All Topics / Finance / No Money Down Strategies?

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  • Profile photo of kong71286kong71286
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    @kong71286
    Join Date: 2009
    Post Count: 261

    Happy Chinese New Year Everyone, smiley

    Any investors here have much experience with 'no money down strategies', specifically Vendor Financing?

    Just noticed there is an increasing supply of positive cashflow properties in Australia, and was just wondering if there are any banks that would lend 60-80% of the purchase price, if the vendors were to carry back 20-40%?

    If so, is this something that can be applied to Discretionairy Trusts, and SMSF? I recall Steve mentioning something about going as Guarantor but don't quite recall all the details…

    Profile photo of TerrywTerryw
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    @terryw
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    In a SMSF it couldn't work if the vendor wanted to take a charge over the property.

    Other entities should be ok. But the problem will be finding a lender willing do lend on this basis. Last time I looked I could not find any main stream lender. But that was a few years ago.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Paul DobsonPaul Dobson
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    @pauldobson
    Join Date: 2003
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    Hi kong

    The technique you mention is one of the 3 most popular vendor finance techniques in Australia,  Vendor financiers generally call it Deposit Finance.  It was easy to put together before the GFC and and then almost impossible to arrange post GFC.

    However over the last 12 months there are more and more traditional lenders who are prepared to accept 'non genuine savings' as part or all of the deposit.  We now use two of these lenders to regularly put together Deposit Finance transactions.

    Cheers, Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
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    An alternative way to finance your home.

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
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    There are also lenders that offer an unsecured credit card facilty with the investment loan charged at home loan rates.

    These funds can then be placed in a 3 month Term Deposit Account and used as genuine savings on the next purchase .

    We are currently working on a 100% blended loan in conjunction with a couple of lenders that will be ready for release shortly

    Cheers

    Yours in Finance

     

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
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    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of ReptilequeenReptilequeen
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    @reptilequeen
    Join Date: 2013
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    I have been around and around in the rent rut for the past nine years. I have tried to save deposits only to to be infored that we have to move out and find somewhere else, because the investors of the property want to sell up. We have shifted 8 times in 7 years, all to owners wanting to cash in their properties and we're left out in the cold. Im sick of it.

    If we can pay $300Per week in rent then I see no reason why we can't pay off a home of our own. We cannot keep shifting, for the rest of our days and I do not intend to. 

    I find Im in locked into a no win system of greedy landlords, who prey on the vulnerability of older women in our society.

     I am now 57 years old, I need a home so I can settle down and enjoy life without the stress of having to keep moving on. I see that "Vendor finance" could be a way out as I do not qualify for a bank loan. 

    I do not have bad credit, nor am I in debt, Im an excellent payer, and always on time. I don't see a problem but obviously the banks do…

    Profile photo of Paul DobsonPaul Dobson
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    @pauldobson
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    The best two spots to look for properties being sold with vendor finance are, the classifieds in your local community newspaper and on the internet at:

    http://www.renttoownhome.com.au

    http://www.vendorfinancedirectory.com.au

    http://www.gumtree.com.au

    If you do find a vendor finance property that's affordable and interests you, may I give you a hint.  You will be talking to business people, possibly even landlords.  It may pay to ease off on the 'greedy landlords, who prey on the vulnerability of older women in our society', line of conversation  ;-)

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
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    An alternative way to finance your home.

    Profile photo of Vin MorganVin Morgan
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    @vin-morgan
    Join Date: 2013
    Post Count: 7

    There are other "no money down" initiatives for active investors opposed to passive.

    Profile photo of TerrywTerryw
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    @terryw
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    Vin Morgan wrote:
    There are other "no money down" initiatives for active investors opposed to passive.

    This is not a very helpful comment Vin. If you want to attract potential clients you will have to contribute something useful.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Vin MorganVin Morgan
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    @vin-morgan
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    I lend money in Melbourne to real estate investors who fix and flip or fix and hold residential real estate properties.  At times I can lend 100% of costs to buy the property and renovate. I am able to do this by taking a view on the after repair value of the property and when the property + renovation costs is purchased at a discount to after repair value of at least 35% (ie 65% LVR ).  Banks will only lend on an "as is" basis which means you usually can leverage to the lower of 1) purchase + building costs; or 2 ) on completion value. Each deal is subject to approval. 

    No money down does not mean "I have no money at all" and "I don't have experience". We look heavily at the borrower, their ability and track record and also a buffer to absorb financial shocks if things go wrong.  If the borrower is deficient in these senses, we recommend them teaming up with people who have the missing components. We are less concerned with financial statements and are more concerned with the security and the potential of the borrower.

     

    Profile photo of TerrywTerryw
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    @terryw
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    Thanks Vic

    A private financier. I was just listening to some Rick Otten podcasts about this.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Don NicolussiDon Nicolussi
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    @don
    Join Date: 2005
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    I had a developer just the other day offering nras stock at 20% vendor 80% bank. There is no limit of vendors out there.

    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
    http://homeloanwarehouse.com.au
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    "I think of finance as a technology, a way of getting things done." Robert Shiller

    Profile photo of TheFinanceShopTheFinanceShop
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    Whats the problem exactly? Is it age or something else?

    Regards

    Shahin

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
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    Residential and Commercial Brokerage

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