Forum Replies Created
Hi Steve,
I have just started reading your book, and was delighted to hear in your ‘Acknowledgements’ of your strong faith, which I also share. I am hoping to build a property portfolio like yours because I am seeking to finance a children’s charity which I started in Sydney four years ago and still run. Is it possible to speak with you about this?
MandySpecialising in leads for positive cash flow properties, and wrap deals (buyer plus house) – email [email protected]
Dear Mark,
Thanks for pointing out this unhelpful article. Lucifer, you alluded to the need for us to perhaps write some articles so I decided I would. I sent this to the Editor of the paper:Dear Editor, I am disturbed by what seems to be your unbalanced reporting of Vendor Finance arrangements, or ‘Wraps’ in your article ‘Government Wise to Dodgy Property Deals’. While I have not participated myself in providing these or buying using this method, I have studied its development closely, and I see this kind of vendor finance as having an important place amongst home-ownership options. Your article seems to imply condemnation of ‘wrappers’ who buy at standard bank rates then lend at 2% more. These wrappers are covering increased risk, and as such it seems to me to be normal financial practice in terms of the ‘risk vs return’ ratio. Perhaps more to the point, though, is that the well known non-conforming lenders would be charging a further percentage point or two, resulting in a really high-risk situation for the borrower, which often sets them up to fail. It is a relief indeed that there is now a ‘middle of the road’ option that doesn’t either preclude these compromised borrowers completely, or else charge them an unjustifiable rate of interest. Furthermore, my study indicates that vendor finance arrangements offered by these usually small businesses are more flexible with regards to the needs of the borrower and not as ready to foreclose without any consideration as per the reputation of the large non-conforming-loan corporations.
I am also disappointed by the very inadequate analysis of the situation provided by Neil Jenman. He calls vendor financing ‘pure exploitation’ and states that these borrowers ‘cannot afford a loan’. This is too simplistic by far, and completely ignores the circumstances of people who, for example, have no deposit, or no savings, or irregular income, or a default on their credit file, or who may be discharged or undischarged bankrupts. It is superficial to assume that because they are in this situation they have no ability to repay, as there are a myriad of events that can lead to any one of these circumstances. Many wrap deals that I have heard of have involved country properties where payments are less than or equal to city rents. If these potential borrowers have been paying their rent consistently over time, why shouldn’t they obtain access to lending that allows them to break out of the rent trap. I do not deny that there have been some unscrupulous wrap dealers who have given the industry a bad name, but please don’t throw the baby out with the bath water. Have we abandoned the great Australian dream? Surely we need flexible options like vendor finance now more than ever before as the dream slips away from increasing numbers of us. Please be fairer in your presentation of this issue, and don’t limit access to this wonderful opportunity by creating an air of distrust in the mind of the general public.
Sincerely,
(name)I wonder if it will get published? If so, it would be in edited form I guess as it is a bit long. As I am not in Melbourne, I won’t know, so if anyone who is can let me know if they see it, I would appreciate it.I hope it may help the cause anyway.
taurus
Hi Marc, just a few additonal thoughts i meant to say yesterday. As Pisces said, why incur stamp duty twice? Maybe financing the property to your daughter would be better on the basis of a contract. Also, meant to say that that house is brick, and i have no connection with it. Just found out about it on the weekend while doing some wrap research from local agents. It was more of an example than anything.
taurus
Hi Marc, You asked for practical ideas, and so i thought i would throw in that i know of a house available for around $290,000 with 4 bedrooms, only 5 yrs old at Bow Bowing. If you wrapped it to your daughter and chose to charge a less-than-usual percentage rate of say 7% they will only be paying $450 a week, there is depreciation in it and it will achieve capital growth as it is a good area for that over time. You said you want to move to Camden which is onyl half an hour away. Just a thought. I am new at all this. The trouble with getting a place with a granny flat to rent as a supporting income is not knowing who you have to share your backyard with. Some people will think this is much too ‘giving’ – handed on a platter. Whether a gift is useful or not depends on the people involved. For some people a gift empowers them and for others it supports unhealthy dependency and helplessness. you have to know the people involved to know what would be helpful. as for your other children, sounds simple but why not just ask them how they would feel about you giving a hand up to her. There can be a range of valid reasons why one person or couple hasn’t developed the same financial strength as another. Maybe, part time work was to do with being present for children. Would that there was more of that in our society.
taurus
taurus
Phil,
What do you think is the minimum %age return you should be looking to make on a +ve CF property? You said not 4 or 5%, so I am wondering how much above that it should be to be worthwhile. Also, is the %age the same whether it is a buy-and-hold or a wrap deal?
Thanks, taurus
taurus
Hi Mortgage Adviser – me again. Sorry, I just realised this is a lo doc discussion, so it must be! My first posts – still getting the hang of it!
mandym
Hi Mortgage Adviser –
Is that a low doc loan to 80%?
