Deposit finance deals – Are they dead???

[jcso99Participant@jcso99Join Date: 2005Post Count: 95]

June 12, 2012 - 7:22 am

Dear,
My name is John So and I enrolled in David and Julie Siacci’s vendor finance program last year. Since completing the program, I have tried to search and look for cashflow positive deals in and around Narre Warren and surrounding suburbs in Victoria (my strategy is to focus on deposit finance / rent to own / installment contracts) but to no avail. Given that I am working in China, I am working with a business partner in Melbourne and we have tried to contact agents, mail dropouts in our target areas (being Narre Warren and surrounding suburbs) but we are yet to hear any form of feedback from our activities. I have also engaged a buyer’s advocate (paid him 1K upfront) to source for cashflow +ve deals for me in the target suburbs but he hasn’t come up with anything meaningful for the past 2 months.

I feel that I am not doing enough so I am asking if anybody on this forum will be willing to act as bird-dog for me in sourcing cashflow +ve deals in Narre Warren and surrounding suburbs. What I am asking for:
– Vendors to provide deposit finance for 2 years, OR
– Vendors to JV with me where they provide the property and I have full right to property for at least 5 years, during which I
have right to sub-let the property but ownership remains with the vendor

I am flexible with deal structure and looking forward to hear interest ideas from you soon.

Cheers
John

[Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,024]

June 12, 2012 - 7:56 am

John i have responded to your emails / posts on a number of ocassions in regards to the financing of such deals.
 
There is no lender / mortgage insurer in Australia that will knowingly lend to an investor who in turn intends to onsell the property by way of an installment contract.

This also goes with Vendor assisted deposits which are not disclosed.

We do all of our Vendor Finance applications on a Commercial basis thru 2 of the big 4 lenders and this is done with the complete knowledge of the lender of what we are doing. The applications are processed thru the State Office credit department with full compliance and disclosure.

Doing the odd deal here and there will not get you anywhere you need to do it as full on business.

Cheers

Yours in Finance

Richard Taylor | Australia's leading private lender

[jcso99Participant@jcso99Join Date: 2005Post Count: 95]

June 12, 2012 - 10:09 am

Hi Richard,

I acknowledge your point. The kind of deals that I want is for vendor to assist with 20% deposit and as you previously suggested, I will disclose it fully with the lender that the vendor will provide finance on 20% deposit for 2 years. However, I am struggling to find deals like that in the Melbourne market and all buyer’s agents that I talk to are saying that these type of deals do not exist. Is this really a out-of-whack requirement in the current market?

Any feedback is welcome. Thanks

Cheers
John

[mattstaParticipant@mattstaJoin Date: 2011Post Count: 604]

June 12, 2012 - 11:04 am

I found some vendor finance for deposits on realestate.com.au… but they were quite rare and in NSW …. you're criteria of narre warrne might be very strict

[Paul DobsonParticipant@pauldobsonJoin Date: 2003Post Count: 1,196]

June 13, 2012 - 12:44 am

Hi John

I agree with Richard, i.e. the chances of you picking up the deals you're looking while you're out of the country are remote.  Most buyers agents will not have sufficient knowledge of vendor finance to talk a seller or agent through the process.

As an example, here's an overview of the last Deposit Finance transaction we did. We watched the price drop on a particular property until we were satisfied with the asking price.  When you are wanting to buy with Deposit Finance, you are asking for Terms, so we don't negotiate on Price.  It's hard to get both.

We caught the Agent's attention by letting him know that we would offer the asking price, if the vendor could accept 80% of the money now and 20% later.  The Agent said that he 'got that' and would we put it in writing.  We did and the vendor accepted a small monthly principal payment, with a balloon after 5 years, with no interest, for the outstanding 20%.  We on sold it with an Instalment Contract.

Getting a transaction like this setup remotely is a major challenge.  It may be best to forgo some profit in the first and maybe second VF transaction by doing a JV with an experienced vendor financier.  It will get you started, you should make a reasonable return and you can think of it as 'on the job training'.

Also, it came as a surprise but we have just found a second tier lender that will do Deposit Finance again.  

Cheers,  Paul

Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone Me

An alternative way to finance your home.

[John MaxwellParticipant@john-maxwellJoin Date: 2010Post Count: 30]

June 13, 2012 - 4:50 am

I agree with the comments …. to achieve complex deal required ‘excellent communication skills’, excellent knowledge and expertise, and face to face meetings to build a relationship and create a win/win result. If you can understand what the vendors needs are (this includes their pain/ problem) then you can focus on meeting their needs within your needs to close the deal. It must always be built on a foundation if integrity or it wont work. Hope this helps …

[jcso99Participant@jcso99Join Date: 2005Post Count: 95]

June 13, 2012 - 6:22 am

Hi all,

Thanks for all your feedback. Re the deal structure, I am happy to pay the full asking price but the vendor needs to provide 20% deposit finance for at least 18 months and then allow me to on sell it on instalment contracts. If anybody can help with my situation or willing to JV with me, please let me know. Appreciate your help in advance.

Cheers
John

[jcso99Participant@jcso99Join Date: 2005Post Count: 95]

June 13, 2012 - 11:56 am

Hi Paul and all,

Thanks for guidance. Can you please PM me and we can have a discussions offline.

Cheers
John