The Australian fintech FutureRent makes it a reality with a new solution tailored to the cash needs of owners. Tom Goodwin, from your investment property, sits with CEO Godfrey Dinh to find out more.
Godfrey Dinh Co-founder and CEO, FutureRent
YIP : What are the expenses that real estate investors must manage as owners?
Godfrey Dinh : Real estate investors must be ready for times when your investment property looks like a big hole in your pocket. Unexpected repairs and maintenance, long vacancies or renovations are just a few of the financial challenges your investment property can throw at you.
Up to now, real estate investors have generally refinanced existing loans or taken out a personal loan when they needed money. Tightening lending standards in recent years has left real estate investors without a good cash flow solution, as banks often overestimate spending, underestimate income, and ignore other assets, making them people are turned away for loans they can actually afford.
YIP : What problem does FutureRent solve?
GD: FutureRent is a new Australian fintech trying to solve this problem. It provides real estate investors with early access to up to $ 60,000 of their prepaid rent. The vast majority of Australian real estate investors are Australians who regularly work with an investment property as part of their retirement plan. By giving them flexibility with their rent, we give them greater control over their cash flow and investment decisions.
We have helped people buy their next property without IMT [lenders mortgage insurance] to give their children a deposit for a house and to pay for renovations. We also helped people pay for expensive items and pay off credit cards and personal loans. By giving people quick access to their rent when they need it, we also allow them to be strategic about when they sell.
YIP : How does FutureRent work?
GD : FutureRent users do not need to provide information on income or expenses, and there is no no impact on their credit as they don't borrow money. Users complete a five-minute online request and are generally paid within two business days. Going up to $ 60,000 without an expensive personal loan should be easier than borrowing $ 600,000, but banks make it just as painful.
We offer real estate investors a fast, digital and user-friendly solution that allows them to unlock their own money.
The owners are paid a lump sum of rent in advance and enter into a type of lease with FutureRent which allows FutureRent to recover the rent paid in advance, plus its fixed cost, from the rent perceived. The property manager continues to collect the rent from the tenant and allocates a maximum of 80% of the rent paid by the tenant to reimburse FutureRent. This allows the landlord to continue to collect at least 20% of the rent to help pay for their basic land expenses, such as property management, strata, and water rates.
YIP : How did you find out that it was a painful point for investors? GD : I am a qualified real estate economist and real estate investor with 14 years of experience in real estate investment and structured finance, including co- foundation of the Sanctuary Partners commercial investment and consultancy boutique. I'm also a former vice president of commercial real estate at Deutsche Bank in Australia and an associate member of the Investment Investment Banking team at Investec Bank. I have been working with investors of all types for many years and have come to realize that timing is paramount and that access to cash flow can really hold you back.
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