G’day
I’ve been wondering with all the finance options available to day are there still people around that would want to take advantage of a wrap ?The example given in the book and on the fast track tape is of a business woman who could not get traditional finance. But that was then and now days, as I have just experienced whilst investigating the refinance of my house, there are a myriad of finance options available to such people.
So who else would still be interested in a wrap ?
Or would there still be plenty of business people wanting a Wrap ?
Richard
Hi Richard,
There are still plenty of people who can’t get finance for all sorts of reasons. For example we have a property with tenants in place who want to purchase their own home but can’t get finance despite using a good broker. We are currently looking into doing a vendor finance deal to help them buy our IP.
Just one example from my own experience.
Kind Regards,
SonjaMany can now get finance, but the rates and conditions can make taking up a wrap cheaper.
eg. a 90% low doc loan with GE. The rate is about 10.65%, you must still put up 10% deposit, plus they have huge upfront costs and exit fees. And then there are the postcode restrictions.
All this makes wrapping look good, esp if you will be charged about 9.5%, with no exit fees.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Thanks for that javascript:insertsmilie(‘[exhappy]’),
May I ask then, is advertising with a classified add still the best way to get expressions of interest in a wrap ?Richard
Hi Richard
We’ve found the small classified ad to be our best form of advertising for our market (mainly homes in the $200K to $300K range). We continue to place all the properties we want to sell, via vendor finance, on at least 3 websites but in 18 months and 6 houses, we haven’t had an enquiry from any of the websites.
Websites might get a better result for a different demographic, e.g. inner city apartments but that’s just a guess.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Originally posted by RichardRoper:Why would any body Take up a wrap ?Perhaps for hedging reasons? If the house appreciates in value they can pay out the wrap and refinance, but if the house loses value they can walk away, leaving the vendor with the negative equity much more easily than they can with a bank.
And if the vendor persues them for losses, it’s ‘Hello, I’m Naomi Robson. Tonight we feature an unscrupulous preditor making millions selling overpriced houses to ‘Aussie Battlers’ at repayment rates they can’t afford to meet….”Cheers, F.[cowboy2]
Firstly there are many reasons why people enter into wrap contracts and acceptability by the conforming or non conforming lenders is only one of them.
The current market and range of lenders has seen no slowly in the demand for wrap and license to occupy based products.
Secondly never buy a property with a view to wrapping it let the wrappee choose the property and then you take over the negotiations and buy it on there behalf.
This way you never get left with a property that you cannot onsell and secondly the wrappee gets a house they wish to live in and have chosen rather than one you have for sale and they only enter in the contract because of the wrap conditions.
Cheers Richard
[email protected]
http://www.yourstatefinance.comIP funding and US property finance
our specialityRichard Taylor | Australia's leading private lender
Originally posted by foundation:Originally posted by RichardRoper:Why would any body Take up a wrap ?Perhaps for hedging reasons? If the house appreciates in value they can pay out the wrap and refinance, but if the house loses value they can walk away, leaving the vendor with the negative equity much more easily than they can with a bank.
And if the vendor persues them for losses, it’s ‘Hello, I’m Naomi Robson. Tonight we feature an unscrupulous preditor making millions selling overpriced houses to ‘Aussie Battlers’ at repayment rates they can’t afford to meet….”Cheers, F.[cowboy2]
Rather than persue them wouldnt you just try and get new tennants, perpaps offering them the wrap deal as well? The way I see it (and I’m probably missing something because I’ve never done a wrap deal) is that the tenant paid a deposit and then would have been paying his repayments (a percentage point or two above your mortgage figure) and that if he walks away from the deal he forfeits the deposit and any payments made.. so you are still ahead, but simply have the cost of going back to a property manager to try and find another tenant?
Thanks everybody
very helpful [exhappy]Richard
ather than persue them wouldnt you just try and get new tennants, perpaps offering them the wrap deal as well? The way I see it (and I’m probably missing something because I’ve never done a wrap deal) is that the tenant paid a deposit and then would have been paying his repayments (a percentage point or two above your mortgage figure) and that if he walks away from the deal he forfeits the deposit and any payments made.. so you are still ahead, but simply have the cost of going back to a property manager to try and find another tenant?
> There are two thoughts on this. One is to buy the house and the advertise and find a buyer, the other is find a buyer then get the house. Both ways can have their merit, and I know succesful wrapers who use both strategies. Of course once you’ve got the house and the wrapee leaves then it’s just find a new wrapee.
The real benefit of finding a buyer is that there is no down time, by that I mean you don’t have an empty house with a mortgage to pay.
Hellman
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