Who is Popi?
Popi Australia and its associated entities (the Popi Group) was established by Brenton Harris (a Financial Planner with over 20 years experience in the financial planning sector) and Sean Ryan (a Property Lawyer with over 26 years experience in the legal sector).
What do we do?
We locate Seniors whom want to stay in their home but need extra cash AND then match them with property investors whom want to build wealth through residential property investment.
Once we 'match' them we then administer the deal to make sure both parties are meeting their respective obligations.
Popi is NOT a party to the agreement between the Senior and the Investor. We just oversee and administer the deal.
How is the initial value of my Home calculated?
Popi will arrange a licensed national valuer to value your Home in accordance with standard property valuation guidelines applicable to residential property.
A copy will be provided to you.
You can elect to obtain your own valuation if you are unhappy with the independent valuation as well as talk with other Real Estate agents in you area.
Ultimately you will set the sale price but if it is above market value you may find it difficult to secure an Investor in a timely manner.
Likewise if you are willing to accept a price slightly below the market value you have a better chance of securing an Investor quicker.
What happens to the increased value of my Home?
Well, it depends on which Popi you have chosen.
If you have executed a White Popi (which is an Income only Popi – which in exchange for the maximum cash flow you forego the right to partake in the future capital growth of your Home) then the increased capital value is for the benefit of the Investor.
However, if you have executed a Yellow or Blue Popi (which is an Income and Equity Share – under which you forego a proportion of the maximum cash flow in exchange for the right to share in the future capital growth of your Home) then the increased capital value is shared between the Investor and you in the proportion agreed.
How are my payments calculated?
We will calculate the payments to you based upon the assumed cost to the Investor of purchasing your Property fully financed and the associated holding costs if owned direct.
In this sense several factors relevant to the calculation are:
1. The Value of your Home;
2. Expected rental return if tenanted under normal conditions;
3. Ongoing costs (ie: Rates and Taxes)
4. Long Term Interest Rates in the market normally incurred by an Investor.
The amount of the Popi payments you receive will depend on which Popi type you choose.
Once we have obtained a valuation on your property and prepared an appraisal we will provide you with the Popi payments we expect to achieve from an Investor.
FAQ's.......here's the stuff that most people ask us.....
plus the answers!
Understandably you have a lot of questions. As it happens, most people ask the very same questions because the answers are important. So we put them all together in one convenient spot. Here goes.....
Does a Popi have an impact upon my pension?
No.
The payments you receive from the Investor are not assessed as income by Centrelink because the payments are considered capital contributions towards the ultimate purchase price of your Home.
Popi has obtained a Product Ruling from Centrelink which confirms that the payments received under a Popi does not affect pension entitlements.
Download the Centrelink ruling here
What can I use the Money for?
Anything you want.
It’s yours to spend as you see fit.
Remember Popi has been designed to enable you to live your retirement dreams.
It was created to provide you with a quality life in your later years – holidays, eating out, theatre, weekends away, celebrations with family and friends, new clothes, shoes, health care, ageing at home…..whatever!
The possibilities are endless.
It’s your life and as long as you ‘live it”, we at Popi are happy.
What if I do have an existing reverse mortgage or normal mortgage?
You may still be eligible.
It depends on;
1. the size of the mortgage
2. the level of repayments
3. the value of the property
4. the choice of Popi
In the event you have a modest level of repayments the likely eligibility for a Popi is good.
If however the level of debt is high and the repayments are significant your eligibility is reduced because the risk is too high for an Investor.
What happens to the mortgage or reverse mortgage if I take a Popi?
It continues to exist but the repayments or interest are met from the payments you receive from the Investor.
We facilitate that process.
In other words the Investor effectively pays your mortgage and any excess comes to you.
Who is responsible for maintenance, insurance, rates and taxes?
You are.
You remain responsible for the payment of all insurance, rates taxes and maintenance on your Home as the Owner.
What if I want or need to leave my Home?
You are able to leave your home at anytime and have the choice whether it becomes a trigger event or not.
You can also rent the Property subject to certain conditions.
What if I need to move into a nursing home or aged care facility?
No problem, you can decide whether this represents a trigger event or not.
You can also rent the property (subject to certain conditions) and receive the rent as well.
If you choose not to sell, the Popi payments and rent can be used towards paying installments on your accomodation bond.
What if I die?
Assuming you are the last surviving partner Death is a Trigger Event under the Popi and gives the Investor the right to buy your Home on the terms agreed.
