Hi Akira,

The First Home Owner’s Grant is an incentive introduced by the Federal Governemnt and acts as a subsidy for genuine first home owners.

The grant currently sits at $7,000.

The FHOG legislation allows the grant to be payable in vendor finance / installment sales contracts with varying conditions depending on the State that you live in.

In Vic & NSW, the grant is payable when the person moves into the property, which allows the investor to receive back an immediate cash injection and reduces the nett amount of money left in the deal.

If the person moves out of the house then it is his / her responsibility to pay it back.

I usually take the FHOG as my lead’s deposit, which is how I am able to offer what I do for people without savings.

As far as more information on wrapping goes, visit:

https://www.propertyinvesting.com/files/content.asp?cid=wrapintro

Bye

Steve McKnight

Hi,

You can do absolutely anything that you want when you have the vision and energy to do it.

You can certainly do wraps out of town, but only when you have the systems and procedures behind you.

The system that I use is well explained in my Wrap Library.

Regards

Steve McKnight

Hello Camilla,

I thought that I would do some research on this topic for you…

The Reserve Bank

The Reserve Bank of Australia is an independent organisation to government and is charged with the responsibility of settling monetary policy.

Monetary policy is the way that an economy can be stimulated or restrained by affecting the price of money. In times when spending needs to be constrained then the cost of money increases – when stimulation is needed, the price of money falls.

The Reserve Bank of Australia controls monetary policy via setting a key benchmark interest rate called the ‘Cash Rate’ – which is the rate generally applied on overnight money markets.

Lenders then take the base case rate and add on a margin when setting home loan interest rates… so as the Reserve Bank changes the cash rate, so too do lenders who price their loan products at the cash rate + % margin.

An excellent link to show how the cash rate has moved since January 1990 is: http://www.rba.gov.au/Statistics/cashrate_target.html

Changes To Interest Rates

Movements in interest rates must be ratified by the Reserve Bank of Australia Board. The Board consists of nine members and meets generally 11 times per annum on the first Tuesday of each month.

Monetary policy is discussed at these meetings and movements in interest rates are generally announced on the day after the meeting.

Once a change is announced then it may take a few weeks for lenders to pass on the movement as they must also manage their internal credit risk and mix of loans:deposits.

Advising Wrap Clients

Provided you run your wraps under a system, advising of changes to interest rates is not a administration problem at all… it’s just a standard letter to each wrap client. Less than ten minutes work.

I hope this has helped.

Bye

Steve McKnight

Hi Rod,

Interesting post…

My thoughts are that there are plenty of people who are interested in wraps. As such, people may disqualify themselves for any number of reasons – such as a prior criminal history, poor credit history etc.

It’s nothing personal, but I would just say that the risk is too high for the return and then turn my attention to helping other people.

Re: your idea about not putting them on the policy… BAD IDEA! If something was to happen then you can bet the insurance company will find out about it and deny the claim. That’s a risk that I wouldn’t want to invest with.

I think that if you must wrap to these risky leads, then it can only be done so on the basis of full disclosure to an insurance company under the guise of expecting to pay a higher premium. Perhaps go to insurance brokers rather than a company, since I’ve heard of some brokers who are experts at high-risk deals.

Bye

Steve McKnight

**edited to fix up a few typos**

Edited by – [email protected] on 08/08/2002 10:45:09 AM

Hello Alison,

Thanks for making your first post and welcome to the forum… great to hear from you []

When it comes to qualifying wrap leads you need to understand that you are not just dealing with “bank rejects” and as such a poor credit risks.

There are lots of people who would be great clients but the major lenders have ignored… self-employed, older persons, high income earners but no savings, ex-bankrupts that went under for personal or domestic reasons (divorce etc.)…

Now as for qualifying leads… the 10 critical questions that I ask, which are outlined in the Wrap Library, all focus on trying to determine if the lead is someone with a victim mentality.

If they are then I won’t go further as from my experience these are the people that will default later on when some other need becomes more urgent (like a new phone etc.)

Hope this has helped.

Once again… thanks for your post.

Bye

Steve McKnight

Hi Nick,

Thanks for your feedback and thanks for making your first post… I hope to ‘see’ more off you on the forum…

I think that you make a fantastic offer… anybody in Queensland looking for a wrap lead? Perhaps you’d like to leave your e-mail address in a post too.

To protect people’s privacy / e-mail addresses we have recently taken away the ability for people to e-mail directly.

Regards,

Steve McKnight

Hi,

What I’m going to reveal is the way that I have been able to secure unlimited finance using a relatively simple structuring system.

In fact… I’m doing the notes for it right now!

See you at the seminar!

Bye

Steve McKnight

Hi Felicity!

How are you?

Thanks for your post… let’s see if I can provide some answers…

Buying Property

If all ABC P/L is is a trustee coy for the ABC Family Trust, I’d just buy the property in the name of ABC P/L. The rest is fine to include, but I think that it is generally unnecessary if the Trustee only acts for one trust.

Multiple Families in One Trust

This is generally not a good idea for two reasons:

1. If your trust makes a loss then because you have multiple families in the trust then the complexity of administering the trust increases dramatically.

2. What happens if you have a fall out?

A better option to discuss with your accountant may be a partnership of 2 family trusts… this has its advantages and disadvantages too.

You could buy the property in the partnership name and the profits would wash down 50:50 to the two trusts.

Perhaps you might also consider a unit trust with the units owned by your family trusts if the partnership idea is not appealing. Property purchased in the unit trust and profits shared based on unit holding (50:50) which flow back to your family trust.

Bottom line… seek accounting advice.

Other Agreements

This would be wise. David and I have a partnership agreement. Perhaps also a ‘Heads of Agreement’ that spells out the relationship and the obligations of each party might be wise.

My comment here is that it’s wise to have something documented… not for any good times, but just in case things get ugly.

Hope this has helped.

Bye

Steve McKnight

Hi Chris,

How are you and Louise travelling? Hey – I’d love to know Louise’s thoughts on the big grizzly bear that’s rocking the stock markets at the moment…

Anyway, about the calculator, remember there are many online tools which I have summarised of Property Investing.Com members in the links section of this website.

If you are after a hand held one for on the road, then a good one (although a bit complicated to work) is the Texas Instruments BAII PLUS, which is available at Officeworks for $80. Click on the ‘Officeworks’ link to open up the relevant web page and then the ‘Product Features And Image’ link for more info.

Best regards (as always),

Steve McKnight

Hi Mark,

On my deals I do 80% LVR.

I could go higher but I find my long-term access to funds drops off as lenders feel I am too highly geared.

At the seminar there will be a lender who I understand can do 90%+ LVR on wraps for certain clients.

Be there or miss out!

Bye

Steve McKnight