚘𝚜𝚎 𝚒𝚗𝚝𝚎𝚛𝚎𝚜𝚝𝚎𝚍 𝚒𝚗 𝚜𝚑𝚊𝚛𝚒𝚗𝚐 𝚛𝚎𝚕𝚊𝚝𝚎𝚍 𝚒𝚍𝚎𝚊𝚜.

𝙻𝚎𝚊𝚟𝚎 𝚞𝚜 𝚊 𝚖𝚎𝚜𝚜𝚊𝚐𝚎 𝚒𝚗 𝚝𝚑𝚎 𝚌𝚘𝚖𝚖𝚎𝚗𝚝 𝚋𝚘𝚡 𝚋𝚎𝚕𝚘𝚠.