Looking at a newly listed property, looking like a very good buy but then this.....from vendor (actually I think he is on this forum?):
The sum of the contract is that the incoming purchaser will pay $490,000 with a minimum equity investment of $60,000 and the balance financed by the seller on which the purchaser will repay with interest, just like a bank loan. This will give the purchaser full rights to occupancy and subletting. When the purchaser eventually sells, they will receive back their initial $490,000 investment guaranteed, less any debt repayments.
The seller keeps the risk (and reward) of capital gains while the purchaser gets a property for 70% of its value so that rent yield is over 40% higher and, hence, a higher return on equity. For a first homebuyer, it allows a more affordable option to live in a property valued higher than what they could otherwise afford.
It is different, but a time-tested contract in the very successful retirement village industry that is now making its way into the mainstream markets.
Is this coming in now? Sounds crap.
The sum of the contract is that the incoming purchaser will pay $490,000 with a minimum equity investment of $60,000 and the balance financed by the seller on which the purchaser will repay with interest, just like a bank loan. This will give the purchaser full rights to occupancy and subletting. When the purchaser eventually sells, they will receive back their initial $490,000 investment guaranteed, less any debt repayments.
The seller keeps the risk (and reward) of capital gains while the purchaser gets a property for 70% of its value so that rent yield is over 40% higher and, hence, a higher return on equity. For a first homebuyer, it allows a more affordable option to live in a property valued higher than what they could otherwise afford.
It is different, but a time-tested contract in the very successful retirement village industry that is now making its way into the mainstream markets.
Is this coming in now? Sounds crap.
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