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Walking the Talk: Why We Invest in Rent-to-Sell (And You Can Too)

Written by Jarrod Wills
Product Expert, PublicSquare
Updated: Sep 07, 2023 | ⏱️ 5-min read
Updated:‏‏‎ ‎
Sep 7, 2023
⏱️ 5-min read

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<h2>How Rent-to-Sell Began</h2>In 2020, PublicSquare founder <a href='/author/dean-arnold'>Dean Arnold</a> sold his technology company in Hong Kong and was eager to invest some of the proceeds back home in the real estate market.<br><br>During several months of research and modelling, Dean explored a range of potential strategies, from commercial real estate and vendor financing to Airbnbs, the National Disability Insurance Scheme (NDIS), and even some shared equity models akin to the Australian Labor Party's <a href=''>Help-to-Buy</a> initiative. <br><br>Interestingly, the latter proved to be the least favourable in terms of investment outcomes.<br><br><img src='' alt='Founder, Dean Arnold created the rent-to-sell model after modelling numerous strategies' style='width:100%;' /><span class='text-small caption-text text-muted'>Founder, Dean Arnold created the rent-to-sell model after modelling numerous strategies</span><br><br><h2>Benefits of Rent-to-Sell</h2>Ultimately, a <a href='/products/rent-to-sell-homes'>rent-to-sell approach</a> excelled in various investment criteria:<br><br><strong>ROI</strong><br>Regardless of market fluctuations, a fixed 5% minimum capital appreciation would protect investors against market downturns while still allowing them to capture the market when prices go up.<br><br><strong>Liquidity</strong><br>Instead of waiting years or decades to make a return, steady cash flows would start immediately, bolstering serviceability with lenders and enabling consistent portfolio growth as well as lifestyle upgrades (such as upgrading personal residences').<br><br><strong>Asset Security</strong><br>As an owner of a rent-to-sell property, the investors would remain on the title until it was sold via a call option deed. <br><br>If a tenant didn't meet their obligations under the lease or hardship accommodations, it would be possible to rent (or rent-to-sell) the property again to a new tenant without having to repay previous yields.<br><br><strong>Efficiency</strong><br>Selecting the best properties or suburbs would become trivial due to fixed returns, avoiding hundreds of hours of research and negotiation. <br><br>Tenant churn and vacancy would also be lessened, and all end-end asset management could be streamlined via one or two service providers.<br><br><h2>From Concept to Company</h2>While Dean initially viewed rent-to-sell merely as a personal investment vehicle, he soon realized that he was laying the groundwork for a scalable technology company.<br><br>The evident demand from tenants to participate in such transactions highlighted a vast, untapped market, proving that Australians were hungry for solutions to bridge the widening gap between renting and owning.<br><br><img src='' alt='Over 1,000 tenants apply to PublicSquare each month' style='width:100%;' /><span class='text-small caption-text text-muted'>Over 1,000 tenants apply to PublicSquare each month</span><br><br>However, it was Dean's discovery of Divvy Homes, A US-based company in Silicon Valley, that solidified his confidence. He chanced upon a podcast with their Founder in 2021 and was struck by their achievement.<br><br>Established in 2017, they were already settling around ten homes per day using a similar model to rent-to-sell. <br><br>This validation in the US, where the housing market was (and still is) comparatively less strained than Australia's, was an important signal.<br><br>For example, house-price-to-income ratios are much more favourable in the US than in Australia (US: 5.4, Australia: 8.5), and there is a wider selection of mortgage products. <br><br>So, it stood to reason that if the model was scalable in the US, its prospects for adoption in Australia were even greater.<br><br>PublicSquare was officially launched in Late 2021 and began with an array of self-funded purchases, mostly including house and land packages in Queensland under $700,000. <br><br>By November 2022, we'd successfully raised a $2m capital round, plus mortgages, to further our investments.<br><br><h2>Your Opportunity to Participate</h2>With over 1,000 tenants signing up to PublicSquare each month, we acknowledge we can't meet this demand on our own.<br><br>This is why we invite investors, including individuals, trusts, and family offices, to participate in the exact same rent-to-sell strategy we invest in ourselves, using identical lease agreements and call option deeds.<br><br>If Rent-to-Sell resonates with your investment preferences, we'd love to help you explore your options. <br><br>Download our <a href=''>latest fact sheet</a> or schedule your <a href=''>free info session</a> to speak with one of our professional team members in Brisbane.
Written by Jarrod Wills
Product Expert, PublicSquare
About me: 5+ years of experience in the mortgage and lending space before joining PublicSquare. Passionate about providing excellent customer service.

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