When you buy something, and you offer to pay cash upfront, there is a good chance you will get a better deal. Well, that is the idea behind FutureRent.
The company works with investors who have property managers looking after their rental, and it allows them to walk away with a year’s rent as a bulk sum.
As a result, it gives property managers an edge of being able to offer their clients up to a year’s rent for signing with them.
The world-first idea came to the co-founders of FutureRent after they noticed how many hoops people had to jump through to borrow small amounts of money from a bank.
“If we pay people their rent upfront, they shouldn’t need to go through that process, it should be a lot easier,” FutureRent co-founder and CEO Godfrey Dinh said.
As a result, its clients can borrow up to $60,000. But it is limited to the annual rent return of their investment property.
People who have used the service have wanted the extra cash to help their kids with a house deposit, cover relocation expenses and other one-off costs that come up.
“Because there hasn’t been a good alternative to date, there have been people using it for debt consolidation. They have personal loans and credit cards, and they realise that is impacting the rate they pay to the bank on their home loan,” Mr Dinh said.
Landlords can pick a three-month repayment with a 3 per cent fixed fee, six-month repayment with a 5.5 per cent fee, or a year with a 9.9 per cent fee.
“We wanted to create something that is consumer-friendly, that way if your tenant stops paying, your repayments stop,” he said. “We are only repaid from 80 per cent of the rent that is collected from the tenant; as a result, it is literally just your rent upfront.”
They are currently operating in Adelaide, Brisbane, Melbourne and Sydney. And its average deal size is $22,000.
“We are the first in the world to do this, so we are very excited to be the first,” Mr Dinh said.
The company also has an option for landlords who have empty properties to help get it ready for new tenants.
FutureRent gives landlords the option to get six weeks rent upfront to help with the cost of getting the property ready for new tenants.
“We realised during the reletting process, it is an expensive exercise for landlords because you usually miss out on one or two weeks’ rent just because of the time it takes for one person to move out and the next one to move in,” he said.
“Then you have to pay leasing fees, the marketing costs, and you often have to touch up the property. All of those little things genuinely take up about four to five weeks of rent.”
Once the landlord has a new tenant, FutureRent collects its money from the rent over six months, plus three additional days of rent.
The company is already working with several real estate agents who can offer their clients different options of how their clients can get paid their rent.
“We spent almost two years making sure we had this right from a regulatory perspective and satisfying all the legal aspects out there,” Mr Dinh said.
“We got a ruling from the Tax Office to make sure our landlords were protected, and nothing changed from their point of view. We wanted to do it in a really professional, considered way that wouldn’t cause any problems.”