All Topics / Help Needed! / A bad wrap for wrapping

Viewing 6 posts - 1 through 6 (of 6 total)
  • Profile photo of L.A AussieL.A Aussie
    Member
    @l.a-aussie
    Join Date: 2006
    Post Count: 1,488

    Hey people,
    just saw this little snippet in the Barefoot Investor (Herald Sun, Melb);

    "Hot Property, Cold Strategy

    I recently wrote about a wealth creation guru called Rick Otton, who specialises in a spruiking strategy called wrapping (sometimes referred to as vendor financing).

    Consumer advocates have labelled the strategy predatory property lending.

    This hasn't stopped super salesman R. Otton who "helps out first homebuyers" on Channel Seven's prime time hit Hot Property tomorrow night at 6.30pm."

    [email protected]

    http://www.barefootinvestor.com.au

    There seems to be gathering unfavourable press; any thoughts?

    Profile photo of Kiwi-FullaKiwi-Fulla
    Member
    @kiwi-fulla
    Join Date: 2002
    Post Count: 371

    All is in the eye of beholder….

    If you come from the side of the finance system that can get finance …. then it is hard to understand…. but if you put yourself in someone elses shoes that doe not have the opportunity …. then things change.

    Really if you think about it … it is like going into business and having to pay top interest (14.6% and higher- as it was in my case)… to take the plunge into business…. because the banks did not like the risk even though credit ratings were impecable.

    If you have all the facts …. then you make a decision to either do it … or not :o)

    I do this in NZ and I find that as long as you give full disclosure…. and have integrity …. and a good system to qualify potential buyers….. then I feel it is a service that very few do …. and those that do not do it well …. get burned in the press.

    Happy investing

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi Marc

    My guess is there'll be more of this type of comment once the show goes to air.  People doing something different always seems to challenge the entrenched vested interests.

    I'm sure our past clients, who have used our finance for anywhere between 1 to 3 years and then moved into traditional finance would love challenge the Barefoot Investor's point of view.

    Cheers,  Paul

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

    An alternative way to finance your home.

    Profile photo of L.A AussieL.A Aussie
    Member
    @l.a-aussie
    Join Date: 2006
    Post Count: 1,488

    Yes Paul,
    It's a pity there are not more tv shows which focus on the success stories of wraps. I guess there are no ratings in that.

    Profile photo of kum yin laukum yin lau
    Member
    @kum-yin-lau
    Join Date: 2006
    Post Count: 342

    Hi, can any of you help me out with lease options? I own 4 new houses, have moved into 1 of them out of desperation & can sell 3 of them. The problem is the GST & tax on profit take out half the total profit.

    If I hold them for rental for 5 years, the -ve gearing wipes out a lot of the gain, though we don't know how much growth we can get in 5 years. my guess is another $30000 per house.

    My major concern is the maintenance bill in 5 years.

    The rent to own option will take care of 2 problems, the cashflow & maintenance.

    I'm prepared to pay the fee to someone who can organise the deals for me. I'm in Adelaide.

    Btw, there's no problem letting the properties.

    Thanks,
    Kum Yin

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196

    Hi Kum

    If you were in any other State except South Australia, I'd suggest you sell 1 or 2 of your properties via a Wrap or Lease Option, so the positive cash flow from the sale of this property(s) covers your negative gearing.

    Unfortunately selling real estate in SA with an Instalment Sales Contract (Wrap) is illegal in SA and new SA legislation has effectively stopped the sale of property via a Lease with an Option (Rent To Own).

    However, as far as I know, you are allowed to use the Second Mortgage Carry Back technique in SA.  The sale of 1 or 2 of your properties, using this technique, may generate sufficient positive cash flow to improve your situation.  Good luck.

    Cheers,  Paul

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

    An alternative way to finance your home.

Viewing 6 posts - 1 through 6 (of 6 total)

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