Saw an article about Commbank's ventures x15 backing this guys.
Here's an explanation of how it works on 7news as the site is a bit confusing.
On paper you'll get 12.5% equity of the house after 5 years from these guys, whereas 30 year loan will get you 16.67% equity. 12.5% equity for 5 years is pretty much 40 year loan.
Repayments wise, it costs 7.05% p.a. or $70,500 on $1m property, which works out to be almost $6k~ vs almost $4k~ on 2.5% interest mortgage.
1.5% starter fee + 1% equity purchase as opposed to 5-20% normal home loan deposit.
Looks like they cover conveyancing fees, stamp duty fees, and strata/land tax too.
Agreed-price is locked in at the start and grow 3.8% p.a. no matter the actual market growth.
The best part is obviously not paying rent! Of course it's already included in the 7.05% p.a. rate.
The biggest cost seems to be the amount of equity itself 2.5% p.a. with them vs 3.33% p.a. on a 30 year loan.
The property can be purchased after 3-7 years and they aren't a lender, still need to get your own form the bank after. So might still incur LMI depends on how much extra deposit you have by the time of purchase.
Can't find much info on exit without buying, I guess you just give it all up?
I might have oversimplified it a bit, but thoughts?
Their FAQs https://www.ownhome.com/faqs
70,000 a year 'not rent' and after 5 years (=$350k) you only end up with $120k. Am I missing something?