If however you die before your partner then your death is not a qualifying Trigger Event and your partner can elect to remain in the Home.
How do I get my money?
We or your Agent will obtain the money from the Investor via a trust account and process the payments to you.
Do I meet the Investor ?
If you and the Investor would like to meet each other we can arrange that. It isn’t compulsory nor in fact necessary but ultimately it’s up to the parties.
We have found both parties have enjoyed meeting and knowing the other person.
What information does the Investor get about me?
The Option Agreement is a legal document and by its very nature contains certain information in order to be effective and operative.
You, the Investor and us all get a copy of the executed Popi.
Certain information is required and recorded in the Popi and of course will be known to all parties including :
1. Your Names
2. Addresses
3. Contact Details
4. Your Age
All information is confidential and cannot be used for any purpose other than to facilitate the terms of the Popi.
Any other information confidential to the parties is not exchanged.
Why is my age relevant?
Age is relevant to life expectancy.
Life expectancy is relevant to time and time is an important factor in any investment.
The Investor needs to have some ability to ascertain the likely length of the Popi agreement before a Trigger Event occurs.
What if a Trigger Event occurs very soon after the Popi is executed?
If the Trigger Event occurs within 3 years (called the “Guarantee Period”) the Investor can either;
1. exercise the Option and buy your Home; or
2. elect to call upon the Guarantee.
What is the Guarantee?
It is a protection for the Investor.
The Investor has entered into a Popi with the intention of achieving capital growth. This is the only way the Investor gets a return on their investment. After all, the Investor is not receiving any income from the Property along the way.
Generally, property is a long term investment and therefore time is critical to that return.
If a Trigger Event occurs soon after the Popi is executed then your Home is unlikely to have acquired much capital growth, if any.
We think that is unfair to the Investor. Why would an Investor take the risk?
So to protect the Investor from this risk the Agreement gives the Investor a right to a refund of all monies paid to you if a Trigger Event occurs within the Guarantee Period. There is no interest added.
This allows the Investor, if they elect not to exercise the Option to buy your property, to acquire another Popi of similar nature and not be significantly disadvantaged.
How do I repay the Investor this money?
Given that a Trigger Event has occurred (ie; either death, or a decision to relocate) then your Home will most likely be sold.
In that case the refund to the Investor can be made from the sale proceeds.
If the Trigger Event is Death and your beneficiaries aren’t intending to sell your Home then your Estate needs to re-pay the Investor.
Is my health relevant?
It is not relevant to eligibility.
Popi doesn’t need to know your health status nor does the Investor.
It may however be relevant to your decision about which Popi you elect to enter into.
We feel that details about your heath would be intrusive and that the Investor is adequately protected by the Guarantee.
What happens if the Investor dies before the Option is exercised?
It depends on the Investor’s legal Will.
The Popi is a legal right and is an asset of the Investor.
Upon death the Investor’s Estate inherits that asset.
The Estate remains bound by the Popi and is compelled to continue making the payments to you. A failure to do so will be a default by the Investor’s Estate and entitles you to terminate the Popi.
The Investor’s Estate may however decide to sell the Popi to another Investor rather than continue making the payments. In that case a new Investor takes over.
What if the Investor ceases making the payments?
Once the Investor is 30 days in arrears the investor is in default of the Agreement and issued with a default notice.
If this is not rectified within 30 days you have the right to terminate the Agreement and the Investor loses the right to buy your Property.
You keep all the money that has been paid to you and we will find you another investor.
Can the Investor sell or transfer the Popi Agreement?
Yes.
A Popi is an asset and can be traded in the same way as any asset.
Remember though the new investor still has the same responsibilities to make the payments to you as the original investor or run the risk of losing their investment.
What does a Popi mean for my Estate?
Under a Popi you are granting to the Investor a right to buy your Home in defined circumstances.
Whilst the Popi remains active, valid and binding, you cannot sell your Home to anyone else. The Popi gives the Investor the exclusive right to buy.
Assuming you are the last surviving spouse your Death is one Trigger Event.
Upon your death the Investor gets to decide whether to buy or not.
If the Investor elects to buy, then your Home is sold to the Investor or their nominated person.
Your Estate therefore does not inherit your Home – it is sold.
However, your Estate does inherit the proceeds of the sale.
Can I change my mind after I sign the Agreement?
Once you and Investor has signed the Agreement it becomes a legally binding document.
Signatures are an acknowledgment at law that you and the Investor are agreeing to be bound by its terms.
