Rent-2-Buy
House and Land
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How to be a Property Investor with
 Cashflow to Burn!

Australia needs more affordable housing

Modern Rooming Houses or Share Houses, provide the perfect solution addressing the growing need for affordable, modern accommodation. If executed professionally. Rooming Houses or Share Houses are a win-win-win for investors, landlords and tenants. House price rises mean a growing section of the community will rent for longer – many choosing to be life-time renters. Due to the rising house costs, middle income workers are increasingly pushed further from their workplaces. Modern Rooming Houses or Share Houses help address affordable housing, so workers can live closer to their workplace. Our Rent-2-Rent Australia property course addresses all from scratch, right through to management. providing the perfect property asset for investors looking for secure, reliable, high return income, while simultaneously addressing the growing need for affordable, modern accommodation.

The RENT-2-BUY Strategy
Often termed the Purchase Lease Opton Strategy (PLO)

A Rent-2-Buy or PLO Strategy is an extremely good option. Personally if I had to start again from scratch in property, I would start with Rent-2-Buy as it's the fastest way to bring cash in. I don't have to use my money, I don't need mortgages. But it's not easy, however many others have done it. It's a mindset, it's about believing in what's possible.

With Rent-2-Buy schemes, investors can rent a home for a fixed term, paying extra every month to go towards an eventual deposit combined with property appreciation to purchase the home. While this may sound like a great solution, Rent-2-Buy schemes can also have some drawbacks. Keep reading to learn how rent to buy works and the pros & cons of rent-to-buy schemes.

What is Rent-2-Buy

Rent-2-Buy, is a scheme that gives aspiring homeowners the opportunity to rent a home with the understanding they will have the chance to purchase it in the future. The owner of the property, and the renter, agree upon a selling price and the number of years (usually three to five) the renter will pay the rent on the home. The renter also pays a non-refundable upfront fee called the “option fee" which gives them the right to have the option to purchase the home later.
The option fee is typically negotiable and tends to be one per cent of the purchase price that is agreed at the beginning of the Rent-2-Buy agreement.  On or before the agreement has finished, the renter will have the option to purchase the property for the agreed price. If the renter decides not to buy the home, then the option fee is lost and both parties are free to leave without obligations.  If the renter decides to continue with the purchase of the property, then the option fee is later discounted from the future downpayment on the property at the time of sale.

Talk to the Owner and Confirm that they are Financially Stable

When you rent a property to buy, you will be locked into an agreement with the home owner. Therefore, this step in the Rent-2-Buy process is quite important. If the homeowner has their assets seized, you will lose all rights to purchase the property including all you have paid toward it. On the other hand, if you fail to make payment on your rent, make sure your solicitor addresses Rent-2-Buy Contract that they do not allow homeowners to end the contract and keep all previous payments you have made. If the home owner is not financially stable. Rent-2-Buy schemes can act as an opportunity for untrustworthy people to take advantage of renters. For this reason, Rent-2-Buy schemes are illegal in some states of Australia. Therefore, this step in the Rent-2-Buy process is quite important. If the homeowner has their assets seized, you will lose all rights to purchase the property including all you have paid toward it. On the other hand, if you fail to make payment on your rent, many Rent-2-Buy schemes allow homeowners to end the contract and keep all previous payments you have made. If the home's owner is not financially stable, Rent-2-Buy schemes can act as an opportunity for untrustworthy people to take advantage of renters. 

How Does Rent-2-Buy Work?

The steps in the Rent-2-Buy agreement in more detail, including pitfalls to watch out for.
However, in short, the steps for rent-to-own agreements are as follows: 
1. Identify a home that interests you
2. Research if the property is a good investment
3. Speak to the owner & Confirm they are financially stable
4. Get advice from a solicitor & draft a contract
5. Sign the rental agreement
6. Pay your rent and option to buy fees.
7. After the specified amount of time, you purchase the home.

Get Legal Advice and Sign a Rent-2-Buy Contract

You will want to have an independent solicitor take a look over the Rent-2-Buy agreement. There are many caveats to Rent-2-Buy. For example, if you can no longer afford the rental payments or miss a rental payment, it typically breaks the lease and you could lose the entire amount you've already paid on the home. Therefore, it's best to fully understand the commitment before signing an agreement. You can ask a solicitor that is familiar with Rent-2-Buy schemes to help you draft an agreement to take to the seller. This way you can assure that the agreement is favourable to both parties.
Submitting a rental application with the intention of Rent-2-Buy is similar to other lease agreements. You will still need to pay the costs associated with renting a home, including a non-refundable security deposit that goes to the final purchase price of the home, and get approved by the landlord. With Rent-2-Buy schemes, most lease agreements last for three to five years before you have the option to purchase the property.
Paying your rent on time is usually one of the stipulations in the contract for Rent-2-Buy schemes. If you miss a rent payment, sometimes this can annul the Rent-2-Buy agreement leaving you in debt. Therefore, it's important to be sure that you can and will continue to be able to afford your rent and the option fee before you decide to enter into an agreement.

