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Returns Calculator:
Rent-to-buy Investment
How does the rent-to-buy model work?
You'll be matched with pre-qualified tenants who will enter into a buy-to-rent agreement to purchase your new property at a future date (e.g. 2 - 5 years) for an agreed future price.
In the meantime, the tenants will pay you rent plus additional contributions while they prepare to buy your property.
It's an opportunity for first-home-buyers with strong incomes but without a 10% deposit to get onto the property ladder. In exchange, they will pay you a premium for your property and lock in guaranteed returns for your investment.
FAQs
How do the legals work?
You will enter into a legally binding contract and lease agreement with the chosen tenants, ensuring that all terms as outlined in the calculator above are firmly established under contract. This provides both parties with a clear understanding of their respective rights and responsibilities throughout the lease term. Additionally, the lease agreement will also specify the procedures and conditions for ending the lease, whether it concludes with the tenant purchasing the property or through a sale of the property in the open market. This helps ensure a smooth and transparent process when the lease period comes to an end.
What are the fees and costs?
All fees and costs are detailed in the calculator. Initially, you will need to cover an independent property valuation, a building and pest inspection, and some rental advertising expenses. These are once-off costs that are usually between $1200-$1600 in total depending on your area. When the tenant is in place, your property manager will charge a standard 8.5% property management fee. These fees cover our collective services, including tenant acquisition and screening, property management including all bills, and repairs and maintenance.
Do taxes differ with rent-to-buy homes?
Taxes for rent-to-buy homes operate similarly to those of regular investment properties. For instance, you can continue to claim depreciation and property-related expenses, as well as benefit from a capital gains tax discount upon selling the property. We recommend seeking advice from your accountant for confirming your tax obligations. Our team will be more than happy to collaborate with your accountant and provide them with all the necessary information required.
Who will be on the title?
The property title will remain in your name or your entity's name until the tenant exercises their option to purchase the property or the property is sold to a third-party. This ensures that you retain ownership and control of the property until a final sale is successfully completed.
Is this fair on tenants?
We take great care ensuring that our leases are fair and equitable to all parties. With Australian households taking over 10 years to save for a home loan deposit, our rent-to-buy solution offers an attractive option for getting into the market sooner rather than later. Tenants can move in immediately and lock in a future purchase price, providing them with an accessible path to homeownership in today's challenging market.
What happens if the tenant defaults?
If something goes wrong and your tenant defaults on the lease, you'll retain the full ownership of the property, and all of the income you've received to date, allowing you to re-lease or resell the home as you see fit.
The finance calculator provided is for general informational purposes only and should not replace professional financial advice. The results are based on user input and assumptions and may not account for individual circumstances or market conditions. Consult a qualified financial advisor before making any financial decisions.