All Topics / The Treasure Chest / Wrapping High Value Properties

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  • Profile photo of MatthewKellyMatthewKelly
    Member
    @matthewkelly
    Join Date: 2002
    Post Count: 17

    Hi All,

    My friend has asked me to post this for some feedback. He currently has a waterfront property (North of Sydney – gestimated value >$1M) for sale and following a discussion with a guy who also wraps properties (Not Steve – No offence mate)he suggested that my friend ‘wraps’ the property to achieve his selling price. Has anyone seen / done / heard of properties being wrapped at this value? Is their a limit that residential property can be wrapped too?

    Any thoughts, comments ways forward would be appreciated.

    Thanks
    Matt Kelly

    Profile photo of Tracie_2Tracie_2
    Member
    @tracie_2
    Join Date: 2002
    Post Count: 6

    Hi there,

    My humble opinion is that if someone can affort the repayments on a 1m plus property then they would be able to get bank finance. If you could get bank finance would you pay more for a property and pay a higher interest rate at that?

    I think that the majority of a wrappers “Market” is a group of people who cant get finance and/or can’t afford huge repayments.

    I could be completely wrong, but these are my thoughts!!!!!

    Tracie[:)]

    Profile photo of MatthewKellyMatthewKelly
    Member
    @matthewkelly
    Join Date: 2002
    Post Count: 17

    Thanks for that Tracey [^]. I see your point however, the gentleman talking to my friend said that there is (believe it or not) people at that end of the income spectrum who can’t get bank finance because they don’t ‘fit inside the parameters of the bank’s lending criteria’. I agree completely with what you’re saying but I posted this for my friend and he will be able to decide whether this is going to be an option for him.

    Thanks, anyone else have thoughts / comments?

    Regards,
    Matt[^] I’ve just learnt how to use those face thingy’s. Quite fun really….

    Profile photo of montomonto
    Member
    @monto
    Join Date: 2002
    Post Count: 8

    If the spread is 2% the wrap buyer will have to fork out additional $20000 each year (or $384 a week) on repayment based on the sell price of 1 mil. Your friend would need to consider if this is the price someone will want to pay to own the property rather than to just rent another place like that for $500 less a week. (Yeah I know for someone who can afford to buy or rent such a place money is the last thing they care about.)
    I once read somewhere that if you have a property worth 100K, 9 out of 10 people can afford to buy. If the property is 1 mil, only 1 out of 10 people can afford and the market is smaller. If you put wrap into the equation there may only be 1 out of 100 people who would be interested in a 1 mil wrap deal, and only 1 out of 500 might actually do the deal at the end.
    I am sure any deal is doable, just how much time and effort it will take to pull it off. If your friend doesn’t have a mortgage pressure under this property and if he can afford spend many months trying to find the right buyer, it may be something fairly profitable.
    Just my 2 cents.

    Profile photo of MatthewKellyMatthewKelly
    Member
    @matthewkelly
    Join Date: 2002
    Post Count: 17

    Thanks for the feedback monto!

    I’ll pass on this info to my friend.

    All the best,
    catch ya all at Mlb!
    Matt [:D]

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi

    I can’t see why you couldn’t wrap at the high end of the market. There would be people who could afford the high rent, but couldn’t afford to borrow to buy such a property. For various reasons they don’t want to live in cheaper houses which they could afford.

    The highest valued property that I know of being wrapped is about $300,000 with a interest spread of 3% and a markup of about $30,000 on price. The wrapee was a restaurant owner that had just divorced and therefore didn’t have the deposit, but still had high cash income!

    Terry

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of ADAD
    Participant
    @ad
    Join Date: 2002
    Post Count: 636

    Hi all….long time no post

    My thoughts on this one are …why not???

    You have to rememebr that people we are wrapping to are those who cannot get standard finance for various reasons. One of those may well be bankruptcy, etc. Now I don’t know about you but I’m sure Mr Bond still had the cash to buy a place even after being bankrupt. There are a few of these sort of people out there and they would probably love the oppportunity to buy a house.
    What a deal that would be…..

    Enjoy

    AD

    Stumbling blocks are merely stepping stones for the successful.

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