There’s a lot of excitement in State government about ‘affordable’ housing. Developers are applying for all sorts of concessions to build what they call ‘affordable housing’. So you’d think, with all this ‘affordable housing’ around, you’d finally be able to get your shot at owning your own place. Have you noticed though, that ‘affordable’ isn’t the same thing for everyone?

A recent new housing project in the outer suburbs of Sydney claims affordable housing starts at one bedroom units for $400,000 (without parking). Now, for many of you, this is not affordable at all.

Especially if you have children and need a bit of space. Nevertheless, the state government agreed with the development and offered the developer large concessions to get the project up and running, while many renting families watch their dream of owning their own home in New South Wales slipping further and further out of reach.

The higher home prices get, the harder it is to qualify for a bank loan – because wages are certainly not going up in line with other living costs, including rental increases (bet you’ve noticed that too, right?). If you are one of those families feeling the rental squeeze and you’re ready to give up renting altogether, my message to you is – don’t give up!

There are other ways to finance your dream besides having to jump through the hoops of bank lenders. There are property owners right now who are interested in financing families into their investment properties – as owners, not tenants. You may have heard of rent to buy homes.

This is truly affordable housing – and rent to buy homes are more than just accommodation; they are home ownership – your own place for you and your family. Your place where your kids can really settle down and get on with growing up in a stable rent to buy home that can one day belong to them and their children (your grandchildren – think of that).

You’ve probably heard this expression before, right? It basically means that your hard-earned cash is going towards financing someone else’s investment property instead of your own home.

It’s money you pay out for no long term gain. You do, of course, get a roof over your head for as long as your lease allows (usually six to twelve months) but compare this to owning your own home ….

When you own your own home, you make a mortgage repayment instead of a rental repayment. A portion of the payment covers the interest on your loan; the rest pays down the overall amount you owe.

This way, you end up owning a little bit more of your place each week. And with rental costs so high at the moment (and showing every sign of increasing in line with other costs this year) you may find a mortgage repayment is not a very different amount to what you are expected to fork out for rent – with one very large difference:

When you pay your mortgage, it’s for your home – nobody else’s. You are no longer at the mercy of a landlord or a managing agent; you have no ‘tenant black lists’ to worry about – and best of all, you have control over your home environment.
You can decorate and landscape to your heart’s content and know that it all improves the value of your own home. One day too, you’ll be able to leave your kids with something from you and they’ll always have a home.

Some people think they can never get off the rental treadmill – never stop paying that dead money which doesn’t offer any long term security – but you don’t have to get your finance from a bank these days.

Vendors, or sellers, are offering vendor finance terms on their properties these days and it’s often the best way for you to get a start towards owning your own home – especially if you’ve been knocked back by the banks. It’s called ‘rent to buy’ and it’s becoming more and more common among people who are just sick to death of renting.

We have helped many people into rent to buy homes of their own – and now they live in their own place, paying off their own asset and securing their family’s future. This is what rent to buy arrangements are designed for – to give you the fair go the banks won’t.

If you rent your place rather than own it, you probably can’t have pets. Or you do have pets but you have to hide them from your landlord and / or your managing agent. You may have had a pet at one place and it was perfectly okay, then the rent rose or the place was sold and you had to move on – to a new place that didn’t allow pets at all.

I know of a lovely lady with two kids who had a lot of trouble finding a place because she owned a particularly large dog that had been the pride and joy of her late husband. As you can imagine, she was quite attached to her deceased partner’s best friend.

The dog was well trained and well behaved, but he did restrict her options when it came to renting a new place. She was lucky enough to find a friendly landlord who liked dogs and was pleased his large yard would be put to good use – and who made a deal with her regarding a reduced rent if she completed and maintained some of the garden landscaping on the property.

This kind of solution, as I’m sure you know yourself, is rare. She still has to worry about what might happen if the landlord should sell her home – and with higher interest rates and increasing state levies and taxes, this is a very real concern. Her wage hasn’t increased any so she can’t afford to offer much more rent than she’s paying now – and moving again is expensive too. Not to mention how hard it will be to find another home with a large yard that can accommodate her beloved pet.

Now, if she owned her home, this would not be a problem for her. She can approach her landlord with a proposal to purchase his property with a rent to buy agreement. This would mean that she would pay extra rent in order to put a little towards her deposit on the property – making her an owner not just a tenant.