It’s no different in that respect to any legal document.
Can I rent my Home?
Yes with certain conditions.
As the Owner you have all the rights and obligations of an Owner.
Can the Investor visit my Home?
Yes, but only in the following limited circumstances:
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Firstly, any Investor may want to inspect your Home in order to decide whether to enter into the Popi. This is no different than you having an open inspection if you elected to sell your Home
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Secondly, annually if the Investor choose to inspect the Property
However, all inspections are arranged, facilitated and regulated by Popi and must be supervised by a representative of Popi.
Can I take out a mortgage over my Home?
No.
Under a Popi you grant to the Investor the right to purchase your Home in exchange for a cash flow stream.
In return the Investor is acquiring the benefit of capital growth in the value of your Home.
Accordingly that growth cannot be restricted or eroded by a mortgage.
Can I have a family member or carer move into my Home?
Yes.
You remain the lawful Owner, and, subject to the terms of the Agreement you can do anything with your Home that an Owner is legally permitted to do.
Should a Trigger Event occur they will not have residency rights though.
Do I need to provide financial information?
No.
Popi does not need to ascertain the financial position of either party to ascertain eligibility.
Popi only needs to know that you own your Home.
Do I need legal advice?
Yes.
It is a pre requisite of Popi that you obtain independent legal advice on the Agreement before you sign.
Popi understands that your Home represents your most significant (and possibly only) asset.
At Popi we want you to be entirely comfortable with your decision to enter into a Popi and that comfort is achieved by ensuring you have obtained independent legal advice.
Popi needs to be sure that;
1. You are advised independently by a lawyer of your choice about the documentation;
2. You understand it;
3. You voluntarily enter into it.
Accordingly once you have received that advice and you are happy to proceed the Popi Agreement will be signed by all parties
Do I need to have a Legal Will?
Yes.
It is a pre requisite of Popi that you have a valid will and that your Executor signs an acknowledgement that they are aware of the Popi.
In addition Popi requires you to have a valid Power of Attorney.
These measures are essential in order to ensure that the legal paperwork can be signed in the event you are unable to do so by reason of your incapacity or death.
If I die before my wife/husband/partner does my Home get sold to the Investor?
No.
The Investor’s right to buy your Home is dependent upon the happening of a Trigger Event to the surviving spouse.
Popi doesn’t want your partner to be “out of Home” just because you have passed away.
Accordingly, the Trigger Event doesn’t operate until your partner dies or decides to relocate.
What happens if my husband/wife/partner is not named on the title to the Home?
That’s not a problem.
There is no need for both you and your husband/wife/partner to be named on the title to the Home.
What happens if I live longer than I expect?
That’s great.
Life is to be treasured and we at Popi hope you live in comfort for as long as you can.
How long you live doesn’t matter to the Popi itself.
The Popi continues;
1. until a Trigger Event occurs ; or
2. unless the Popi is terminated due to a breach by you or the Investor.
However, after 25 years the payments cease. You are always in control of when you leave the property.
Does my name remain on the title?
Yes.
The Title remains with you. You are not transferring title.
The Investor does not become the Owner of your Home until;
1. a Trigger Event occurs; and
2. the Option is exercised; and
3. the sale occurs.
What happens if Popi as a company falls over?
The Popi Agreement is between you and the Investor only, this is done deliberately so there is no risk to either of you if Popi as corporate entity ceases to exist or operate.
You have a legally binding arrangement with the Investor and our existence or otherwise doesn’t impact upon that.
We maintain a management and administration role in respect of the Popi to ensure both parties abide by its terms.
That management and administration role is set out in an Agreement which we will sign with you.
Should I tell my family?
Yes. Yes. Yes.
Popi strongly support you sharing your news with your family and indeed your friends.
We are confident our product offers such a unique benefit to both you and the Investor that once it is explained clearly your family and friends will understand the utility of our product.
In fact your friends may want one too.
What are the set up costs for me?
Minimal. We pass on the cost of obtaining the valuation and that’s it.
Are there any ongoing fees?
Yes.
We maintain an administration and management role for both parties and charge a fee to do so.
The Popi payments you are quoted will always be net of costs. We charge the investor $110 per month on top of the Popi payment you receive.
Is it a Loan?
No.
A Popi is not a loan. In fact it is quite the opposite.
The Investor is agreeing to pay you regular and ongoing pre determined instalments in exchange for the exclusive right to buy your Home at some point in the future when a Trigger Event occurs.
Is it a Mortgage?
