I am considering purchasing a display home on a rent back option.
They have guaranteed me 3yrs rent at 8.5% with a further 8 x 6 month options.
Has anyone else tried this and should i just take out an interest only loan.in my experience the rent offered in the rent back period was well over market value, and after that, the return on my ivestment wouldn’t have been enough, so I didn’t go through with it.
make sure you not over paying for the property although they offer good returns most of the tome you will pay for the extra returns in the purchase price
Cheers Rick
If the contract gives you enough time to realise the capital gain….. then it sometimes is a good opportunity… even if you are currently over paying (within reason) for the property.
“Better to have something on the go than to have nothing at all”
Cheers
KiwiI’ve investigated these and it’s been my experience that this high yield is built into the purchase price and definatley not worth it.
The ones I looked at had high 8-9% yields for a year or two, but you were paying about $50k above what you should have for the place itself.
Some of these deals might be OK, but the ones I saw weren’t. I recommend that you do a comparision with house and land packages these people have for sale if possible, or at least try to get a vacant block price plus a building cost.
If the builder is renting it back, make sure their business is OK as if they go broke, the lease back isn’t worth anything!
Many of the major builders and land developers are currently struggling with sales at the moment. Dependant on the area it is a fantastic deal if you buy well. Always remember you don’t get if you don’t ask, and you should ask for a 10% rebate included in the price. Make sure you are not over paying. The 10% can then be contributed to your deposit.Also ensure there is a make good clause so that the property is maintained 100% as it will have high levels of traffic. .How do i know you ask I negotiate property as a full time job ,it is horrible:) You are not doing this to make money for the developer you are doing it to build your own personal wealth.Good luck
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