Yes, our company Property Prospects Australia Pty Ltd are what Neil Jenman calls a “property spruiker’. There is a list of reasons why Neil doesn’t like rent-to-buy schemes. It appears out of a huge network of rent to buy businesses across Australia, Neil chose one business making it look like every rent to buy business is the same.
Many years ago I wanted to understand the real estate industry better as I was interested in selling development property. I trained under the Jenman system, then worked in a Jenman office for 9 months learning the ropes. Guess what? One of the other Jenman agents would lie, scheme and manipulate to either list or sell a property. It appears that Jenman is a company who endorces “property spruikers” too. Because of this ONE agent, are we to assume all of Jenman agents are the same?
Below is straight from the pages of Jenman stating why rent to buy doesn’t work:
Rent to Buy Accusation: First, the rent that is charged to the battlers is usually far in excess of the market rent.
Rent to Buy Response: A little maths should sort this out. To rent a $300,000 home would cost $300 per week. To purchase a rent to buy @ 8% [interest only] on a $300,000 home is $24,000 per year or $461.54 per week.
This does not include any principle for the loan, most home owners have a principle and interest mortgage, normally 25% is the principle which would add another $115.38 per week to the costs = $576.92 nearly double. Yes, as you can see, what a rip off rent to buy is. This is what every home owner in Australia is doing, many are paying a much higher interest rate than 8%.
How are you going to start paying back the $300,000 rent to buy loan unless you start paying it back?
Rent to Buy Accusation: Second, the price that the battler pays to 'buy' the home is far in excess of the market value.
Rent to Buy Response: Do you really believe that Jenman agents ONLY list and sell market value homes? Nobody is forcing anyone to buy an overvalued home, it’s up to the buyer to do their due diligence and make sure it’s a fair value. This can easily be done by purchasing a market report online.
At the end of the rent to buy process the buyer has to have a bank valuation done to obtain the bank loan. If the valuation is low they will not be able to refinance, so how will this help the home seller, buyer or rent to buy company? The rent to buy company makes most of its money on the sale of the property. This means that if it doesn’t sell they won’t make a profit.
Rent to Buy Accusation: And, third (and this is the biggest scam/danger of all), the battlers (who are often called 'buyers' when they are, legally, nothing of the sort) have almost no rights.
Rent to Buy Response: Wow, does this mean that every tenant in Australia has almost no rights, because a general tenancy agreement is one of the documents? Last time I looked at the Queensland legislation a tenant has the right to give the land lord 2 weeks’ notice and the land lord has to give the tenant 2 months notice. The other document which protects the buyer’s interest is a legally binding option which the buyer takes to their solicitor. If it wasn’t legally binding don’t you think their solicitor would point this out?
Rent to Buy Accusation: There is another terrible twist to the 'rent-to-buy' scheme. Many of the spruikers hope that the battling buyers get behind in their payments. The spruikers can then kick out the battlers, keep all (that's right, all) their money and then go and find some more victims and repeat the process.
Rent to Buy Response: Amazing stuff here Neil, it sounds just like what the banks do, the car company, the lay-by you didn’t finish paying off and anything at all that you intended purchasing that you didn’t pay for.
So what are you saying here Neil, maybe we should give the buyer the house for free, or tell them it’s ok to not pay the payments? There is NO terrible twist to the rent to buy scheme, you pay for what you get and get what you don’t pay for. JUST LIKE THE BANKS!
The rent to buy system has never been tested in a Queensland court so it must have something going for it. Rent to buy helps desperate owners sell their property fast, and then helps buyers who have been knocked back by the banks, who have a bad credit file through no fault of their own, who would not normally be able to afford a property to be able to lock the price in today, stop paying dead rent and realise the dream of owning their own home.
For every one crummy rent to buy story, I can tell you dozens of fantastic rent to buy endings where buyers bought a property, renovated it, then sold it for far in excess of their costs or lived in it because it was their dream home. We have just sold a renovator to a family that has had 67 foster kids and want a bigger home so they can take in more. They have little deposit but big ideas, it’s all about helping others to achieve their goals.
Kerrie Mercel
http://buymyhomequick.com.au
http://propertyprospects.com.au
We would
really appreciate you looking at our list of homes available
in Queensland, New South Wales & Victoria at buymyhomequick.com.au .
Or just give Amanda a call 0422
771952
We are not real estate agents. We are
private home buyers who help both buyers and sellers in or out
of their homes. If you have a bad credit rating or have been
bank rupt, this does not automatically prevent you from
purchasing one of our properties.
Jenman questions come straight from the Jenman website.
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