Then all she has to focus on is keeping up her repayments – and owning her first ever home. Rent to buy arrangements are becoming more common as many people keen to give up renting forever see them as a solution to the rather unhelpful attitude of the large banks who, let’s face it, don’t really seem to care about you and your furry friend.

In the example above, the rent to buy arrangement is a good solution for our dog-lover. She would never have to worry about finding a place that accepts her dog again – and she’d never have to move again either. What a relief!

I Wonder How Many Renters Will Be Left Homeless? After the floods in Queensland and Victoria have subsided, the fires in Western Australia have been doused, and the rubble in Christchurch is cleared away, I wonder what will happen to those who were only renting their homes.

I’m not talking about rent and buy arrangements here, because they do give you the security in these awful circumstances that a straight lease does not.

If your landlord didn’t insure their property, or the insurance takes months to pay out, where will you and your family go? It’s not a question most tenants often ask when they make a rental application is it? How often have you, as a tenant, asked ‘is the property insured?’ Most likely the agent won’t even know.

After a natural disaster, your landlord may decide not to rebuild at all – even if he was insured. He may decide to keep his insurance payout (if there is one); indeed, he may need it.

It’s entirely possible he lost quite a lot in the natural disaster that just hit. It’s just one more example of how little control you, as a tenant, have over what happens to the place you live. The place you thought was your home but in the end, it really just belongs to someone else.

Renting is all very well – as long as nothing goes wrong. That’s when you really start to see where you stand and, without your own claim on your own place, you can find yourself with nowhere to go, like a lot of the tenants who were renting homes in Emerald, or Toowoomba or even Brisbane.

Then there’s also the frustrating problem that we’re bound to see a lot of now – with less houses around and more people desperate to find accommodation – any accommodation – there will be more competition for what homes are available, and rents in these disaster-stricken towns and cities will become astronomically high. At a time when most of the folks affected by these tragedies could really use a break too!

And if you’re going to be competing to pay these higher rents anyway, you may as well be paying off your own home anyway. Rent and buy arrangements are a good option for you if you’re sick of the insecurity that comes with being a perpetual tenant.

The best way to protect yourself from ever ending up in a similar situation is to get off the rental treadmill, stop funding your landlord’s dream and do everything you can to make owning your own home a reality.

If you think you won’t get far with the banks, consider the rent and buy option. Rent and buy arrangements will really come into their own in the next few years – and for many, it will be their only chance for a new start in owning their own home.

This post belongs to Jody, one of the people we helped to own her own rent to buy home. She has kindly given me permission to tell you a little about her, and how her situation has turned around now that she owns her own home.

Jody is a single mum with two kids. She has a fairly average job and with no rental history and no banks willing to give her a loan, she had no other option but to rent a place through the Department of Housing. She was in her first one for seven years and she describes it as a ‘terrible area’.

Her place was broken into three times, and her car five times. When The Department of Housing relocated her and her family, she had no say in where they were sent.

She spent another two years living in an area where she worried about her kids’ safety every day, before she discovered us; she saw a sign on a nice street – one of ours – saying ‘Rent To Buy’.

She figured – what did she have to lose? And once she worked out that the difference between rental payments and loan repayments on her very own rent to buy home was only a few dollars a week, there was no stopping her. Why pay all that rent money for no security, when she could be paying off her own home?

Three months later she moved into her very own home! We simply suggested she go round to have a look at a home … and if she liked it, she could have it. What could be simpler?

She told me it was ‘so surreal to collect my key to my own home’. She actually cried when she drove down her street for the first time, to pull into her driveway.

As a single mum, she sleeps better at night now that she has something set up for her kids. She wanted an asset for them, and now no matter what happens they will always have their own place. She has peace of mind when she goes to bed, knowing her kids’ future is secure.

One of the best things for Jody is being able to do up her place her way. And anything she does to her rent to buy home is for her and her kids. No more landlords’ inspections and no more permission needed to do things to her home. She’s already redone the floors and can’t wait to paint her feature wall.

Even better than that – no more dead rent money. Now she is paying off an asset. She says every payment is ‘like it is going into a savings account. It is… it is going towards an asset. Every penny is going into my home which is an asset growing in value.’

She told us ‘I am the best single mum in town. I have set such a good example for my kids. My seven year old son, Rarty, said to me: “I’ve gotta look after the house, Mummy, you work so hard, you got a home for us. I am going to work and bank my money to help”. My four year old daughter, Lydia also respects things more. I am the proudest single mum!’

