Hi guys,
I came across a company who secured properties in regional centres of NSW and onselling them to investors with rental guarantee of up to 10% on their asking prices. The lease back agreement is optional and is up to 25yrs term with annual upward adjustment of 3% or CPI (whichever is higher) and with no maintenance cost or vacancy. How do they do it? They business model is based on relocating benefit recipients from Sydney to country towns where their dollars can go the extra miles! They make profit on managing the properties, the benefit recipients have a better life style than what they could enjoyed in Sydney, the investors have worry-free investments. Sound like a perfect investment opportunity or it is too good to be true? Any comments or has any body has any experiences with such company? I would love to receive any feeback.[[8D]
LeonHey Leon
What happens with any capital growth? It sounds an interesting concept, but one I’ve not heard of – that of ‘moving’ people to the country anyway.
Cheers
MelHi Leon, Mel,
I know these people I went with them to see the properties in wagga wagga area. But couple of problems there. They increase the price before they sell any thing so $350k IP they will be selling for $400k. now if you apply for loan then you will get loan on 60%or 70% of 350k so even though you get 70% of $350 it’s about 245k for the property value $400k so you need big deposit in this case about 155K to buy $400k property. Other then that I don’t understand fully how can they relocate people to these cities and charge them higher rent.
Cheers
[
]Hi Mel & Smilie,
Capital growth is market driven and is varaiable based on local conditions.
The concept of relocating people is great and they claimed that they run regular seminars in RSL clubs to attracting pensioners.
I did went on to one of their tour and one of the property comprises of 10X2BR unit and the asking price was $900K with rental return of $90k pa. I was very keen on the property, so I packed the family and took a 2 days trip to inspect the property and get to know a few of the local agents. The feed back I got was, they were so many out-of-the-area investors, that they aren’t any property avaiable. I came to realised that similar property were selling at about the same price. For instance, there was one 8x2BR unit block asking for >$700k and is listed for Auction.
Yes, they do inflated they prices(but limited to the rental they can achieved), but they do provide the following services: 1)a good cash flow to spring boarded onto multiple properites, 2)sourcing of properties.
As we all know, we don’t have the time nor it is possible to locate every properties in every regional towns.
No, I did not buy the property. It was sold before I could organised the finance. To get around the large deposit required, one option was to request for vendor finance.
Higher rent was achieved by upgrading the existing properties with the built in price of the properties they sold. I am not here to justify they business model but there is a problem with this model – I think it’s called conducive problem or something! This being, they are the head lease, if the tennant paid them their rents and they are not pass on to you, you will have a problem of evicting the tennants.
Back to my point, has anyone bought from them and would like to share their experiences?
Thanks
[8D]A friend of mine went on one of these property tours about a month ago. When he asked was the price negotiable, they turned around and said the yield will drop in accordance with the price. WTF, buy a tenanted property in any city and negotiate on the price. Do they drop the yield? NO. I think its quite dodge.
[
]Hi australia, no experience with this company just a couple of questions for you.
How long is the initial lease or guarantee for and what are the break clauses they can exercise if they want to?C2
“Is it true the more you owe the more you grow until the bank steps in?”Thanks George, you have got a vilid point!
C2, the agreement is 5X5 and is a personal guaranteed only. He ould declared bankrupt at any time but then again a company can goes under too!
[8D]
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