Hi all,
I am in the process of building a new house and got a knock on the door today from someone looking to buy my existing home, or to be more exact to “rent-to-buy” it.
We were originally planning to rent it after the house is built but it may be a good option to consider doing something along these lines, as we can continue to use the equity in the house until the “renters” fully pay it out.
My research indicates that Vendor Finance/Wrap contracts are void in South Australia, but I am looking for a creative solution to this problem.
Lease-with options seems like the next best option available to SA residents. My understanding is that they pay the going rental amount plus an extra amount over and above this and an initial option fee. In return they get the option to buy the house at a future date and some of the payments they have made would be deducted from the selling price (and the initial option fee).
If they decide not to take up the option they lose all payments. Is this correct?
When do we set the sale price for a future date that could be 1,2, 5 years down the track?
Is there a better option out there for people in SA?
Any info on deals like this that work in SA would be appreciated. I am happy to use my mortgage “creatively” (and legally) to assist this if there is a loophole somewhere.
Thanks
Hi Intrinsic,
I’m happy to give you the benefit of my somewhat limited experience in Lease with Option to Buy. I have put together one deal for an investor, and will probably be looking to move into a “Rent to Buy” house myself later this year.
Feel free to call me on 8381 3609 in the evening to discuss! We may be able to help each other out.
Steve G
Hi Intrinsic,
Wrap around mortgages as in getting a tenant to pay inflated interest rates on the purchase of a house, council rates and all home ownership expenses but not allowing the title to transfer to them for 25 years, is highly illegal in SA. This is just one form of vendor finance.
another form is having the title transfer in a 6 week settlement and the vendor leaving in part of the purchase price which is secured as a second mortgage on the title. This form of vendor finance is allowed in SA and done all the time. ‘
Leasing with an option to purchase is also legal because it is just a residential lease agreement with an option to purchase contract. We offer this service to investors as part of our business. Have a look at my website you may get some useful information and feel free to contact me if you have any questions.
We can also set up the legal sort of vendor financing.
[email protected]Investment Property Management
http://www.adprop.com.au
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