Has anyone heard of Future Rent?

Hi all

I was looking around for $25k in loans and thinking of topping up the loan on my investment property, but the value has come down a bit. I then found these guys online? Has anyone dealt with them? If I can borrow the money without getting a loan I’ll seriously consider it

thanks
Joe

 

How will you make loan payments if they get the rent? Clever way of dressing up factoring, but what happens if the tenant stops paying? The property is vacant?

 

What do the numbers look like on this vs. traditional credit models?

 

Good idea for a business. Its a form of factoring I guess. There would be some fine print to check I'm sure.

 

And when they go belly up and you are an unsecured creditor you cant claim a cent on LL cover.

No interest...But they charge a 5.5% fee which annualises at 11% or 9.9% over twelve months. That hefty. . Isnt that sorta like interest? .Is the FEE deductible ? Maybe capital in nature ? And then lease arrangement is a default THREE YEAR TERM. ....With fees etc if rent receipt is delayed. And all outgoings for the rent is still paid to the agent by the owner NOT deducted from rent.

And the tax issue seems to be supported by a product ruling which allows the prepaid rent to be recognised on a accrual basis. Provided its received that is !!

 

Hi all,

My name is Nic and I’m one of the founders of FutureRent.

I just wanted to respond to a few of the questions here. Hope this is helpful!

Q: How will you make loan payments if they get the rent?
A: You’ll need to make sure you can meet all of your regular expenses including any mortgage repayments. In most cases, FutureRent is repaid using 80% of the rent paid by the tenant, so you’ll continue to get 20% of the rent and you need to make sure that this in addition to any other income you earn is enough to cover your expenses. Because we are not lending money (we are simply prepaying your rent) and we believe property investors deserve some flexibility with the timing of their income, we let our clients accelerate their rent and we leave our property investor clients to manage their own personal budgets.

Q: What happens if the tenant stops paying? Or if the property is vacant?
A: FutureRent is only ever repaid from a share of the rent actually paid by your tenant (usually 80% and this amount is a fixed percentage upfront). This means that you don’t need to make repayments when / if the tenant stops paying or the property is vacant.

Q: What do the numbers look like on this vs. traditional credit models?
A: Obviously it depends on the particular loan, but generally FutureRent is more expensive than a home loan, but cheaper than a personal loan or credit card. We are quicker and easier than both.

Q: Isn’t that sort of like interest?
A: Because the cost is a fixed cost and not an interest rate, if it takes FutureRent longer to be repaid from the rent paid by your tenant, it doesn’t cost you any extra. This means that you know exactly what the service will cost you and that never changes. There are also no late fees, or other hidden charges.

Q: Is the fee deductible? Is the payment capital in nature?
A: How it works is FutureRent pays you a lump sum upfront and then recovers the lump sum, plus the fixed fee over the term. For example, on a 6 month term (at current pricing) if you have a property rented for $700 each week:

• you get paid $13,839 upfront; and;
• FutureRent collects the $13,839 plus $761 (5.5%), so $14,600 over 6 months (you collect $3,650 over the same period).

You obviously only get taxed on the amounts you receive (i.e. the $13,839, which is paid upfront and the ongoing $3,650), which results in the same net position as the ‘fee being deductible’ as per your question.

The lump sum you get paid upfront is just a prepayment of income i.e. no it’s not capital in nature.

Q: Why is the lease arrangement a default three year term?
A: You’ll notice two dates in the lease term: (1) an expected term (which is the 6 or 12 months depending on what you have selected) and; (2) a 3 year term that is automatically terminated when FutureRent receives the fixed amount of rent it is owed. The 3 year term, is really just an outside date in the unlikely scenario the property is vacant for a long period of time, but in practice the agreement ends as soon as FutureRent has collected the repayment amount. The expected term is how long the lease will run for if the tenant pays the rent as expected. If your tenant moves out, or is late paying the rent during our lease, it may take longer for FutureRent to collect the repayment amount.

Q: Are there fees etc if rent receipt is delayed?
A: No, there are no fees or extra cost if rent is delayed.

Here to help with any more questions, so just let me know.

Nic

 

Good to see there is a ATO product ruling for this facility.

 

Hi Nic,

I came across to your company and just a question about your product, they sent me the ATO ruling but it's very hard to understand.

If I received the prepayment this financial year example 60k using FutureRent, and use this to buy anything that is not income producing ei. buying a new car or renovating PPOR, will I get taxed for the 60k prepayment of my rent for this financial year?

Regards,
Paul

 

If the amount is income it is taxed on receipt or entitlement. This is distinct to the taxpayer ability to claim deductions.
The taxpayer cant deduct a car as this is private and also capital expenditure which unless they are also a sole trader eleigible fr asset write off may be limits as a write off and also any personal use %. Renovation costs may be capital in nature and be mostly depreciable.

 

Bumping an old thread here since I'm suddenly getting these FutureRent ads on YouTube several times a day. Except for those whose IPs are paid off, encouraging people to draw down future rent seems like the height of irresponsibility to me.

 

Someone told me about another company yesterday www.ourlegup.com which somehow allows people with equity to 'guarantee' loans of investors and earn about 4% per year. I don't know how it works and haven't looked into it so am not recommending it, just point out another one of these start ups with 'innovative' ideas

 

Looks like you are basically becoming a guarantor for some random?

 

The acts of some lenders and their incessant ways to exploit those who are financially vulnerable seems to be the model many "disprupters" seek to follow to find cracks in cashflow and sell debt to those who may be desperate or lack the capacity to understand risks and costs.

The target market is two fold - Home buyers that are financially vulnerable people who want to access high leverage debt in a rising rate environment while property prices are struggling. And these are likley borrowers no mainstream lender will lend to. And homeowners who want a low cash rate return in exchange for leveraged debt against other people's low equity. They expose their own equity to risk in exchange for a low income benefit. Under 3% after tax. Lets be really honest here. There is the potential here to leverage loss of any equity into a debt trap for a buyer and I must ask why a homeowner would want a modest return when they are effectively lending to poor equity borrowers.

The facilitator takes a spread. No risk ? Its like being the roulette wheel operator. You just sort out the winnders and losers and take your bit