Is RTR a real strategy and is it legal here?

Discussion in 'Investment Strategy' started by 2ndTimeAround, 7th Jan, 2019.

Join Australia's most dynamic and respected property investment community
  1. 2ndTimeAround

    2ndTimeAround Active Member

    Joined:
    4th Jan, 2019
    Posts:
    37
    Location:
    Sydney, Brisbane, Wellington
    I dont know if you guys have watched the Rent to Rent videos on youtube. Basically you garuntee the landlord something like 5 years rent, the allow you to do the place up, list it on booking.com etc and voila instant money for jam. Thats in the UK.

    Is that viable or even legal to setup such contracts in Aus?
     
    2ndTimeAround, 7th Jan, 2019
    #1
  2. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    27,248
    Location:
    Sydney or NSW or Australia
    There's been a few threads about subletting - most responses in the negative as the owner has little relationship with the sublessee.
     
    Scott No Mates, 7th Jan, 2019
    #2
  3. 2ndTimeAround

    2ndTimeAround Active Member

    Joined:
    4th Jan, 2019
    Posts:
    37
    Location:
    Sydney, Brisbane, Wellington
    The thing is though, the contract is not your traditional Rent contract, so its a bad term RTR really.

    They seek out landlords willing to accept the conditions and the contracts state those conditions. Unlike standard real estate rental agreements, there is no sub let type wording.
     
    2ndTimeAround, 7th Jan, 2019
    #3
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,996
    Location:
    Australia wide
    Yes legal, but many issues to consider
     
    Terry_w, 7th Jan, 2019
    #4
  5. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,346
    Location:
    Australia
    What landlord would accept this? They take the risk if you running it properly and more wear and tear. When vacancies are high, maybe.
     
    Trainee, 7th Jan, 2019
    #5
  6. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,524
    Location:
    Melbourne
    The Y-man, 7th Jan, 2019
    #6
  7. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,524
    Location:
    Melbourne
    Most commercial leases have a "make good" clause (the tenant is required to bring the property back to its "original state" as at the time of taking out lease.

    The Y-man
     
    The Y-man, 7th Jan, 2019
    #7
  8. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,524
    Location:
    Melbourne
    Hi Terry,

    Would there be issues that would run foul of either resi tenancies act (if done as resi) or zoning (if building is in resi zone)?

    Cheers,

    The Y-man
     
    The Y-man, 7th Jan, 2019
    #8
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,996
    Location:
    Australia wide
    yes
     
    Terry_w, 7th Jan, 2019
    #9
  10. D.T.

    D.T. Specialist Property Manager Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    9,190
    Location:
    Adelaide and Gold Coast
    Remember no landlord insurance cover if subletting.
    Can't change the word to something else and expect it to be accepted.
     
    D.T., 7th Jan, 2019
    #10
    ellejay likes this.
  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,536
    Location:
    Sydney
    Many councils have (or some are considering) rules the restrict or prohibit short stay rental. Many Body Corporate entities are opposed and can limit / stop short stay rentals. These rules also may prohibit any alteration to premises.

    NSW Govt has announced rules to limits some short stays in some regions

    Insurances would need to cover short stay (eg EBM short stay policy) but may only cover the property owner.

    Liability for losses may rest with you rather than the occupant.

    Interaction of residential tenancies act, boarding houses and other laws

    You would need to take on a residential tenancy lease and some of the elements you seek may not be capable of being included. Finding a willing owner to take on a long term lease may be problematic. Its uncommon. Anything uncommon raises concerns
     
    Paul@PAS, 7th Jan, 2019
    #11
  12. Car tart

    Car tart Well-Known Member

    Joined:
    16th Sep, 2018
    Posts:
    926
    Location:
    Sydney-Melbourne
    There are a number of people doing this in Melbourne City and Docklands area. They rent the properties paying the owners monthly in advance and airbnb them for $200+ per night.
     
    Car tart, 7th Jan, 2019
    #12
  13. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,653
    Location:
    Gold Coast (Australia Wide)
    In the good ole days :)

    very skinny margins these days

    ta
    rolf
     
    Rolf Latham, 7th Jan, 2019
    #13
Paying too much CGT or tax – Or not enough ?

Not all tax advisers are property focussed specialists and DIY errors will always cost you. We know property taxes and will advise and get it right. Even a second opinion. Contact us for an obligation free initial consult (conditions apply).