We are in a situation where we just have too much secured debt on our house to live on what is left at payday. To cut a long story short, we are thinking of approaching a number of firms who buy your house - for somewhat less than its market vakue - and rent it back to you. This is not a good deal in some respects, but would give us a liveable budget and a large amount in the bank from the equity on the house.

Any experience with these firms out there?

From my clients, I've heard that many of these firms will increase the rent payments to unrealistically high amounts after a period of time. It would be VERY important to do your homework.

I also suggest that you call an advice agency such as National Debtline or CCCS to have a chat about other posible options.

If there is equity in the house , why not sell it through the normal channels and then look on the private rental market ? I am sure there is loads of property for rent in your area ?

Two reasons, Phantom; that it would involve moving and that it would take time to sell the house.

True, but those reasons appear to be more like inconveniences associated with the sale of any property

From an economical point of view, it is far more sensible to put your property on the open market. You say there is a lot of equity. Then you don't have to put it on for its top end valuation if you are looking for a quicker sale

A local estate agent can advise you what you can expect if you are looking for a quickish sale in your area

The home information pack law I believe has been suspended until August now, so you still could put it onto the market without this

Selling to one of these companies is like throwing your property away and then renting of a company which will be happy to put your rent through the roof.

You then have no property and may have to move to cheaper accomodation anyway

Phantom, the advantage of using the kind of company that Ripley is talking

about is that the whole operation can be conducted quickly [usually within

a month] confidentially [so neighbours do not know that a change has ocurred] and without the need to spend money "tarting " up the house

prior to the sale.

I understand your argument, but putting it on the open market does not

guarantee a sale firstly, and veen if a buyer is found, it may be several

months before the exchange takes place because of possible hitches

further down the buying chain. By then, may be forced into a more desparate sale with a consequential lower price.

My wife and have just started up a business doing exactly that. We usually aim to buy properties at about 85% of the true market value (true market value being the price that you would realistically ask for a quick sale). We need to do this to cover potential buying and selling costs and make a small profit, since this is after all a business.

There are no estate agents fees to pay and we pay the legal fees for both parties. When HIPS is introduced it will not apply in cases where the property is not actively marketed, so there is a further saving there. We can offer a quick sale, which is useful when repossession proceedings are in motion - we can stop repossession in many cases, usually leaving the vendor better off. We can also buy a house in any state of repair, although we would pay less if a lot of work needed doing. When we commit to a deal, if is effectively a cash sale that will not fall through.

A lot of people would prefer to sell and rent back, and this method allows this. In fact sometimes people would choose to sell for a lower price in return for a lower rental. It is easy and discreet, and you neighbours need never know that you have sold the house or were in financial difficulties.

The suggestion that firms would massively increase the rent after a while is a little ludicrous in my view. A guaranteed long term tenant who will look after the property is exactly what we would want. There is an open rental market out there and forcing tenants out by charging uncompetitive rents would be counter-productive, resulting in void periods and the hassle of finding more tenants.

There are quite a lot of people doing the same as us, since it is a good way of investing in property. Most of us are just normal people wanting to make some money out of property and not wanting to rip anyone off. No one forces people to sell to us, they sell because they decide it is the best option in their circumstances.

There is no doubt that most people could achieve a higher sale price by selling through an estate agent, but this can take time and a lot of effort, you can be in a long delicate chain, and there are more fees to pay. Plus of course then you have to move out of your home and find somewhere else to live. An alternative for you Ripley would be to try to refinance on a lower rate, that way you could still benefit from the future growth on the value of your house.

The reason I have been on this site a lot recently is that I am trying to help someone who is in a lot of debt, more in fact than the market value of his house. If I can help him to reduce his debts I will be able to buy his house and rent it back to him. It is hard work, and I don't know yet whether or not I will succeed, but I am trying very hard and have spent many hours on this. It's not just about profit, if it was I would have walked away, let him be repossessed and moved on to an easier deal. If I can help people as well it makes the profits available from property investment seem justified.

Phantom, the advantage of using the kind of company that Ripley is talking

about is that the whole operation can be conducted quickly [usually within

a month] confidentially [so neighbours do not know that a change has ocurred] and without the need to spend money "tarting " up the house

prior to the sale.

 

I understand your argument, but putting it on the open market does not

guarantee a sale firstly, and veen if a buyer is found, it may be several

months before the exchange takes place because of possible hitches

further down the buying chain. By then, may be forced into a more desparate sale with a consequential lower price.

No, but selling to one of these companies does not guarantee confidentiality to start with, as they like to advertise their services.

One company is quite happy to put a sign in your front garden saying "BOUGHT BY 'A QUICK SALE'" to ensure everybody knows (A few popped up locally recently - just to make sure the entire neighbourhood is aware)

Also as I said above you don't have to put your house up for the top end valuation,local estate agents will be able to advise. So often there is no need for big improvements if you are willing to sell for mid range valuation.

If there is so much equity, I would always try to sell on the open market first and then consider other options. You will never know how quickly your property sells on the market without having it on the market in the first place. If it just sits and doesn't sell, you can always take more desperate steps afterwards