A private sale or a sale through an Agent is the strategy you're probably locked into if you need all the money now (less Agent's commission and sales negotiation loses).
However, if you can afford to trade off some time, you may get the price you want and positive cash flow while you're waiting, by selling it/them with vendor finance. If you do a search for 'vendor finance' on this forum you'll find a wealth of information.
We work a lot with JV's. From a JV where our JV partner buys the property and we do the rest, through negative2positive JV's and finally the Assumptive JV (AJV). In all cases we've made sure that the owner on the Title is the owner of the insurance policy, with us 'on the side' with our paperwork authorising us to deal with the policy.
If we on-sell the property with an Instalment Contract, we use a fully disclosed vendor finance policy and, if we keep it as a buy & hold or on-sell it with a Lease and an Option, we use a Landlord policy.
All that you propose is possible and we stumble on them from time to time. Mainly in regional areas.
However most Instalment Contracts (IC) do require the owner's permission for the VF buyer to rent the property, i.e. you would need to change that clause in the IC. Equitable title is not a factor in this issue. Possession is the issue in what you are proposing and all IC's in Australia give Conditional Possession in one form or another.
That depends on the vendor, i.e. the vendor selling the property with an Instalment Contract (IC). Some will only sell to owner occupiers and others will allow an IC purchaser to rent but only under certain conditions/restrictions
The concern in the mind of a vendor financier is often that 'control' of the property is starting to move too far away from them. This, in my experience, would be the concern you should address if you plan on putting such a proposal to a vendor financier.
That depends on the vendor, i.e. the vendor selling the property with an Instalment Contract (IC). Some will only sell to owner occupiers and others will allow an IC purchaser to rent but only under certain conditions/restrictions
The concern in the mind of a vendor financier is often that 'control' of the property is starting to move too far away from them. This, in my experience, would be the concern you should address if you plan on putting such a proposal to a vendor financier.
It's certainly doable and you could 'buy' using either a vendor finance Instalment Contract (previously called a wrap) or a Rent To Own (Lease with an Option),
The challenge is that buying a property that's being offered by a vendor financier, with vendor finance attached, usually means you'll be paying a premium price. This is because a vendor financier's target market is normally a buyer who can't get traditional finance.
You could reconcile yourself to paying this premium price or you could spend some time learning about real estate vendor financing and, as a result of this new knowledge, learn how to buy properties, directly from sellers, with vendor finance.
We've been using Leas/Options (Rent To Own) and other forms of vendor finance since 2003. You will find quite a lot of properties for sale with vendor finance at: http://www.renttoownhome.com.au and http://www.vendorfinancedirectory.com.au You'll even find them on realestate.com.au and Domain.
If your deposit and borrowing capacity allow you to buy your PPOR with a traditional loan, I suggest you go that way, as you do normally pay a premium price for vendor financed properties (the penalty you pay for not being able to get 'traditional' finance).
However, if you are familiar with vendor finance it would be very possible to buy a property, directly from the owner, within 10km of the CBD, with vendor finance. I'm unsure of Sydney townhouse prices so I'm also unsure if $1,000 per week would work. If you have a price range we might be able to give a better guess.
If you do happen to Lease the property, I'd consider paying his asking price, if he will give you an option for 2 years. When you've got that agreed, pop the question i.e. 'how much of the lease will go towards my deposit?' It's certainly worked for us with motivated sellers.
If it were the owner is hurting, i.e. the property has been vacant for sometime, I'd move a bit further down the road you've already taken a baby step on Baby step? Yep, you've already thought about leasing it for awhile and delaying the settlement.
Why not take the Lease/Option further, i.e. control the property with a lease and an option. Often called a Rent To Own in the residential marketplace. You could Lease it for 5 years at a mutually agreeable rental and take a 5 year option on the property at a mutually agreeable fixed sale price (the 'strike' price). It is likely you'll have to offer a premium rent to make the offer attractive to the seller but you then negotiate a 'price credit'. You get a 'price credit' by asking the seller, 'how much of the rent is credited towards my deposit?' I've often been surprised at the excellent 'price credits' that are offered.
And, as long as the property isn't in Victoria, you will only pay stamp duty on the 'option fee', i.e. full stamp duty is deferred until you exercise the option. The option fee is usually quite small and is, in effect, a small deposit.
It may sound 'different' but believe me you'd be surprised at the number of large commercial premises that change hands this way. We've found them to be a great way to 'control' factory units.
We did our first vendor finance (VF) transaction in 2003 and have continued to build our real estate VF business since then. Karen & I now work full time in our VF business, so that's been a real bonus for us.
Initially the positive cash flow from the business supported our long term buy & holds but now it supports our lifestyle as well.
Of course, if you have a Residential Lease on a property and a Call Option over that same property (often called a Rent To Own), you do not have any ownership of the asset until such time as you exercise the Option.
Thanks for the insight into what you're trying to achieve. Let's see if I've got it right You'd like to do some renovations to your PPOR and you'd like your IP to stop costing you so much money each month, so you and your wife can start a family.
If you were to sell your IP with a vendor finance Instalment Contract (IC) you would expect to receive somewhere between $10K to $20K (sometimes more) as a deposit. This may or may not be sufficient for your renos.
Also, most properties we sell with IC's generate somewhere between $500 to $1,000 per month positive monthly cash flow. If you were currently negatively geared to the turn of $500 per month, selling with an IC could possibly improve your cash flow position by $1,000 to $1,500 per month. This monthly improvement to your cash flow position could help with the renos and also help with your financial planning regarding starting a family.
There are always trades off in whatever strategy you undertake. When selling with an IC you do fix, i.e. lock in, your capital gain and generate positive monthly cash flow but you do lose the long term capital gain on the property.
I'm sure there will be more suggestions regarding the use of other strategies. Hopefully out of all these suggestions you'll get one that best meets your family's needs.
It is worthwhile researching all these educators and choosing one that suits your style.
We know lots of people who have attended the seminars/courses supplied by the above educators and there seems to be a common result for all seminar attendees. The urban myth about results from seminars says that 80% of attendees do absolutely nothing once the seminar is finished and out of the 20% that actually take action, only 20% of them are left after one year. It may be an urban myth but our experience shows this to be pretty spot on.
I believe all the above educators will give you the information you need to get started but it's then up to your ability to 'stick' to the task. Our experience shows that taking a lot of continuing action and not giving up so you can attend the next great 'make a million dollars easily seminar', is the only way to be successful in any business enterprise.
In short, yes, there are many people doing it successfully. Good luck with you research.
The new rules regarding Options in Vic don't relate to 'above market rent'. If you take an Option over a property in Vic, without a Lease, no Stamp Duty is payable.
Stamp Duty however is payable on the 'strike price' of an Option, if the Option holder also has a Lease on the property.
These new rules where brought in because long term Lease/Options were being used in large commercial transactions and the State Revenue Office was missing out on a lot of revenue Lewis O'Brien, a solicitor and member of the Vendor Finance Association, has been fighting a tough battle against these new regulations with the SRO but to no avail so far. At the moment the SRO unofficially admit they didn't mean to 'rope in' residential property but, to date, they aren't about to change the rules.
As a result of this, vendor finance Instalment Contracts have become more popular in Vic. You'll find some lively discussions on the subject at the next Melbourne meeting of the Vendor Finance Association.