The rentcle concept is a simple one. It is a system where the property owner can let it out to a tenant, called rentcle, for the time it takes to clear a lease. With rentcle, not only does the property owner get to avoid foreclosure, but he also gets to have a nice monthly income. However, do they work? And how do they work in your situation?
Rentcle has proven to be an effective rent suppression method for some investors in commercial real estate. A rentcle agreement is entered into with a tenant that agrees to pay rent and avoid foreclosure. In this case, it is almost impossible for the tenant to pay back the rent and reclaim the house, and rentcle offers them the opportunity to rent back the home or apartment at market value through a short sale process.
How does rentcle work? The answer is simple. Once a tenant signs a rentcle agreement with the property owner, the house or apartment is put into a short sale escrow account. The escrow company handles the foreclosure proceedings, selling the house at a trustee sale to the highest bidder on the day of the auction if there are no buyers, and holding the deed in escrow until the house or apartment sells at a public foreclosure auction.
During the time the property is going through this process, rent collection can take place. This is done by sending rent payments to the owner of the property. If no money is collected, or the amount of rent collected is not enough to cover the balance due on the mortgage, the property will go into foreclosure and the rent back company will hold the deed to the house until the full mortgage amount has been paid. At that time, the owner can sell the property back to the rent back investor. The investor then becomes the new owner and responsible for paying back the mortgage.
Some investors may choose to hold onto the property for just a few months and rent it back later when the property is up for sale. However, some investors will put their houses in rent back facilities for as long as three years. They may have to pay a small fee for rent but at the end of the agreement they can buy back the house. It all depends on the amount of rent the investor is willing to pay.
How does RentCLE work? First, any missed payments on the property are added to the principal amount due on the principal. Interest is added on to the principal as well. Then, each month that the property is in the rent back program, the total principal amount due is decreased (since the investors own the property). Payments are sent to the address provided by the investor when rent is due.
There are two ways to qualify for RentCLE. First, you must be a homeowner (the property owner). Second, you can also be a non-homeowner who lives in the house but needs to rent it out (a subtenant). Either way, you are still investing in your house and taking advantage of the lower rates. If you have either a credit or mortgage history, it won’t matter because RentCLE doesn’t consider either one when determining your eligibility because it is not a credit or mortgage facility.
The nice thing about RentCLE is that you don’t have to worry about the property going to waste if you don’t pay rent. Your property is safe and you will have a monthly income (rent) that you can use to buy back your home when the time comes. It’s an easy way to get your house rent paid while still investing in yourself and your property.
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