I am considering buying a property using Vendor Finance; my prinicple reason for considering this is because it won't "tie" up other money to a bank (if that makes sense). To make it work for me though I want the property to be:
- in the Brisbane area, prefereably close to PT and/or Unis and the CBD
- in reasonable condition, however needing some work (ie new bathrooms kitchens etc)
- Able to be refurbished so that part of it can rented out to someone else (maybe a couple) and for this part to be fully self-contained
- the rent and my payments to be at least equal to the repayment of the VF.
The reasons for me wanting to to do this are that it allows for me to make a smaller deposit, I'm able to buy a property and do it up to my style; effectiively pay only rent with the other tenant paying the balance of the repayment. I anticipate that I would re-finance in about two years, after which I could remain living there, rent out my part or sell.
How does this sound? what suggestions or advice are people able to provide? Many thanks in advance
BarneyPaul DobsonParticipant@pauldobsonJoin Date: 2003Post Count: 1,196
I've been in real estate vendor finance since 2003 and unfortunately I haven't seen anything like what you're looking for come onto the open market. As you intimated, it may be something you have to go out there and find, i.e. find a suitable property at the same time as getting the vendor to give you vendor finance.
So you can get a bit of background on what's out there on the open VF market, here are a couple of sites to have a look at:
There are also quite a few VF properties advertised on http://www.gumtree.com.au
Thanks for that info, I have looked at those sites already. Yes I think I will have to be pro active in my search… Do you think my general idea is sound though? It allows me to make a smaller deposit, effectively only pay rent on the property (ie about $400/week); be able to do the property up and then hopefully take advantage of capital growth in the future (with no CGT as PPR)
MarkRichard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Like Paul i have been involved in VF in Qld since 1996 but have to say in 2013 you wont find anything in Brisbane like that what you are requiring.
We pulled out of offering VF in Brisbane in 2005 and back then had a maximum loan of $175,000.
Even with current lower interest rates and based on the fact that you you could locate a Vendor or VF company to potentially take a deal over 25 years your repayments are going to be a lot higher than rent.
Yours in Finance
Would this be the case even if someone else was renting as well; ie. the combined rent between myself and another tenant was $7-800 week in rent?
MarkPaul DobsonParticipant@pauldobsonJoin Date: 2003Post Count: 1,196
As both Richard and I agree that you're unlikely to find what you're looking for in the open vendor finance (VF) market in Brisbane at the moment, let's look how it might be done.
First up, VF is just another form of financing your property purchase. If the 'numbers' work for you regarding renting out a room or two that's fine but have a fall back position if sharing your PPOR with others doesn't end up suiting you.
This leaves you with the task of going out there into the market and finding a seller (vendor) that will VF you into their property. Before you get out there on this quest I'd suggest you ensure you've researched VF as thoroughly as you can. This could range from reading through the links I'll add to this post, to doing a VF course provided by one of the VF educators.
We have been working in the residential real estate vendor finance market place since 2003 and you may be interested in a blog post I've just posted called '10 Mistakes to Avoid with Vendor Finance'. It's at:
The Vendor Finance Association is a great place to meet vendor financiers. Dates and details of meetings are available at: http://vendorfinance.asn.au/meetings-and-memberships/
If you decide to do a VF course, there are numerous educators to choose from. Some that spring to mind are:
Sean Summerville – http://www.thepropertyking.com.au/
Rick Otton – http://www.rickotton.com/
Dave & Julie Siacci – https://vendorfinanceinstitute.com.au/siacci-system-of-vendor-finance-1997/
Paul Zalitis – http://www.aussiewrapper.com.au/Cash…Investing.html
It is worthwhile researching all these educators and choosing one that suits your style.
Some other research locations are:
Cheers, PaulRichard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Mark i think what you will rent in Brisbane for $700 -$800 a week will be bit better in quality that the sort of property you would VF for the same weekly payment
Yours in Finance