With the housing market going gangbusters in the past few years, ambitious property investors are thinking of buying more real estate, whether that’s a dream home or another lucrative investment.

One of the biggest challenges to buying that next property, however, is coming up with the deposit. Accessing your rent in advance using Futurerent is one way to help you do this.

If you have an investment property and you’re buying another property, you can get up to $100,000 of rent in advance on that investment property whether you are buying a home to live in, or an investment property.

Why get your rent in advance to fund your property deposit?

• Buy what you want today – You can fast track your next purchase with a significant helping hand with the deposit, which at today’s growth rates has been impossible to save for the average Australian and won’t allow you to buy into the same market if you are relying on accumulating more equity in your existing property. Accessing your rent in advance allows you to buy what you want today, rather than compromising on the next purchase, or missing out entirely.
• Fast and easy – Given you are not borrowing money, but rather accessing your rent in advance, Futurerent is able to get everything it needs from your property manager, meaning there’s no paperwork, no serviceability or valuation.
• Avoid or minimise the cost of LMI – If your LVR is above 80%, using your own rental advance to bump up your deposit to 20%, or at least reduce your LVR as much as possible can save you thousands in LMI.
• Choose the right home loan for the long term – If you plan on holding your investment property for the foreseeable future and want the peace of mind of a great low fixed rate, you should be able to plan for the long term without your decision being influenced by what you might need in the short term. By using Futurerent for your short to medium-term capital requirements, you can choose the best loan for your long-term financial needs without having to compromise on other features.

Using rent in advance as a property deposit – how it works

If you’re using Futurerent to help form your property deposit, it’s important to know that Futurerent does not replace the bank. Rather, Futurerent helps you with the deposit by providing up to $100,000 of rent in advance. Here’s an example of how Futurerent can be used to fund a deposit:

• Dan owns an investment property in Penrith, NSW, that makes $500 per week. He wants to buy another apartment in Rowville, VIC, for $500,000 and has $50,000 in savings. This isn’t enough for a 20% deposit but Dan doesn’t want to pay LMI, as it could cost him more than $11,112 (excluding stamp duty). It would also mean that Dan would have to borrow $450,000 and pay the associated interest.
• After weighing up his options, Dan discovers that he can get 2 years’ rent ($52,143) in advance using Futurerent and pay it off quickly over 3 years. He decides to apply.
• Dan uses his $102,143 to fund the deposit & other costs to buy the Rowville apartment for $500,000. The monthly instalments are paid to Futurerent from the rental income from Dan’s Penrith property. He still gets $463 in rent each month. By increasing the size of his deposit, Dan only needs to borrow $397,857 instead of $450,000 if Futurerent wasn’t available.

The instalments to repay the rent advanced are paid from your existing property’s rental income. In the above example, after Dan gets the $52,143 rent advanced on his Penrith property, it is paid back in 36 equal instalments of $1,448 per month from the monthly rent of $2,173 along with the cost of using Futurerent.

What’s the cost of using Futurerent to cash out?

The cost of using Futurerent includes a setup fee—$2,900 incl. GST for advances under $50,000 or $3,900 incl. GST for $50,000 or more—and a fixed amount of rent, both fixed at the time of the advance, so there’s no interest or hidden fees to worry about. For example:

If you get $50,000 of your cash out and choose a 3-year term, you’d pay:

• A $2,900 setup fee (incl. GST) upfront, plus
• A rental margin of 7.8% p.a., totaling $3,900 p.a. over 3 years (or $325 per month over 36 months),
• For a total cost of $11,700 over 3 years, all paid from a portion of the tenant’s rent.

If you get $100,000 cash out and choose a 3-year term, you’d pay:

• A $3,900 setup fee (incl. GST) upfront, plus
• A rental margin of 7.8% p.a., totaling $11,700 over 3 years ($3,900 per year, or about $325 per month),
• For a total cost of $15,600 over 3 years, with the rental margin paid from your rental income.

You’ll never face interest charges or unexpected fees with Futurerent. Since the cost is fixed, if your property becomes vacant and you need more time to pay us back, your total cost won’t increase.

Want to find out how much rent in advance you can get? Check out our online calculator to see the numbers instantly.