I'm sniffing around some towns in the Surat Basin, and I've come across an off-the-plan townhouse that looks very promising. The developer is offering a "lease back guarantee" of 10% of the purchase price annually for 5 years.
I asked them a heap of questions, and found out that this isn't an option - it's compulsory if you purchase these townhouses. When I asked why this was so, I was told "the developer expects to make a profit leasing it to a third party, even after paying your 10%."
What am I missing here? Why shouldn't I purchase now, settle in 12 months and sell 3 years later, still with 2 years to run on the guarantee, when prices have (hopefully) gone up? Are they expecting rents to boom in that time, while they only have to pay me 10%? Personally, I'd be more than satisfied with 10% and no risk.
Any advice appreciated.
Cheers
Ricky
I asked them a heap of questions, and found out that this isn't an option - it's compulsory if you purchase these townhouses. When I asked why this was so, I was told "the developer expects to make a profit leasing it to a third party, even after paying your 10%."
What am I missing here? Why shouldn't I purchase now, settle in 12 months and sell 3 years later, still with 2 years to run on the guarantee, when prices have (hopefully) gone up? Are they expecting rents to boom in that time, while they only have to pay me 10%? Personally, I'd be more than satisfied with 10% and no risk.
Any advice appreciated.
Cheers
Ricky