Hi all, as I am relatively new to investing, although I have been interested in property for many years, I have now decided to be more serious…
I wonder if anyone will post on here real examples of deals they completed using vendor finance, IC or other, when either buying or selling..
I am considering converting my PPOR into a vendor finance sale as we are building a new PPOR, but then I will need to look at buying using vendor finance for a while, as I will be at my limit with the bank, and have another property -ve geared, which will be converted to a VF sale next year at the end of the tenancy.
I just wanted to see some examples so I can get my head around how it works. I understand we may need to be a little creative in this area..
Look forward to seeing some deals so I can try and convert to my situation..
Here are some for a property in Brisbane's northern suburbs, Deception Bay.
Purchase Price – $180,000 (this property was bought at a deep discount)
Sold with an IC for $250,000 with an 8.05% interest rate
Total Profit in transaction – $70,000
Positive cash flow per month $420, after ALL expenses
After 2 years the VF buyers sold the property for $322,000. They made $72,000. Not bad for not having much money to get started but putting in some hard work to fix the house up.
Cheers, PaulProperty TraderParticipant@property-traderJoin Date: 2002Post Count: 111
Based on your comment of "as I will be at my limit with the bank," if you go to get serious about property investing and are looking for a vendor finance, you'll need to seriously look at how you are going to fund your property acquisitions in the future. You can either do what is called sandwich lease options (is a bit of a minefield doing it that
way) or take on joint-venture partners to build your business. In partnerships, however, you are giving away 50% of the profit. Just something to consider when doing vendor finance hot deals.
Hope this helps.
Couldn't agree more with Jason. We started the lazy way That is, we had equity in our home and used that to buy some properties that we then on-sold with VF. Of course, you eventually run out of money and that's when you really learn how to run a VF business One of our great learning points as we went along was realising just how flexible joint venture agreements can be.
Thanks for your thoughts Paul and Jason. I am serious about investing and my mind is boggling. My 1st step is to try and sell our PPR whilst we build a newer down sized PPR. If it doesn’t sell then I will look at selling using VF. Although this will still leave us with a big mortgage, yet with some +ve CF to assist. I then will look at my other investment which is only 3 months into a 12 month lease, to put that on VF closer to the time. Creating CF is my 1st aim, then buy and hold… Would love to find a local mentor to assist as 50% in a JV is quite high don’t you think?
Yep 50% does seem quite high but our Investors have still been getting an annualised return of approx 20% on the funds they contributed to the JV.
Some then go off, having learned how to do it and go solo. No sharing then Some just like the return and do another JV. One of these investors has told me that he'd rather make a profit on his VF education.
Others have done the long weekend training, not felt confident when Monday morning rolled around and done a JV with us as a profitable, confidence building process.
Do more research and think about how self motivated you are. With that realisation you should be able to chose, (a) a long weekend of training, followed by a lot of self motivated action, (b) a JV or (c) a combination of both.
If you do end up selling your your PPR with VF, it may be worthwhile getting a WA VF'er to help you with a negative2positive.
Me again, thank you for that feed back, I am motivated, but also realize there is more to it than just getting an offer, or coming up with the win win figures in the 1st place. I see that 1) I need an ACL as I understand it, I know I then need to find a lawyer to draw up the contract, find a tool or similar that will calculate interest payments, etc etc. Work out how to do credit checks. The list goes on..
I know once I have done it once or twice I will be able to fly with it, I manage my own business, with clients and books, include payroll for a couple of casual workers, and am a very competent person (if I do say so myself) .
As far as selling with A VF’er in WA, do u guys have some one in WA or recommend anyone?
Also, with the 50/50 thing, does that also include 50% from the sale proceeds? Ie say I purchased something new for 380K and we agreed a sale price of 420K, does the JV partner get half? If so, how would this work with our PPR? Would I remortgage that to it’s max before heading into a JV, as all of our equity is sat on that property?
Thanks again. Just going to check your negative2positive sight out.
Just answered my own question regarding the JV split!! Having now read your negative2positive… So another question, I assume we have to go on today’s market prices, when looking at resale, even tho this is under what we paid for the house itself? How much can you add for resale to a new buyer under VF, as oppose to in a normal purchase agreement? What kind of deposit would you ask for a property worth 650K?
Thank you”……… Again
Hi Paul, we paid 670K for the property, and have spent about 20K putting boundary fence, aircon upstairs and down, plus window treatments in some areas…
We currently have approx. 270k equity based on that price..
We bought 3 years ago… Look forward to some clarity.
Thanks for those details. Based on your other posts I'm presupposing the current market price of the property is $650K. On that basis I'd probably suggest you market it for around $682K, i.e. about 5% above market.
The deposit level needs to be flexible as you may get some high earners but they often have very little deposit. Ideally I wouldn't want anything less than $20K but I might have to accept less if the prospects have strong serviceability.
Get well soon.