- TaylorChangParticipant@scha9799Join Date: 2009Post Count: 234
If the potential buyer wants to take the Rent to own lease option, but he only have $5,000 to contribute toward initial deposit.
does that $5,000 deposit goes into the rent bond ? ( which is normally 4 weeks ) ?
also if the buyer also wants to rent the property out to other tenants instead of living in himself.
does that mean they are 2 set of bond need to be collect from the rental bond board?
buyer want to be an investor, buy the property from me on rent to own lease option. then he wants to rent out the property to other tenant.
how does this work in term of payment and bond?
please helpKristin Simondson PBREMember@kristin-simondson-pbreJoin Date: 2012Post Count: 86
Which state are you in?TaylorChangParticipant@scha9799Join Date: 2009Post Count: 234Shiny_Suit_ManParticipant@shiny_suit_manJoin Date: 2012Post Count: 54
Hmmm that sounds overly complicated. I’m not sure what your legal obligations are here. Technically your renting the place to “your client” therefore its already under lease, and your are still responsible for it depending on your contract. I don’t know if the client can then go and rent it out again. If he did, who is legally responsible should something happen to the property or tennant? I suppose it would kind of be like flip renting but without the flip? I’m interested to see what our forum experts have to say on this one as it is a doozie.
There are 2 transactions:
2. Option to purchase
With the tenancy there will be a bond as per the RTA requirements.
WIth the option you can charge the option taker a non refundable option fee.maverick1980Member@maverick1980Join Date: 2012Post Count: 2
can anyone refer me too a good real estate lawyer in cairns would be good but someone in sydney would also be ok, im looking at doing a rent to own on my rental property in cairns. as i am currently living in canada and will be at christmas i would like to have the contract in place before i leave in jan.
I'd suggest you ask the person who has offered to take the property from you on a Lease/Option (often called a Rent To Own), if she/he is planning to on-sell the property with another Lease/Option. This technique is called a Back to Back Lease/Option or Sandwich Lease/Option and is often used by vendor financiers.
As a vendor financier myself I don't like Sandwich Lease/Options because , as the owner, you are giving away a huge amount of control of the property with the possibility that, if things go wrong, the person that took the first Lease/Option can just hand it back to you.
If the person that's trying to take control of your property is really serious about buying the property, possibly offer vendor finance but, offer this vendor finance by way of an Instalment Contract or Deposit Finance. These two techniques are much more highly regulated and your position will be stronger.
Of course, I also suggest you get independent advice from an appropriate professional.
I would recommend Ton Cordato – google him. He is in Sydney, so am not sure if he could help wtih a QLD transaction.
As the property is in Qld you will need a solicitor that's registered in Qld. Mark Game is my go to solicitor for all things vendor finance in Qld. To contact Mark call him on 07 3236 0001 or by e-mail at [email protected]
Now there is mutual recognition between states so a solicitor admitted in NSW can do work for someone in QLD and can even act in QLD or another state. But most wouldn't act for property matters because they wouldn't be familiar with the procedures and different state laws.shereebeckerMember@shereebeckerJoin Date: 2004Post Count: 31
I've done these before, not too tricky, the investor is subleasing to their tenant and should get your permission for this in writing from you. 2 bonds, you can put the 5k wherever you like but I've always been advised to put at least $100 towards some sort of a bond for your insurance company as they like to see some sort of a bond., you could have no bond if you prefer or a full bond. Investor is still responsible for the lease to you regardless of what the tenant in the house does, plus he is responsible for the house and responsible for the condition of the house. If the investor wants to pass on the option to his buyer it needs to be allowed for in the paperwork between you and investor that your allowing him to do this. Definitely talk to Tony if your going that way but nothing wrong with these transactions, investors like to keep the option and rent them, I had one even do share accommodation on a rent to buy once…
Since we started in vendor finance (VF) I've always been wary of the Sandwich Lease/Option. I think it may be because of the number of parties in the transaction and the fact that there are two complete sets of paperwork that all have to run smoothly.
Don't get me wrong, I often use a Lease/Option if my VF buyers need some time to get the Stamp Duty together, before we roll them over into an Instalment Contract. It's just the on-selling again with another Lease/Option that I don't feel comfortable with. To each his own I guess
Cheers, PaulshereebeckerMember@shereebeckerJoin Date: 2004Post Count: 31
Lol Paul true there are much more elegant solutions than the sandwich lease option these days, especially with joint venture agreements being more prevalent now .. But occasionally it seems to be the right solution for some parties