What is a Property Reversion?

| George Martin Jr

A property reversion is basically when you purchase a property but you have an agreement with the people you are buying it off that they can still continue to live there for a specified time, normally until they die or some other significant agreed event happens. As you can imagine this sort of deal is normally done with the elderly.If the elderly could only sell their homes, they would easily have enough money to live out their days comfortably. But if they sold their homes, they would have nowhere to live. And besides, this is their home.This is the place where they brought up all their kids. This is the place they love and they don’t want to move, and why should they! But they also don’t want to consider remortgaging or anything like that, because the last thing they want is debt at their time of life. Plus, because of their age is might be unlikely that they can remortgage anyway.These sorts of people are ideal candidates for property reversion deals. Typically, their kids have grown up, and, even though originally the plan was to leave the house to the kids when they die, the kids are doing ok for themselves, and just want to see their parents live out the rest of their lives without too much financial hardship. There are many benefits to reversions for both the sellers of the property and the buyers. We have listed just a few below.Benefits for the seller (normally an older couple) Benefits for you as the buyerAs with anything there are pros and cons, and one of the biggest cons with a property reversion is that you will not be receiving any rental income at all from the property. The tenants live there rent free until either they die or they are taken into a nursing home or somewhere similar.The exact details of in what circumstances you take over the property will be made clear on the lease and at the outset before you buy the property.Below is an example of how reversions work:This is obviously an excellent return for your money especially considering most, if not all, of the £120,000 could have been on a mortgage.Something to keep in mind is that the average time a property reversion is in place before the investor takes full control of it, because one of the clauses in the contract, such as the death or the removal to a nursing home of the tenant, has been triggered, tends to be between nine and eleven years. **Nothing on this website should be confused with financial or legal advice. If you need this, or any other type of advice, please seek the help of a competent professional. In addition, because real estate laws change all the time and differ from state to state, and even city to city in the same state, everything in these pages should be considered general marketing advice and ideas. Please see link to full Disclaimer at the bottom of this page.

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