Hi Jason

We have been doing what we call Assumptive Joint Ventures since 2006, i.e.. we have been putting paperwork in place to assume control of the owners mortgage and the property.  As Terry says, it's probably the most dangerous technique we use in our business.  The amount of due diligence we now undertake on the owners situation is quite daunting.  Along with the other paperwork we use to secure control of the property, it's a technique I'd definitely warn newbies away from.

There is a VF educator out their suggesting that you go in and take control of distressed properties with a 4 page JV agreement.  Frankly, if you rely on this agreement to cover your position and the thousands you've invested in the arrears and the property itself, you would have rocks in your head 

Cheers,  Paul

Hi dgirl

Have you approached the owners to see if they would sell the property to you with vendor finance (VF).  I'm guessing the owners aren't finding it easy to sell traditionally so they may consider a VF sale.

Cheers,  Paul

It's not free but we do sell a vendor finance calculator that originally came from an excel spreadsheet.  A video on how it works is at:  http://www.negative2positivecalculator.zreply.com/

Cheers,  Paul

Hi Scott

The Vendor Finance Association is a great place to meet vendor financiers.  Dates and details of meetings are available at:  http://vendorfinance.asn.au/meetings-and-memberships/

Cheers,  Paul

A lot of Lease/Options, i.e. Rent To Own's, have what are called Price Credits built into the agreement, i.e. a portion of the rent is credited towards the deposit on the property, IF the Option is exercised and the sale completed.  I've also heard them called Equity Credits and Rent Credits.  Same thing though.

Cheers,  Paul

Hi Cherie

Just be aware that second mortgage security is pretty ordinary, especially if your buyers first mortgage is already at a high LVR.  That's why second mortgages are so expensive out the in the commercial world, i.e. the people who do this type of lending on a regular basis know the extra risk involved and charge accordingly.  In our vendor finance transactions we try to ensure that the second mortgage money we lend is only profit, i.e. if it defaults we're only losing some of the profit.

Cheers,  Paul

Hi gags

The following article about Lease/Options may help:

https://www.propertyinvesting.com/strategies/lease-options

Cheers,  Paul

Hi Bel

Cutting off the FHOG to eligible first home buyers, buying an existing property (2nd hand) is only happening in NSW.  It will effect first time buyers, using a vendor finance Instalment Contract, in the same way it will effect a buyer under a 'traditional' Contract of Sale.

Vendor Finance buyers in any State, buying with a Lease/Option (Rent To Own), have never had access to the FHOG. i.e. it's never been available, until they actually 'exercise' the Option and buy the property.  In short, in NSW the FHOG will not be made available to any purchaser of an existing property after 30 September.

We have a procedure we call negative2positive in which we, as vendor financiers and Australian Credit Licence holders, assisting sellers to sell there property with vendor finance.  The negative2positive website is http://www.negative2positive.com.au

Yes, all our purchasers have always paid to have the legal paperwork drawn up.

Cheers,  Paul

Hi Alex

We and our JV partners often buy properties with I/O loans and on-sell them with a P&I vendor finance Instalment Contract.  This works for us because all our loans are limited to 5 years on I/O.  They then revert to P&I.  Us being on I/O and our buyers being on P&I has the effect of pushing our profit forward, by way of greater monthly positive cash flow during the I/O period.

Buyers refinance out of their P&I Instalment Contracts for two main reasons, i.e.

1.  They can get a cheaper interest rate via a traditional lender, and

2.  When they refinance, they get the Title transferred to their name.

Cheers,  Paul

Hi PaperChaser

Banks tend to get off peoples backs when loan repayments get caught up and repayments become regular again.  If you can buy a couple traditionally, more power to you.

However I like to buy properties with as little of my money in the transaction as possible.  I'm not saying that you don't give the vendors a fair price, you do.  You just negotiate with the vendor on how long you can take to pay off your debt to them and the repayment schedule that fits that arrangement.  With that done and the necessary National Credit Code checks complete, you ask the solicitor to draw up the Instalment Contract for you.  And you make sure that both parties get independent legal advice.

Cheers,  Paul