Vendor Finance aka Rent to Buy

Hi All,

I currently have a property that is negatively geared, in Victoria. I'm thinking of selling it, and did an inspection recently and spoke with my tentant.  They expressed their desire to stay in the house long term, and mentioned something about "rent to buy".  After doing some searches on Google, I see some bad press about it, but also some information showing that really it's just a form of contract.

Just wondering if any investors here had entered into such arrangements and any feedback would be great!

Also happy to take advice as to where to find contracts or get them drawn up etc..

Cheers

Corwyn

I have sold a few properties on a 'rent to buy' method in Vic. You can get higher rents in exchange for giving them the opportunity to purchase as a reduced price in the future.  You do this by selling them an option to purchase and charge a higher rent with some of this coming off their purchase price.

The major downside is if you sell them an option it may be disadvantageous to you if the area booms. You also will not be able to sell the property while they have an option to anyone else. But if they don't exercise the option you get to keep the option fee and extra rental income.

Terryw
Finance Broker
Solicitor

Under investor HQ on this website, check ou "Wraps" and "Lease-Options".  They are both types of vendor finance.  I have 2 properties wrapped at the moment and it works well.  The best place to get a contract drawn up is from/by a solicitor who is an expert in this type of deal.

Thanks for the advice guys.