All Topics / Help Needed! / Rent to Buy

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of mwoodingmwooding
    Member
    @mwooding
    Join Date: 2004
    Post Count: 15

    In the last couple of years I have seen sign posted on street poles advertising "Rent to Buy".  I was wondering if anyone knows how this sort of thing works.  I have a property I want to move and I am looking outside the square due to the poor market in the area.

    Profile photo of TaylorChangTaylorChang
    Participant
    @scha9799
    Join Date: 2009
    Post Count: 234

    It's like buy before you try. it's vendor finance, a way to buy property without a tradition bank loan.

    A (seller) sells a property to B (buyer)

    B rent for X amount of money and on top of the rent B offer Y amount of money to secure the agreed price.
    then B agreed buy the property for Z amount of money in S amount of time.
    A can't sell house to someone else other then B for predetermined price Z

    so the A gets X + Y
    the B pays X + Y
    after S years B pays Z amount of money

    TaylorChang | Finance Broker
    Email Me | Phone Me

    Home loan | Commercial loan | 0414 691 517

    Profile photo of thomas19thomas19
    Member
    @thomas19
    Join Date: 2012
    Post Count: 8

    hi i would like to know as well but can someone other than an abbot and Costello skit  (w = explain it )

    Profile photo of mwoodingmwooding
    Member
    @mwooding
    Join Date: 2004
    Post Count: 15

    Cracking response.  It took me a little bit of time to digest it. 

    So what you are saying is that there is a contract of sale put in place with an extremely large settlement period or there is a lapsed date that the deal falls through.  Is there also a contract for the rent or is that tied in with the contract of sale.

    Does B pay A anything at all apart from rent to secure the property or is it just a higher rent? Is the vendor finance for the entire amount or just the deposit amount.  Does the title change hands / when does it change hands.

    My reason is I have 500K tied up in the property and I would like some of it back to reinvest in another property if possible.  That is the reason I ask if the vendor finance is for the entire amount.

    Does anyone else have any experience with anything like this?

    Profile photo of thomas19thomas19
    Member
    @thomas19
    Join Date: 2012
    Post Count: 8

    hi this is what i think its all about : say you buy a house that's  worth $360k  but you do a little haggle with the owner and for a fast sale you end up buying it for $300k 
    then you offer it as a rent to own but the offer is for the price of $360k or even higher  —say it costs you $3oo per week on an interest only loan  :under contract you then charge the rent to own buyers the amount that would cost them to pay off a $360k or higher loan
    plus you ad on extra amount to cover there deposit  say $100
    so for a house you only pay $300  per week the rent to own pay you $400 per week to cover loan amount and $100 extra as there deposit 
    if at any time the rent to own buyers fault on this you only have to pay them the amount  that has accumulated for there deposit : you are there bank so to speak :
     when the rent to own buyers  have enough deposit saved they then go to a bank for a real loan and pay you the agreed amount that is in the contract for the house :
     the rent to own people must earn enough of a  wage to afford  to pay you  the $400 – $500 you charge per week : its a system that helps buyer save for a deposit and own a house and its a good way for you to profit  — im not %100 sure but i think thats how it works

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi Martin

    As Rent To Buy is one of the 3 most popular vendor finance (VF) strategies and because there are a couple of misconceptions above, I suggest you do some general research about VF.  Some suggested places to start are:
    https://www.propertyinvesting.com/strategies/wraps
    https://www.propertyinvesting.com/strategies/lease-options
    http://negative2positive.com.au/information/about-vendor-finance
    http://www.vendorfinancelawyer.com.au/vendor_finance_intro.htm
    http://www.vendorfinance.asn.au

    The second link above is the one about Rent To Buy's, i.e. a Lease along with an Option.

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

Viewing 6 posts - 1 through 6 (of 6 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.