Hi All,
Well i recently bought a brand new 3 bed, 2 bath home located with 5 mins of Cairns town centre. I had intended to live in it, build equity and start my property investing career but circumstances have allowed me to start a lot sooner than expected.
As i received the FHOG i can not sell the property for another 7 months. I would be interested in seeing if i can set a rent to buy situation but am unsure of exactly how to go about it.
Has anyone got some simple tips for me? Do you recommend getting an agent involved (i would prefer not to as they cut into the return i would be getting?)
I have read Steve McKnights books and know i have to leave something on the table so i have worked out my figures quite conservatively.
Thanks in advance
I wont comment on whether i believe you can sell the property now as i assume you have spoken to the OSR. As far as i am concerned it is 6 months in the first 12 months.
Now how you on sell the property (assuming you dont wish to sell it in the open market) doing it by some form of rent / buy, instalment contract, License to occupy will vary.
Initially all you would so is decide on a end price you want for the property and an interest rate you wish to charge and then decide which method you want to offer potential buys.
Each has its advantages and disadvantages depending on what your long term goal for the property is.
Do you want immediate income, good long term income, a quick capital gain ?
Once you figure this out you will be able to move forward.
Just remember as from July 1 you will need to be licensed under the new National Credit Act
Richard Taylor | Australia's leading private lender
One small technical aspect however relating to the new National Credit Licence. In Tony Cordato's "A Vendor Financier's Guide to the New National Credit Act", he mentions, "The use of Leases and Options for vendor finance is not affected by the new National Credit Act."
HI guys thanks for that, it was one thing i didnt know about!
In 2 weeks time i will have satisfied the 6 month live clause.
My goal is to make the property cash flow positive (even if that is only $10 a week ) with a time frame of between 2-3 years for a $50k capital gain.
Is this an unreasonable way to structure it? Weekly rent would be around $500 which would include costs (insurance, rates, water (it has tanks so this is negligable)) $10k deposit out of which will come legals and set up costs.
$400 per week (unchanged over the life of the contract) reducing the strike price of $385,000. Weekly rent to increase with CPI
This should make it easy for the tenant to get finance at the end of the timeframe as effectively they will have the 20 % ‘deposit’ required.
Does this make sense?
Cheers again
I am interested in the Lease Option because I don't have sufficient deposit. I would like to know if I want to buy 1 2BR unit in Parramatta NSW, assume it cost around $350K, how much would the rent per week if sing the lease options? I amcurrently paying $260 per week and really want to have my own home.
The great thing about Lease/Option's is that they are almost infinitely variable. All the variables, such as strike price, term, option fee, on-going option fee and rent credit, can be setup to make it work for you and your new purchaser. The reason we tend not to use them is because the Lease bit of the transaction comes under the control of the various Residential Tenancy Acts around Australia and we've found that L/O buyers tend to have a tenant's mentality.
Possibly consider selling with an Instalment Contract. It's a standard Contract of Sale with an Instalment Payment Schedule added and your new buyers will be able to claim the FHOG if this paperwork is used. In Qld the FHOG is paid after the Contract has been running for 12 months. As it 's a real contract of sale our instalment contract buyers tend to have a buyer's mentality and we find that much more pleasant