Retirees needing extra cash flow may finally have a solution.
Sean Ryan and Brenton Harris are the brains behind an entrepreneurial concept targeted toward homeowners over 60 and investors. It’s called... Property options for seniors, pensioners and investors... also known as a POPI.
"Seniors simply don't care about future capital growth, they want the money… they are living on the pension, they are struggling to make ends meet and the future growth of the property is something you can't convert into cash until you sell which is often too late," says Sean.
Barry and Sandi Budgan own a beautiful home in Adelaide's southern suburbs...
"We really like living here, we just like the surroundings, close to family and we didn't feel the need to move out of here until we have to," says Sandi.
The self-funded retirees wanted extra income to be able to live comfortably... And enjoy the things they love without having to re-mortgage their home.
"I think it's a great opportunity to receive added income and stay in your premises for as long as you can," says
So how does it work?
“We've got an aging population who need money. We've got investors who are struggling to get into the property market, and matching them together actually suits both of their needs… The investor makes a monthly cash flow paramount to the senior, in exchange the senior gives them the right to buy the house at a point in the future, at today’s price,” says Sean.
While the homeowners are compelled to sell to the investor, the time of sale is on their terms and they retain full ownership of their home until then.
"There is no transfer of title, that's significant because they remain the owner of their home, they remain in occupation of their home and all the normal ownership remain with them. There is absolutely no transfer of title, therefore there's no risk," says Sean.
"If you were to choose a POPI the way it works is that we get an evaluation done on the property based on that evaluation. We project an income stream that would be coming to you once we found an investor on the other side of the equation," explains
Property expert Peter Koulizos believes a POPI is the ideal solution for retirees looking to free up some cash...
"For them there is virtually nil risk," says Peter.
So how does it fare for investors?
"Significant benefit to investors to get into the property market without a deposit, secondly without a bank loan and thirdly they have the ability to then ride the capital growth curve of property without investing any capital into the deal," says Sean.
And peter agrees...
"There's a lot of great things about this from the property investors perspective".
And he's happy to put his money where his mouth is... Investing in a POPI himself.
“I have bought this one because I can see there are great advantages for the investor and the pensioner," says Peter.
However... Like any investment, it's not risk free.
"For the investor the risk is the property market may not move so they may have paid an income stream to the senior and the market hasn't moved with that," says Sean.
But on the flip side, they aren't locked in either…
"If the investor says I'm not in a position to purchase now, this couldn't have come at a worse time for me, they can market the property in a traditional way, sell the property on the open market and the transaction occurs in a standard real estate sense," says Sean.
"If we get into some financial difficulty and we can't make the payments anymore then good luck to the pensioner they keep all those payments," says Peter.
And to ensure there aren't any legal hiccups at time of sale...
"Every senior who elects to do a POPI has to have a current or updated will, secondly has to have independent legal sign off, and thirdly has to have the executor of the will acknowledge the agreement," says Sean.