Rooming Houses

Rooming Houses are one of the best property investments available, equaling or beating both Airbnb and Commercial property investments. If you’re looking for powerful positive cash flow property investment, it’s hard to beat Rooming Houses. A low-set Rooming House; House and Land package usually costs about $500,000 to $550,000 and with careful planning a purchase settlement budget of say $125,000 to $150,000 to seed such a development.
Just two or sometimes three well-built low-set modern Brisbane Rooming houses can replace an average Australian income. The average Australian income is around $68,000 gross pa. A Brisbane five bedroom Rooming House typically earns around $57,500 gross pa to $70,000 gross pa. Annual outgoings including an 80% mortgage are around $35,000, meaning net income per house is around $22,500 to $35,000 or say 2 houses offer an income of about $46,000 to $70,000, say equal to an average Australian salary. Just take a moment out and absorb that. Rental yields can easily be increased by the "MacDonald's" way. Do you need fries with that - Do you need furniture with that?
Rooming Houses are the ideal income-replacement retirement strategy that you should not overlook. Annualised returns are well into the double digits (25% to 50% annualised ROI depending on the project). If you are interested in developing, we can devise a strategy and solution for you. Multi-Let-Homes Australia can source for you the right land, perform the required due diligence, feasibility studies and work with Rooming House specialist consultants to design, engineer, build, furnish, tenant, and undertake your property management for you.
Design: The overall design and specification and sound control between rooms can be critical to achieving the highest and best performance of a Rooming House. Clever exterior and interior designs will ensure your Rooming House stands out from others, when it comes to renter appeal.
The right floor plan with the right road frontage facade and colour scheme, can maximise an applicants appeal, comfort and convenience, thereby attracting a happier, better paying residents who stay much longer. Resident turnover adds to management costs, so should be avoided as much as possible by controlling short term tenancies to say a minimum of 3 months but preferably six months minimum. Designing and building a Rooming House to the highest standards including sound control to all room walls and doors to achieve happy residents is one of the best investments you can make, giving you peace of mind you have created a desirable home for happier renters.
 
Consider Signing Up to the Rent-2-Rent Australia Property Course below>>>

Narrow 10.000 meter Lots

Narrow Lots: The standard 10m frontage is usually OK. Not all lots are the same and dimensions can impact yields. When buying land or a property it’s important to do a spreadsheet analysis on cost verses yield. Narrower lots can mean narrower rooms which affects tenant appeal, thereby lower rent and higher resident turnover, thereby reducing return on investment. Always consider your residents’ living conditions. Would you live in a tiny room?  
Storage: Rooming House residents need storage, so ensure designs allow for extra storage, additional to room storage. 
Parking: The Brisbane City Council requires a minimum of two car spots per Rooming House and no resident may park on the street. When designing a Rooming House it is preferable to have allowance for five on-site car spaces, including garages to maximise resident convenience and appeal. 
Noise: One critical, yet underestimated, element of a Rooming House is noise reduction from common areas to rooms, and between rooms. If noise mitigation is not properly addressed, tenant disputes and high turnover will inevitably result, which adds to costs and lower rents. To achieve an acceptable level of house noise control, linings and acoustic insulation should be better than just the common 10mm single layer plasterboard. Rooming House residents are entitled to watch TV or play music in their rooms without the threat of eviction for normal room activity. Your renters are your cash flow so should be looked after and accommodated. This means investing in noise wall, floor and door noise elimination. Initial costs are higher but overall returns are better. Happy renters make for happy investors. 
Property Manager: Managing five unrelated people in one house (Brisbane LGA) is a specialised area of property management. We recommend that you self manage for the first year and learn the ropes which is fully set-out in the Rent-2-rent Australia Property Course.  After you have learnt the ropes of good property management we recommend you set up a ........................ 
Conclusion: These are just a few factors to consider when building or investing in rooming houses. As you’re choosing your builder, developer or managing agent, always ask questions. Also ask if the houses they are using for their videos, ads and/or promotional material are their projects, and not appropriated from other peoples’ projects (which is more common than you might realise).To this end, we purposefully create only a limited number of quality, high performing rooming houses per year to deliver long term, better grossing and netting investments. You’re not just a number you’re a true partner. Partnering with a trustworthy, knowledgeable, experienced developer in rooming houses will always save time and ultimately money and grief, to leverage your investment.  
         

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