You could get a mortgage on the current property, using a no doc loan – no questions concerning income are asked. You could get $344,000 and use this as cash for the deposit for the second. You would then get another No Doc loan for the second one for 65% of the value, $475,000 = a total of $819,000 which should be enough to cover your expenses as well.

I assume you would rent out one property to help with servicing until you could sell the original one. Anyway, it would be a temporary situation, so is not a major drama, but these things tend to take longer than expected.

Terryw
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You haven’t factored in costs such as rates, repairs, agents fees, accounting etc.

These would be claimable, as would borrowing costs (over 5 years) and depreciation on fixtures and fittings and building (depending on age).

this would probably be negative cashflow even after tax breaks.

Are the capital growth prospects high? If not, why buy?

Terryw
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I think Steve and Dave setup trusts where both were directors or the trustee companies.

Terryw
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Rob, Yes for commercial second mortgages, but we’re talking vendor financing here. ie where the vendor lends the deposit to the purchaser and takes a second mortgage as security.

Terryw
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There are various ways to deal with defaults, not all involving courts. You could just let them out of the contract, if no equity, or you could chase them for the rest. If there is equity, then they could sell, renegotiate the loan term, or you could offer them cash settlement etc.

If they want to sell, that is ok. They just organsie a simultaneous settlement, settling with you and then immediately with the new purchaser. This happened to one of mine, and they made more money than I did.

There is another recent post here about a dfaulting wrapper. I think it the the ‘SMH article on wrapper’ post.

Terryw
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Must be a statement as there was no ‘?’ !

Terryw
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I think the major stumbling block would be the fee charged by the credit card company (2-3%), if the agency is prepared to wear this then it wouln’t be a probably – as long as they had the facility.

Terryw
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Why do you want to get rid of this? Sounds like you won’t be making hardly any money on the wrap. maybe better to just sell?

Terryw
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A friend recently had a place demolished in Sydney. He paid $10,000 cash.

Terryw
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I beleive lenders could pull the loan. ie give you x days to repay the loan. This happend recently to a big ‘wrapper’ (allegedly for other reasons than non disclosure). Dig out some of those old mortgage agreements that you have and read through it.

I have an old one here, from a bank i won’t name (start swith an A and ends in a Z – with a N in there somewhere).

it states:

I will not do ….. grant any rights of any kind over the property.

And then, states the borrower will be in default if any of the provisions are breached. The bank can then do anything deemed necessary, including taking possession.

Terryw
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