Jody’s advice to anyone wanting to buy a home through a rent to buy arrangement like hers’? Well, in her own words:

‘You’d be mad not to… It’s true; you can own a home without the banks. No one believes it BUT it is really easy to own a home with Belinda and Marc. Within three months I was in my own home as a single mum. It’s not as hard as you’d think to have a mortgage as it is really only a bit more, and you are only blowing the rest of the money so why not put it towards owning a home?

I’m not in a high paying job and it is not that hard, I was throwing it away anyway. I think of my home loan repayments as going into a savings account anyway, as it is really; it is going towards an appreciating asset. I am investing it instead of wasting it … I am sorry I didn’t do it earlier. It is ‘easy as’’

People often ask us why we do what we do here – so thank you Jody, for allowing us to tell your story.

So, what have you go to lose?

In today’s buyer’s market, seller financed – also called vendor financed – real estate is becoming very popular with new home buyers – especially those keen to give up renting forever.

Since the Global Financial Crisis in 2008, the banking industry has been tighter than ever with loan approvals, making it harder for those of you who want to get of the rental treadmill.

People, who may have qualified quite easily for a home loan a few years ago, are finding that banks and home loan companies are turning them down, or are only offering to lend them a small amount which, in a metropolitan city like Sydney, may not buy them anything decent. If this has happened to you, you’ll understand how heartbreaking it can be – especially after all those years of careful saving.

This is why vendor finance is now in greater demand. This is an effective option for both the seller and the buyer. It is also a good solution for the vendor when their property is not selling, because the owner of the house can finance the purchaser into the property – that’s why it’s called vendor financing, or seller financing. You may have also heard it called owner financing, or rent to buy.

The old owner acts like a lender, offering the house for sale and financing the new owners into it, and because the old owner is not a bank with shareholders and big balance sheets to even up, they do not have the same restrictions on lending that a bank would.

A bank’s priority is to get a good return for their shareholders, not to help you own your own home. A single seller’s priority is to sell their house – and your priority is to buy it. What could be simpler?

Next week, I’ll show you a real example of how this is done … stay tuned.

It’s unavoidable – there are more taxes on the way. Apparently the new carbon tax will add about $300 to household bills. Other living costs are rising as well. If you haven’t already experienced a sickening electricity bill, or a nasty water rate rise – brace yourself.

They’re on their way; and thanks to cyclones, fires and some torrential rains and floods, the cost of fairly basic fruit and veg have just gone up too. And let’s not mention the fuel prices – up already and predicted to rise by over 6 cents per litre under the new carbon tax rules … with the increases in taxes, and the lower competition in the banking world, interest rates will go up and council rates are rising too.

If you currently rent instead of own your place, you can guess where your landlord will look to recoup his rising costs – so you can expect a rent increase as soon as your agreement allows for it.

Is there anything you can do? It can be very frustrating being at the mercy of the rental squeeze and without any control over where you can live. There’s just not that much out there these days. Have you ever done the sums on what you pay in rent?

You may find that for a similar amount per week, you could actually be paying off your own rent to buy home. Think what this might mean – no more having to move when the lease is up because the landlord suddenly sees fit to raise the rent 25%, no more pulling your kids out of school where they’ve just started to settle in, no more early morning inspections and waiting around for repairs for anything that breaks down – and best of all – your rent to buy home is yours.

Put up as many picture hooks as you like. That’s what rent to buy homes are all about after all. Plant the plants you want in the front garden. Revamp the kitchen if you like – it’s your place. And one day, it’ll be there for your children and grandchildren. If you could do this for a similar weekly payment to your current rental payment – would you?

It Could Happen To You – Tenant Uncertainty In Distraught Circumstances Makes Rent And Buy A Better Option

A sad story today from a tenant I know. This wonderful lady – we’ll call her Sue – recently lost her husband. Not only was he the main breadwinner in the family, but he was also the lessee on their rental home.

This meant that the lease is in his name. Sue and her two kids have no legal claim to live in their home at all. In a rent and buy arrangement, Sue would have a much more certain future for herself and her family.

At the moment, the landlord could have them evicted; he could raise the rent as high as he wants – even so high as to force Sue and her kids to leave. They are completely at his mercy. The only contract that counts – that is, the lease for their home – is between the managing agent and Sue’s deceased husband.

