Hi knowing much about rent to buy I was interested in x2 ads in our local rag for rent to buy. One was for a townhouse in Patterson Lakes and the other a 2 bedroom unit in Carrum, both under different contact names. Interesting though they were both $550 per week. Not knowing anything about the properties of course – but I thought the rate was high, if the normal rent was around max $350pw? We currently play $300pw for a 2 bedroom ground floor beach front flat with a rear yard, a couple of suburbs closer to Melbourne.
Would that rate be the only cost for the tenant? Does the owner pay for rates, insurance, water? Would the potential "rent to buyer" have to outlay a deposit as well? is there a percentage that would be?
If normal rent was say $350pw is $550 a week the norm rate above market rent?
Would be very interested to learn more?
MareeA Rent to Buy is a description of a paperwork system used to buy and sell property. The Payment is actually a payment made to the seller to buy the property over a period of time. The payment is similar in structure to a loan payment. That is part Principle and part interest, but with a rent to buy the payment is made up of the bit that comes off the balance owing and the bit that does not. At the end of that time you would have a balance owing and would get a loan and pay out the seller. Its a great way to get into a house and pay some of it off as you go. The good part is the Lenders usually look at it a savings record for the bit that comes off the price. Under the rent to own the seller still looks after the outgoings.
The idea is you get in and are paying off your own home.
Dave
Thanks Dave, I have contacted the agent acting on behalf of the home owner. It all sounds very fair and agreeable. It is for 2 years. I am going to have a drive by tomorrow. I keep you posted.
Hi Maree
Rick Otton is the main person in Australia who deals with that sort of thing. I think there is some info at the below website but if not just Google his name and I'm sure you will find heaps of info!
Cheers and good luck
Banjo
Hi – thanks for the lead Banjo, I had a look at the property on the weekend from the outside. Sadly, it isn't what we are looking for. Cheers
I would contact the owners anyway. As if you find one that you do like and on the market then I often heard of people putting together a deal this way.
They want you to find the home YOU want. It all works out better if you get what you want.
'RENT TO BUY' SCHEMES
New name for an old scam.
by Neil Jenman
Home ownership, that great Australian Dream, is harder than ever before. Across the nation, tens of thousands of families are locked-out of homes they can never afford to buy.
The rising cost of rent plus day-to-day living expenses makes it almost impossible for these families to save even a minimal deposit for even the most modest home.
And the banks, well, they just won't touch these battlers who, desperate and despondent, feel doomed to a lifetime of renting. Many would do almost anything for the slightest chance to own a home. It's a national tragedy.
And so, when they hear about a scheme called 'Rent to Buy', their hopes surge. It's like offering water to someone dying of thirst.
It sounds so simple, so alluring. Instead of renting a home you'll never own, you can now rent a home that you will own. Surely that's cause for celebration.
Sadly, no.
Here is a simple fact: 'Rent to Buy' schemes are dangerous scams. They are designed by predators who prey on the poor. They are a complete rip-off and should be outlawed.
Like all slick scams, 'Rent to Buy' schemes are so seductive. The pitch goes like this: We are here to help you. We have a unique system. If the banks reject you, we can help you.
And on and on and on it goes. One twisted truth after another.
The straight truth, however, goes as follows.
Victims of these scams (many of whom do not even realise they are victims until it's too late) are ripped off in three ways.
First, they are charged an exorbitant amount of rent.
In just one typical example, a property offered by a mob called Rent 2 Buy Pty Ltd (run by a 35 year-old spiv called Troy Boldy) offers a home for rent in the Sydney suburb of Fairfield at $550 per week. The market rent is about half that amount.
Astonishingly, Boldy himself openly admitted yesterday that his rents are "double" the market rent.
Okay, so that's the first part of the rip off. Buyers pay double the market rate for their rent.
Second, as well as the exorbitant rent, the "buyers" (victims) pay an exorbitant price for the home.
Sticking with the same example of Troy Boldy and the same home in Fairfield, the purchase price being asked for this home is $380,000.
Yesterday, a local agent estimated its real value at between $250,000 and $270,000.
So, on top of the double rent, the victims are also paying at least $100,000 too much for the home.
