Fractional property investment manager DomaCom has acquired the first property for its new Rent-to-Own offering.
DomaCom said the one-bedroom apartment in the Melbourne suburb of Moonee Ponds, acquired for $447,000, was currently seeking a new tenant through property manager Rent Exchange.
The recently launched Rent-to-Own product would allow more tenants to break free of the rent cycle by taking part in the new equity model at no additional cost to their rent, DomaCom noted.
“Tenants pay rent on a commercial basis and after costs and interest on any loans, the rent is shared between the unitholders in proportion to their investment. Any increase in capital value over time is also shared,” the company added.
It said tenants would, under the new model, receive 1 per cent equity a year for a maximum of five years and would also have the option to acquire additional equity from investors over time.
“Apart from the initial developer discount, which has been negotiated by DomaCom with the assistance of property advisory group Third Garden, investors in this model will have tenants who are part owners,” it said.
“As tenants become part owner and occupiers, the company expects that this lease incentive will lessen any tenancy risk, an important factor for investors during the COVID-19 pandemic.”
DomaCom chief executive Arthur Naoumidis said: “Rent-to-Own is a product of our time with the potential to change the outlook for people who may have thought they would be renters for life.
“The developer discount does not come at an additional cost to the developer as it simply shifts the distribution margin in favour of the purchasers and tenants. On a wholesale basis, this model can put many more people into the home ownership category.”
In October last year, the company received notice from the ATO that SMSF investors in its funds would be able to satisfy the sole purpose test when a property investment was rented by a related party of the fund.
