Hi Traezi

Vendor finance may be one option for you but even that is problematical.

Vendor finance can be broken roughly into 2 techniques; instalment sales contracts and lease options. The lease option would probably be best for you as you would most likely lose your rental assistance with an instalment sales contract.

However, to be realistic, nearly all lenders, including vendor financiers (wrappers) would not like to see you spending more than one third of your gross income on your house payments. That comes to about $216 per week on my claculator.

Next it comes down to your personal situation. Do you live in an area or can you move to an area where the houses are cheap enough to allow a payment of $216 per week to be viable. And is $216 per week too much out of an already tight budget.

For your planning purposes, a payment of $216 per week would give you a borrowing capacity of approx $140,000 at 7% over 30 years.

If you would like to continue with your enquiries, leave your details on the Vendor Finance (Wraps) Association’s website and I’m sure somebody will get in contact. Their website can be found at:
http://www.financewraps.asn.au

I hope this helps.

Cheers, Paul

Hi Waz

I know you say you don’t want to spend the money on a wrap pack but I’d suggest you have a re-think about short changing your education on this business.

We use Tony Cordato as the lawyer for our business but ultimately we would have had to spend a lot more than 2k to 3k to get the same amount of information from Tony as we got from the wrap pack (as with all lawyers, Tony’s time is expensive).

There are also many many areas covered in the wrap pack (either Steve’s or Rick’s) that a lawyer just wouldn’t know about, i.e. the day to day running of the business and the pitfalls for newbies to be aware of.

And anyway, you’ll get more than the cost of the pack back in your first deal.

I hope this helps.

Cheers, Paul

Hi Fish

I’d suggest you sit down and discuss these very important questions with a “switched on” accountant.

In the meantime, if you’d like to educate yourself on these subjects, I’d recommend Steve’s “Wealth Guardian” kit which is available on this site. It’s an easy read and is a fantastic educational resource.

I hope this helps.

Cheers, Paul

Hi Redwing

Have a look at:
https://www.propertyinvesting.com/strategies/lease-options.html

Cheers, Paul

Hi Julia

I just wanted to second what Felicity said. Great post! Thanks for your help.

Cheers, Paul

Hi KFJ

If you join the Vendor Finance (Wraps) Association you will find a mortgage broker there who has a loan product which he promotes as having both “Funders” and “Lenders Mortgage Insurance providers” approval to use for on-selling using vendor finance, i.e. wraps. The Association’s website is at
http://www.financewraps.asn.au
You will find reference to this product on the members forum.

As an aside, I think you might have it wrong with your comment about the wraps pack(s) being “a lot of money to outlay just to find out about the finance side”. It’s what you don’t know in this pursuit (as with many others) that will hurt you. And anyway you will recoup the cost of the wrap pack(s) on your first wrap. My suggestion. don’t scrimp on your education.

I hope this helps.

Cheers, Paul

Hi Rakky

As far as I can see, you’ve got it right up to and including,
“Who’s name is the property in for the duration of the wrapp?” – Usually your name stays on the title.

“Does your own lender require any involvement in the process?” – I now know of 2 mortgage organisations who are advertising that their underlying funders and mortgage insurers are fully “in the loop” as far as knowing and approving that the house may be on sold using a wrap strategy.

Also, if you haven’t already, go back to the home page of this site and click on the “wraps” link. You’ll find a lot of good information there.

I hope this helps.

Cheers, Paul

Hi Craig

Try the Vendor Finance /Wraps forum on this site. Have seen quite a few Canadian wrappers posting on the John Burley forum boards – http://www.johnburley.com

Hope this helps.

Cheers, Paul

Hi

I’d like to ask the moderator to move this thread to the “Opinionated” forum. My feeeling is that’s where it belongs.

Cheers, Paul

Hi Jonny

You mention that wraps are illegal in SA. Wraps are generally divided into 2 types. Those using an “Instalment Sales Contract” and those using a “Lease Option”. Unfortunately the governemnt of South Australia will not allow the use of “Instalment Sales Contacts”, so if you wish to wrap in SA you’ll have to use the Lease Option method.

There is a wealth of knowledge about wrapping in OZ on the Vendor Finance (Wraps) Association’s website at: http://www.financewraps.asn.au

However if you are simply looking to invest your $380,000 for a return of approx $57,000 per year (15%), I would consider becoming a Joint Venture Partner with one or a number of existing wrappers. Via this avenue the wrapper will usually get the loan on the property to be wrapped by using your money as the 20% deposit. Your investment is secured by the property and these wrappers will usually offer you 15% or, if you want a bit more risk, 50 – 50 on the profits over the life of the wrap.

Good luck.

Cheers, Paul