We have been investing in residential property between Raymond Terrace and Singleton since 2003 and we're very happy we did.  However I do have to agree with 'Key' above, i.e. there are some lower socio economic 'war zones' in the area that are very tempting because of their lower price point.  We now stay well away from them and the upper end of the market.

Cheers, Paul

Hi Pat

Are you thinking of using the Rent to Own process (Lease with an Option) to buy the property in the USA?

If you can get directly to the seller an negotiate with them it may be worth your while.  It isn't too difficult to get a sub-lease clause.

It's probably not a good idea to buy a RTO off a vendor financier if you're planning to make the property a buy & hold.  This is because the vendor financier will normally have marked the property up to full market price, or just over full market price, to get his/her profit.

Negotiating with the seller can be a drawn out process, so this may cause some difficulty with your USA idea.  However the same strategy can be also used in Australia.

Cheers,  Paul

Hi CeeKay

There is an alternative to direct investment in property that may be attractive to you at this point.  We have built a business showing people:
1.  How to buy a property and on-sell it with vendor finance.  The idea being that people may do one or maybe two of these properties with you and then go solo.  They don't always want to be sharing the profit with you    and
2.  How to sell an existing property with vendor finance.  There are plenty of properties out there that have less than stellar capital gain prospects and negative cash flow.  Selling them with vendor finance can lock in fixed capital gain on these under-performing properties and get them to generate positive monthly cash flow.  This strategy can allow people to improve the structure of their existing portfolio and give them more flexibility in the future.

The above to strategies do not involve direct property investment but they do generate, for us, great positive cash flow and a share of the locked in capital gain on these properties.  However it will take diligence over the next couple of years to really learn the business.

Cheers,  Paul

Unfortunately there are many reasons, other than your job, that will allow a clever lawyer to come after all your assets.

Just my opinion and please don't take this as advice but I purchase in a unit trust with the units owned by my family trust (with a corporate trustee).

To me the idea of spending $2K to $3K to setup such a structure is peanuts in comparison to the value of the assets this structure is protecting.

I also don't scrimp on the professional advice I take when setting up such a structure.  There were many aspects that I'd not even considered when I sat down to talk about it with my solicitor.  It was definitely a matter of "you don't know what you don't know"   This professional advice ensured I got the finer points of the structure right for my personal situation.

Cheers,  Paul

H Jack

Just be aware that, even after a listing agreement has expired, an Agent may be successful with a claim for his/her commission, if s/he introduced you to the property during a period when s/he had an 'exclusive' listing agreement on the property.  That's one of the reasons Agents nearly always get your name and address when they first talk with you.

Cheers,  Paul

Got to agree that sometimes 'simple' is best.  Just watch out for the sad fact about software, i.e. a lot of software won't 'talk' to another manufacturer's software.  This leaves you with the frustrating task of entering the same information into different software, e.g. entering all your pay details into payroll only software and then having to enter it again into accounting software.

Cheers, Paul

Hi Despina

Welcome to the forum.  I hope you enjoy your time here.  Great to see the Gold Coast being so well serviced in the Vendor Finance area.  Don't be surprised if you get an invite to a Vendor Finance Association, Gold Coast meeting next year 

Cheers,  Paul

G'day Terry

Yep that's how it's generally been since the GFC and the advent of the NCCP.  However recently we have been getting quite a number of Deposit Finance transactions over the line through the available 'non genuine savings' products that have come back into the market.

As as a sign of the times Deposit Finance may not even be necessary these days.  Today I've had 3 sellers inquiring about selling their properties with VF and they're all willing to enter into 30 year Instalment Contracts.  Sure 3 in one day is unusual but I'd say we're averaging 4 of these inquiries a week at the moment.  And refinancing out of IC's has become so much more simple than it was before, with the help of one to the big second tier lenders.

Cheers, Paul

Hi Fig

In short, if you can substantiate that all the work you are doing is repairs and not capital improvements then yes you can claim all the costs you mention in this tax year.

However there are many more qualified people on this forum than me in this area so I'd suggest you listen well to them and speak with your accountant on the subject.

Cheers,  Paul

Hi aybiss

As Terry says, if it is a true Rent To Own, the title will not transfer to you until you buy the property.

The legal paperwork that goes around a Rent To Own is a Residential Lease and an Option.  The Residential Lease gives you the right to occupy the property and the Option gives you the right (but not the obligation) to buy the property, for a fixed price, for as long as the Option lasts.  In your case it looks like the Lease and the Option will run for 3 years.

From what you say it looks like the sellers are offering what we call an Equity Credit.  An Equity Credit allows for a fixed proportion of your rent to be credited towards your deposit when you 'exercise' the Option, i.e. when you actually buy the property.  Usually this Equity Credit is only credited to you if you do exercise the Option, i.e. if you don't exercise the Option and walk away, you don't walk away with the Equity Credit.

Some points to watch with Lease/Options are:
1.  Find out who is offering the Lease/Option.  Sometimes the people offering Lease/Options only have control of the property via a Lease/Option themselves, i.e. they have a Lease/Option on the property and are actually offering you a Sub-lease and an Option.  We are wary of this type of arrangement.
2.  It looks like you are being offered a Lease/Option with a term of 3 years.  If you can't finance into a traditional loan within this 3 year time frame, both the Lease and the Option expire.  Not a great position to be in.  Therefore it is extremely important for you to consider the likelihood of you being able to get a traditional loan within the length of the term you're being offered.
3.  As people have said above, you do usually pay a premium for a vendor financed property.  However this premium does vary considerably among vendor financiers, i.e. shop around.

Another vendor finance alternative, is to find a property being offered for sale with an Instalment Contract.  These transactions are regulated by the National Credit Code and are often offered with a 30 year term.

At this point, I'd suggest you do more research into what's available out there in the vendor finance market place.  Some places to search for available properties are:
http://www.renttoownhome.com.au
http://www.gumtree.com.au
http://www.vendorfinancedirectory.com.au
http://www.vendorfinancerealestate.com.au

Cheers,  Paul