Financing Steel Buildings | What You Need to Know
Are you considering buying a steel building, but aren’t sure if it’s the right choice? Read on to learn about purchasing steel buildings from companies that offer finance options.
Wood is a thing of the past. The new building material is steel.
Steel buildings are inexpensive to maintain, and they have a positive impact on the environment. But is it affordable?
That depends on several different factors.
We’ve put together this quick guide to walk you through the process.
Can You Finance Steel Buildings?
The short answer to that question is yes.
But what does that mean?
Financing is a great way of buying more costly items over an extended period of time. The seller lets a buyer pay for that item in increments instead of purchasing it with a single down payment.
The two parties agree to finance the steel building at the present so the buyer can own it in the future.
Making use of financing from steel building company means that you’re buying it on credit. You do not have to pay for the metal building on the spot, but you are billed periodically by the seller for a portion of the cost, plus interest charges.
How Does Financing Work?
Financing means borrowing money from a lender to make a purchase, usually the purchase of a larger, more expensive item, like a boat, house, and yes, a steel building. You begin by entering into a contractual agreement to repay this amount over time with interest or finance charges. Most often, a customer makes a down payment and agrees to repay the balance by making monthly payments. As the buyer, you must make a down payment at the time of purchase. After that, the faster you can pay off the remaining installments, the more you can save on the building.
Here’s how general the process works:
The buyer and seller discuss the terms of the transaction and come up with a contract. The buyer can customize parts of this contract to match their personal situation.
For example, if a buyer doesn’t have a large budget, they can negotiate a small down payment. You can also request the seller include certain features or facilities before you make the first payment. This all varies by the lender.
Agree on the Final Purchase Price
The next step is agreeing on a final purchase price. This is the price you can buy the building for in the future. You usually have to wait between one to five years before you can buy the building for this price.
Determine Who’s Responsible for Maintenance
The issue of maintenance can get a little sticky on rent to own buildings. While you’re making payments, the building still belongs to the seller. But at the same time, you are slowly buying the building yourself.
So you have to decide which party should be responsible for regular upkeep.
For many people, this can result in somewhat of a compromise. The buyer might pay for small maintenance jobs (things that only cost a few hundred dollars). The seller might be responsible for larger tasks or repairs.
The exact agreement will depend on the seller and state laws. Many laws require the seller to provide certain amenities, regardless of any rent to own contract.
Have a Lawyer Look It Over
Large purchase contracts can be complicated, and you’re putting a lot of money at risk during this transaction. So you’ll want to make sure a real estate lawyer looks over your contract before you sign anything.
Like any other industry, there can always be scams out there when it comes to buildings. You should feel secure in your purchase.
It’s always a good idea to have a lawyer check your transaction contract.
Make the Down Payment
The amount of this payment can vary, but it tends to be about 0% – 5% of the final purchase price of the building.
Rent to Own – Another Possible Option
After your first down payment, you’ll continue paying a set amount every month. This amount covers the rent to use the building. Because remember, you don’t own it yet.
The duration you’ll keep paying this rent depends on your personalized contract.
Pay Additional Rent
You’ll also pay an extra amount of money every month called additional rent. This additional rent goes toward the final purchase price of the building.
This money is non-refundable. Why? Because it helps reimburse the seller if you decide not to buy the building in the end.
You can’t buy the property until the rental agreement closes. But that doesn’t mean you have to buy the building after this time. The additional rent protects the seller if you decide you don’t want the building.
Is There an Interest Rate When Financing Rent to Own?
There isn’t an interest rate when it comes to financing per se. At least, it’s not called interest.
This is where the additional rent comes into play.
While you don’t have to pay any interest on the building, your monthly rent will be higher than normal. It might seem like your the monthly rent is expensive, but if you’re planning to buy the building anyway, it will save you money in the long run.
Why You Should Rent to Own Instead of Renting
Rent to own gives you more freedom with your building than traditional renting.
When you rent a building, you’re stuck renting it forever. When you rent to own a building, you can own that building after five years. That means no more monthly payments.
Depending on the building, you might also have limited access when you’re renting. That’s not true of rent to own. Because the building can be yours in a matter of yours, you can access it whenever you want.
Are you interested in rent to own? Make sure you get the best price.
Take a look at some of these price guides so you can find a steel building that fits your needs.
Get a Loan For Your Steel Building
Tell us about your needs, and we’ll connect you with the best local metal building suppliers. From there you can discuss financing options, pricing, and then compare your options to get the best deal.