No.
A Popi is not a mortgage. It is an Option.
We will record the Option on the title to the Home with a caveat which protects the interest of the Investor.
Note: For Qld residents the Option needs to be secured by a registered mortgage rather than a caveat due to the limitations on the long term use of caveats in QLD.
How is the final value of my Home determined?
The final value of your Home is only relevant to a Yellow or Blue Popi where you have elected to share in any capital growth.
It is not relevant to a White Popi.
Under a White Popi you have elected to receive the maximum cash flow and forego all capital growth so the ultimate value of your Home is not relevant.
Under a Yellow or Blue Popi the Final Value is determined by 3 independent valuations, one by a valuer selected by you (or your Executor) , one by us and one selected by the Investor.
The average will determine the Final Value.
The costs of the valuations are borne by each party.
Are there ongoing valuations of my Home?
Possibly.
We need to ensure that you Home is insured for its full replacement cost and in that respect a valuation may be required from time to time.
A final valuation is conducted only for the Yellow and Blue Popi to establish the value of your Home at the time of exercise of the Popi.
This valuation is used to calculate the share in capital growth.
How is my share of capital growth determined?
Once again this is only relevant to a Yellow or Blue Popi, where you have elected to share in any capital growth.
It is not relevant to a White Popi.
For example:
1. If the initial value of your Home is $400,000.00
2. You have chosen a Yellow Popi (ie : 50% share )
3. The final value is $680,000.00.
4. The capital growth is $280,000.00 ($680,000.00 Less $400,000.00)
5. Your share is $140,000.00 (50 % of $280,000.00)
What if the capital growth of my Home is greater than the income I receive?
Many potential clients ask………”What if that the capital appreciation of my property is greater than my income stream – by doing a Popi I’m ‘missing out” on that growth."
Popi openly acknowledges that under a White Popi a Senior Home Owner is exchanging the uncertainty of future capital growth for the certainty of an income stream today.
Accordingly, there is always the prospect that the property market may appreciate in value more than the combined income received.
Ideally, of course, we would all love to own a crystal ball…………to see into the future….to know exactly what annual growth our Home might have.
That same crystal ball would allow us to predict when we will need an operation, the timing and cost of our future health care needs, if and when we might need “in home” care, a nursing home or a respite care………..and of course we’d have certainty as to when we will die.
It would be a very different world if we knew with certainty what lay ahead.
Ideally, we’d all love to live in a world where we have ample savings, ample investments to live off and the comfort of a long and healthy life.
Ideally, we’d be financially independent and have no money worries whatsoever.
However, sadly that is not the reality for many of our ageing population.
The harsh reality is that it is getting harder to make ends meet and we are living longer.
That means we need more money than ever before.
Popi dreams of a day when no single Senior has to consider the prospect of a Reverse
Mortgage or the prospect of downsizing to free up capital to fund their future.
Unfortunately, we see that dream being unfulfilled in our lifetime.
In the meantime, if you need to use your Home to fund your future a Popi remains, in our view, a much safer alternative to a Reverse Mortgage.
If you genuinely feel that the residential property market is destined for future capital growth that far outweighs the cashflow stream you will receive, then we at Popi would recommend either:
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you don’t do a Popi at all;
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or you choose one of our colored Popi’s (equity share) instead.
We accept that, like anything in life, our model is not for everyone. It does however serve as a unique solution for an increasing number of Seniors either in Retirement or facing it.
In fact one of our potential clients, when advised by her financial planner that she was “foregoing the capital appreciation of her home in order to get income” remarked “Yes, but what you are missing is that I’m converting the uncertainty of future capital growth for the certainty of an income stream today.”
We completely agree!
Is Popi covered by credit or financial services laws?
We’ve had potential clients raise with us whether we are regulated by credit or financial services laws.
The answer is No.
We arent required to be because the Popi product is not a financial product but rather constitutes a Real Estate transaction. Accordingly, we're licenced Real Estate Agents.
In that respect we are bound by the state based regulatory framework that applies to Real Estate transactions. So it's not as though we're unregulated. In fact to the contrary because each State within Australia has a legislative framework that has been designed to protect you as a Consumer.
Whilst we’re not governed by the legal framework that applies to the credit or financial services industry, we are most certainly ‘regulated” and any suggestion by anyone to the contrary is simply wrong.
How Does a Popi Compare to a Reverse Mortgage?
We feel a Popi is a better solution than a Reverse Mortgage for many seniors.
You can find out more here.