It is a very frightening situation for her – especially as she is now a single mother with two young children to provide for which makes working full time difficult. On top of dealing with her grief and that of her two children, she now has to worry about where they are going to live.

Sue has no legal rights whatsoever in this situation, because she has no agreement with the agent or landlord – she simply has to rely on their goodwill and this doesn’t make for a very secure home for her and her children.

You may know of someone who has experienced a similar situation – or perhaps you have been in one yourself. You’ll know then, that tenants can often find themselves vulnerable to the whims of landlords and the vagaries of legal loopholes.

There is simply no better way to prevent this than to have a go at getting your own place – and rent to buy is the best option for many tenants who are sick and tired of feeling vulnerable.

In Sue’s case she was lucky, and the landlord immediately agreed to a new lease with her as the new tenant – not without first raising the rent a little though, which meant Sue had to borrow money from friends and family to cover the new bond. She also had to make arrangements for someone to watch her children so she could find work.

Her situation is more secure now, but she is still a tenant, and she could still find herself out of a home if the landlord raises the rent above what she can afford.

It is a situation that more and more tenants are finding themselves in every day – and more and more tenants are turning to rent and buy arrangements to get them into their own place so that they never have to face such uncertainty again.

Rent to buy arrangements are becoming more popular with first home buyers and they offer you many advantages. For example, the repayment terms can be set up in a way that suits you, the buyer.

Rent to buy finance arrangements hardly ever fall through at the seller’s end – mainly because the seller is also the financier and usually they just want the sale completed as quickly and painlessly as possible. Most sellers are so happy just to be sell their old home that they are quite prepared to do what it takes to make the numbers work for you. 

You can also arrange a settlement period that suits both of you – no banks or agents breathing down your neck, and no dodgy real estate agents to deal with either.

The seller will usually be extra-vigilant about getting their legal things done quickly. After all, they want you to buy their house – which is not something banks usually care too much about, is it?

Some of the benefits of rent to buy arrangements include:

• The finance agreement terms are more flexible and this can be to your advantage.

• The repayment terms can be customised to suit you.

• You will own your own home sooner because the rent to buy arrangement is much faster to set up than a full scale bank loan. Most sellers are ready to move out immediately after the contract is signed – much faster than the traditional 8-10 week settlement period you go through when you deal with a slow-moving bank and agents who don’t work weekends.

• A rent to buy arrangement will give you a good credit history over a few years and you can use this to refinance into a traditional bank loan if you wish.

• It is much easier to gain approval for buying a rent to buy home than it is to get approved for a bank loan. You don’t need years of payslips or tax returns – you don’t even need a perfect credit history.

The best benefit to owning your rent to buy home is of course – your new home is yours! No more rent money going to some anonymous landlord who won’t let you paint the front room or plant a vegetable garden.

No more property inspections or having to ‘get permission’ to call in a tradesman. You suddenly have more control over your home – and an asset for your future.

This Is The Best The Reserve Bank left interest rates on hold this month – and experts predict they’ll leave rates alone until the middle of 2011. There has never been a better time to make your dream of home ownership come true.

With the first home owner’s grant now available for property purchases up to $835,000, and interest rates on hold for the moment, renters looking to get off the rental treadmill and make the leap into home ownership have a window of opportunity here to step up into a rent and buy home of their very own.

Even if you’ve been knocked back for a loan before, that doesn’t mean your dream of owning a home for you and your family is over. The steady interest rates mean rent and buy arrangements are becoming more popular than ever; that’s where the home seller actually sells you your new home with finance – and you don’t even need a bank (or a hundred forms to fill out).

In fact, rent and buy arrangements cost a lot less to set up than a traditional bank loan and that’s good news cause you’ll want to keep as much of your savings as possible for your new rent and buy home deposit.

There’s also a lot more flexibility in the arrangement of a rent and buy home agreement because you are not dealing with a bank – just one person who wants to sell the home you want to make your own. What could be simpler than that?

Just like a bank loan, you will have interest to pay on your rent to buy home, but you may find that, unlike a bank loan, you don’t need a $20,000 deposit upfront, and your income and circumstances are looked at differently.

Another difference between a rent and buy arrangement and a traditional bank loan is that with the rent and buy home agreement, you could be moving into you new home in a matter of weeks, rather than months which is how long most banking arrangements take.