Buying real estate in sight or through financing are modalities known by most people, but not everyone knows how a real estate consortium works. Totally different from the other forms, the consortium may be an option for those who have credit restrictions or for those who are not in a hurry to use the property, for example. For this, however, one must know how it works to decide whether or not it is the best choice.
Continue reading today’s post and understand more about how the real estate consortium works!
How does the real estate consortium work?
This type of modality is based on the fact that the acquisition of the property is made through the participation of people with the same objective within a group. This group is set up by an administrator and each person must pay a value known as a quota.
At the end of each month, a lottery is held in which one of the people in the group receives the property. Even after being drawn, the person must continue the payment of quotas until the end of the consortium, which only ends when everyone has their property.
Read more: Know what you need to know before buying the first property
Who is it for?
Basically, the real estate consortium is indicated for those who are not in a hurry to acquire the property, since the lottery can happen both in the first month and in the last one. This situation, however, can be changed if there are bidding or payment advances for extra sweepstakes.
This modality is also indicated for those who have some type of problem or restriction with traditional real estate financing, since this option tends to be less bureaucratic.
What are the advantages?
By its characteristics, this type of purchase of property has been increasingly used by those who want to acquire a new good of the type. Among the advantages, we can mention:
In financing, they often charge quite high interest rates and make the purchase of a property an even more expensive process. On the other hand, the consortium has only the management fee, which is usually lower than the interest charged.
Option for negatives
It is also possible to make a real estate consortium even if you have the name negative, which hardly happens with financing. So, even if you are experiencing credit difficulties, it will be possible to buy a property if you opt for this form of acquisition.
Multiple forms of contemplation
If you do not want to depend on luck alone or want to increase your chances, you can also opt for some of the many forms of contemplation. So, anyone who has money saved can make the highest bid and take the property without having to be drawn, for example.
Read more: Refinancing property: see how it works
What are the disadvantages?
Not only good points is the real estate consortium, and it is also necessary to know what the disadvantages for it is possible to take a decision based. In general, the disadvantages include:
It takes time to receive good
When you finance or buy the property in cash, you can enjoy it almost immediately. With the consortium, this does not happen, and with each month that you are not contemplated, the longer you have to wait, which may entail costs.
Possibility of not receiving the property
If you do not choose the right administrator , there is the risk of running out of good. This is because if the company is not of quality, safety and excellence, there are risks that it will use the resources of the quotas in an improper way, generating damages and headaches.
Risks associated with the group
It is also important to note that if many people in the group default, you can be affected with higher shares, for example. Therefore, it is important to know what the conditions are for the group and how the default of people can affect it.
The consortium may or may not be the perfect option for you to buy your property. This decision basically depends on your goals, possibilities and financial situation. By understanding how the real estate consortium works, therefore, you will be better prepared to make the right decision.