All Topics / The Treasure Chest / Which price range of property to wrap

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  • Profile photo of IBIB
    Member
    @ib
    Join Date: 2002
    Post Count: 6
    January 22, 2003 - 12:38 am

    If getting deposits together is an issue,
    would it be better to attempt to wrap more
    cheaper properties (ie $45k properties in tassie)
    or wrap fewer larger ones.

    It seems to me that the win/win idea of the repayment costing less than rent is easier to achieve the less the property costs.

    Should I be aiming to get going in the cheapest possible viable area?

    Any tips would be appreciated.

    Thanks
    IB

    Profile photo of BelladonnaBelladonna
    Participant
    @belladonna
    Join Date: 2003
    Post Count: 12
    January 22, 2003 - 1:11 am

    Hi IB

    I’m a newbie to all this as well but I think you’re on the right track wrt acquiring lower priced properties as +ive cash flow investments. It’s virtually impossible to recover more rent than the cost of the mortgage repayments & expenses once you get over a certain amount.

    My trouble has been finding the little blighters… everything I’ve seen so far is very unappealing (i.e. I wouldn’t want to rent it if I were a tenant) or ready for demolition! Takes a lot of hunting around to find a good one.

    I’m sure I shall be corrected here but I think you might be confusing two issues here – +ive cash flow properties and wraps. A property doesn’t have to be wrapped in order to be a +ive cash flow property… and to my knowledge by their nature if you are wrapping a property to someone else it is +ive cash flow because you are paying the lender at a lower interest rate than the buyer is paying you as the financier of the wrap deal. At least I think that’s how it works… my big wonder is how to entice someone into a wrap deal if they can just as easily get finance through non conventional lenders at equally inflated rates? What is the incentive for the buyer I wonder?

    Profile photo of IBIB
    Member
    @ib
    Join Date: 2002
    Post Count: 6
    January 22, 2003 - 2:53 am

    Belladonna,

    My thinking is that positive geared property is very uncommon, and not without risks. I think our rental yields are just too low in general.

    Say something needs fixed – such as replacing a roof for $5,000, that would wipe out a whole years rent on a little cheapie.

    Hence the attraction of wraps.

    I am aimint to wraps for cashflow, and to park the cashflow in good long term highish yield property.

    IB

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