I am new to vendor finance and an very interested and learning the ropes quickly, as these deals appear to have been main steam for quite a while now I fear I may have missed the boat…
With the broad range of lenders & brokers out there fighting for business it appears to me that obtaining finance is one of the easier aspects of my life. The obvious question is who need wrap services when traditional finance is so easy to obtain ?
Questions for brokers:
======================
Do you have clients that you are unable to obtain finance for, is it a common scenario or once in a blue moon for good reason ?What types of scenarios do you have where applications are declined ?
Questions for investors:
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Are you still wrapping or has the boat sailed many months ago ?What are the types of scenarios where your clients were unable to obtain finance from a broker ?
Thanks
p.s. any other insights into wrapping in todays world would also be appreciated.
There are plenty of people out there unable to get finance. Having minor defaults on your CRAA can mean you need a larger deposit (and larger interest rates), many people do not have this. Even if they had the 10% deposit, some low docs have rates higher than a wrap would be. eg GE is nearly 11% pa. most wraps are around 9%, and this is with a lower deposit.
Terryw
Discover Home Loans
Parramatta
[email protected]
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Mc
We are still wrapping and finding plenty of people out there who are wanting to buy their home via an instalment contract (wrap). We definitely don’t think the boat has sailed.
Terry’s explanation in his post covers the movivations of most wrappees.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
I am with Paul the boat hasnt even come ashore yet.
We settled on the possession of more installment contracts in October than this time last year and more than for Jan / Feb 05 put together.
Keeping up with the demand is half the battle at the moment.
Cheers Richard
Ph: 07 3720 1888
[email protected]
http://www.yourstatefinance.comSpecialising in US & IP finance.
Richard Taylor | Australia's leading private lender
Hi all
I am just starting to do rent buys and vendor finance type deals in SE Qld. I have spent a lot of time (and money) advertising for buyers in various newspapers, along with adverts on notice boards in supermarkets, shop windows etc. I have also spoken to my mortgage broker, accountant, and solicitor asking for referrals. So far I have only 2 positive buyers wanting to buy a house, and the time isn’t quite right for them at present to proceed. Sometimes my advertising (and I change my ads) attracts no response. I know there are lots of people that cannot obtain bank finance, but where are they? Can anyone give me some tips on finding more buyers, other ways of advertising etc that I have overlooked. How do you experienced wrappers attract buyers?Thanks
SwampySwampy
Not sure which part of SE Qld you are in or advertising for business but we certainly are receiving many enquiries.
As Terry mentioned the non conforming market is booming and many clients find they can’t meet traditional guidelines. try some of the regional areas where prices are no so high and competition is less.
We have only eve taken introduced business or from our advertising and now only take business from 3 introducers in Qld and non of them are in Brisbane.
Keep at it mate the demand is there and the exercise profitable.
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
I too am getting many queries in Sydney but do not seem to get people to commit. Perhaps my prices are too high. I am looking at a$30k markup on the closing property price (a $300k property offered to the wrapee at $330k) and a 2% premium on the interest rate. Is this unreasonable? What margins are successful wrapers charging?
Cheers
PyramidCertainly i don’t think your mark up is too high given the stamp duty costs in NSW but in saying that i would never wrap a property at $300,000.
Up until recently our maximum loan was $175,000.
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
Richard
The problen in Sydney is that the lower end properties (houses) are already at $250-280k. After closing costs (stamp duty, conveyencing, wrapee mark up, etc) they come close to the $300k range.
[glum2]pyramid
Another good reason to wrap in the Sunshine State – lol
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
l’m not a wrapper but l was forced to buy my first house through a wrap loan so l made damn sure it was a bargain with plenty of leeway [ $70,000 ] , so that l could fix it up and still resell with good profit which we did . So l think wraps are a good thing in helping people get started . But , l can’t understand how anyone who can’t get finance can pay a $300,000 wrap , the repayments are so high and if they can repay that sort of repayment they should be able to find a normal mortgage .
Cheers
MkcMkc
Probably the major issue would be deposits. Many would not be able to come up with 5%+ needed. If they also have bad credit, this would mean a much larger %.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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