From the moment they sign up with Rent 2 Buy Pty Ltd (or any similar company), they have instant negative equity (meaning they owe at least $100,000 more than their home is worth).
The third rip-off with the 'Rent to Buy' schemes is that the buyers are not the owners of the homes they are buying. No, the homes remain in the name of the rogues running the scams.
Quite simply, this means that if the buyers pay the rogues and the rogues go broke or their companies collapse (as many do) then the buyers – who have done nothing wrong – are instantly evicted.
These schemes (sorry, scams) are just a variation of the notorious wrap schemes which were once promoted by get-rich-quick spruikers such as Henry Kaye, Steve McKnight and Rick Otton.
Mr Otton still runs seminars – at thousands of dollars a ticket – where he teaches hundreds of wanna-be-property multi-millionaires how to set-up these predatory scams to exploit battlers.
As the housing affordability crisis gets worse, more predators will be attracted to these scams.
As the trusted finance commentator, Ross Greenwood said: "These could be the financial scandals of the next five years." He's right.
Now, before the usual abuse from rogues spews forth at the author of this article, here's a final message to any battlers who may be tempted by these schemes…
Go and see an independent lawyer before you sign anything.
Any lawyer with any intelligence or integrity will tell you to have nothing to do with these typical 'Rent to Buy' schemes.
Rhys Roberts LLB, PDLP, LLM
Legal Practitioner with a current practicing certificate (Quoting Neil Jenman – but not necessarily endorsing his opinion)Hi Maree
I guess it would be fair to say that all of the members of the Vendor Finance Association of Australia don't agree with Mr Jenman's opinion
I'm not sure if you live in Sydney but details of the Association's next get together in Sydney are at:
https://www.propertyinvesting.com/forums/property-investing/creative-investing/4324521Also, a solicitor with a great deal of experience of Vendor Finance in Australia has some interesting information and history of Vendor Finance in Australia at:
http://www.vendorfinancelawyer.com.au/news.phpI hope this helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I think rent to buy has merits for both parties. Sadly I am in Melbourne Paul.
Not sure if Qsl007 does or has done any Wraps in Victoria.
Hello Maree_Bradross,
After you read my post if you still think that rent to buy has "merits for both parties" I will to a rent to buy deal with you. No problem.
You choose the house, contact me and then let's come to an arrangement.
Deal? Somehow I don't think you will want to do it.
No all of our wraps are and will always be in Qld.
Richard Taylor | Australia's leading private lender
Hi Rhys – well that is a pretty easy offer, you could just propose unviable figures. Are you proposing a standard rent to buy deal? Regards Maree
Hi there,
Paul is totally on the money when he says that no-one in the Vendor Finance Association would agree with the views in that article by Neil Jenman that Rhys has posted and, Maree, I would be very reluctant to get involved with a possible rent-to-buy scenario with some-one posting an article expressing those views even if he said he doesn't necessarily endorse them.
I suspect he is being tongue-in-cheek with his offer.
Btw there are plenty of people doing Rent-To-Buys in Victoria.
Cheers,
TamarHi,
it is surprising that a legal practitioner decides to quote in the same post notorious Jenman and to offer a Rent-To-Own proposal.
What was your motivation Mr Rhys? Do you need attention?
Joe Sarai
dont go rent to buy maam they realy a good way to go broke
Vendor finance, wraps, handyman specials, rent to own schemes all have three things in common 1, A vendor who is desperate to sell and can’t 2, A buyer who can’t get approval from a bank for finance 3, Robin Hood the good guy trying to help the old Aussie battlers in the middle oh yes and trying to get rich quick with as little effort as possible. A recipe for disaster! The crux of all of the schemes and I’ll save you a good few thousand dollars on courses is… 1, Agree as low a purchase price as possible from the vendor and try not to pay him until you’ve sold-on the property 2, Sell the property to a buyer for an inflated price, try and work in some positive cash flow via inflated rents etc.. until they can find a bank who will lend them the money done deal? Robin Hood or just a hood that is Robin. I hear stories every week of people who have been involved in the role of Robin Hood and are now themselves desperate to sell, if a bank refuses to give someone finance they have done it for a reason. Who makes the money in these agreements? Talk to the guy giving the seminar and ask them how much they make from property and how much from seminars. If you want to go on the courses go, then sit down for one hour with your legal eagle the cost will be negligible compared to what you’ve just spent on the course and will save you a fortune.
Hi
A quick story to show just how terrible these wicked Vendor Financiers are
An investor went along to the great "get rich via real estate" seminars and negatively geared himself into a cashflow crisis. The result was that, when he contacted us, he was just days away from foreclosure and probably bankruptcy soon thereafter.We paid the loan arrears (approx $12,000) and took control of the property for what was owed, i.e. $180,000. Being the ever greedy Vendor Financiers, we sold it for $250,000. Our new buyers have been with us now for two and a half years and last Friday they rang us to tell us they've sold the property for $322,000.
The result. The original owner keeps ringing us to thanks us for saving him from bankruptcy. The people who bought the property from us at a highly inflated price are just gutted at having bought the property for $250K and sold it for $322K. And yes, throughout the two and a half years we've held this property, we've made approximately $300 per month positive cashflow.
Of course there are shonky vendor financiers. There are shonks in all professions. My suggestions would be to get references and ensure that you only deal with members of the Vendor Finance Association of Australia.
And yes, we did learn this business from a manual we bought and seminars we attended. We started in 2003 and now have a business that is financially rewarding but, more importantly, it's a business that we'd happily allow ALL our clients to be approached and quizzed about how they feel about their experience as our clients. Thanks.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I have a house, which is 2-storey, 3 bedrooms and a garage in Queenland, Coomera. It is a new build and I have to settle on 9 April 09.
I would like to sell it as lease option, owner finance or in anywhere way that the deal will work for me.
My asking price is $395,000.
If anyone interested , please contact me at [email protected] for more details and photos. Agent welcome.
wenny
I am new to this forum but unable to find an " Introduce Yourself" forum so I am doing that here.
I have been involved in R.E. for some 30 plus years and am currently trying something in NZ while living in Australia.
I have come across many 'Nah Sayers. when it comes to 'Rent to Buy' and have been on both ends of the deal. They can be good if you are in a position that the extra rental payment makes no real time difference at the time because it is financially affordable to you and your credit is not the best or your ability to get a conventional loan is compromised but you must have a plan in mind for the property.
One property that I purchased on 'Rent to Buy' was signed over a 3 year period which allowed me to renovate it cosmetically and re-sell it at the end of the period. I was in the US and self employed so unable to provide previous years tax returns to the lenders to get bank money. The person I purchased this property from was a millionaire and the 'Rent to Buy' deals were all he did. Of course he wanted me to fail and walk away but I knew this at the start. I just did not. Simple.
So if you go into these types of creative financing deals and become fully informed and are armed with a good future plan then they can be a boost to PI and an easy way for many to get your feet wet. The bottom line is the person offering the deals has his own wealth in mind no matter what they say their reasons are for offering their particular property but so does the buyer, in general.
Some 'poor' buyers are unfortunately sucked into deals they are unable to keep up with financially but isn't that what C.C, companies and many Banks do to people as well? Man's inhumanity to his fellow man never seizes to amaze me. If you only have one cow then would it not be wise to just milk it rather than butchering it. Think about it.
My first ever RE deal I did was to purchase my first family home about 30 years ago and I actually had to present my offer to the seller personally because the RE agent was too embarrassed to present such a low offer whereas I, on the other hand, wanted to get the home for as little as possible. Needless to say the seller did not take my offer, great, I thought, I never expected them to, but they counter offered me and I accepted.
The lesson I learned here was (1) If you do not get a "no" for your first offer you are offering too much.
and (2) Pick your RE agent carefully.I am by no means a 'GURU' but as we age we find ourselves in a position of being fairly knowledgeable purely because we have been around longer. I, unfortunately am a little like a teacher who knows more than he has put into practice. That being said I am still learning every day.
I did not mean to monopolize the post but I truly love property investing with all its' good and bad and finding this forum where there seems to be others of the same vain I am sure I can help a few and get some help myself.
Cheers.
Brian
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