Hi everyone,
My Uncle has been talking to a property investment group that he has paid a membership fee with and they have since offered him a property that was listed on realestate.com at $495,000.00 for $420,000.00. Their condition was he had to make up his mind up within 1 week.
With that, their service is a one stop shop where they offered him finance, property inspections and valuations. He doesn't have to put in any of his own money as the equity of the property that he gained straight away is used for deposit and pay stamp duty etc. Equity of $75k (495k – $420k purchase price)
As far as I am aware, he has already signed the contract.
I am very skeptical but my Uncle vouches for it as it doesn't cost him anything to get in to the property. He refuses to talk to anyone in the family about it so I am asking on here for anyone's experience with this kind of purchase.
The property is within 20km from the CBD and is already rented out.
Regards,
Brad.
Hi Brad
Welcome aboard.
Sounds a bit suss – I don't know of a lender that will fund a deal no money required because the val came in higher than the contract price unless its a favourable purchase between relatives or something.
There's also purchase costs such as stamps, legals, etc that need to be covered.
Tread carefully with one stop shops- conflicts of interest can present.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Sounds very suss.
Get a property valued at $390,000 and put it on the web for $490,000 then give a 'discount'.
Is the uncle using other property as additional security? If so then he may not realise if the valuation comes in low.
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
That's what it sounds like – they might be using equity in existing property held elsewhere to cover the deposit/costs. Probably crossing it all up too.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
No, he has no properties under his name which is why he was so eager to hop on board.
They’ve told him that they only offer properties that already have equity in it so they can pass on the equity on to him to use for deposits, stamp duty etc.
He just has to cover the shortfall of about $140/week from rental and interest only repayments.I don’t understand how you can use equity within?
Apparently the contract says $420k but I’m unsure which bank and what the interest rates are.
I’m quite sure it’s not a deposit finance either.
They do seem to target desperate sellers as you can’t pick your own property off property listings.Brad
Thats a large weekly shortfall.
Will be interesting to see how this pans out.
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
Interesting indeed as it simply work out as i cannot be done with equity / cash or some form of vendor rebate / financing.
Look don't have a problem with Vendor Finance in fact we have just started back up out Vendor Finance division to investors where they can borrow 100% of the Contract price on selected properties but it is like anything as long as everything is disclosed and the investor aware then fine.
This sounds very suspect to me and personally I would be getting your own lawyer on board to read thru the fine print off the purchase contract and the letter of offer from the lender before going unconditional.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Terryw: could you elaborate on your short fall comment please?
Is there possibly some extra fees within?Qld007: definitely not vendor finance, as he says that he’s using the equity gained from buying below market value to pay for deposit. He said he’s not borrowing anything on the side, so unless it’s hidden.
He said these guys are geniuses and are the first in Australia to do this but when the family kept questioning he got pissed off and doesn’t talk to us haters about it no more.
I never meet something like this before. Usually, real estate service provider tends to ask you for some deposits before you can purchase the property.
b.a.1989 wrote:He said these guys are geniuses and are the first in Australia to do this but when the family kept questioning he got pissed off and doesn't talk to us haters about it no more.Is there a website or a link to further info about them?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
pm sent
Either genuises or shysters and i have money on the one on the right.
Maybe Jamie can enlighten us all after her has read his PM.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Sounds like a rebate scheme of some sort.
suss…
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
just an update.
I’ve found out that price on the contract is actualy $510k and not
$420k but his bank loan amount is $420k.
He said the bank has valued the property at $510k but he doesn’t know how the discounted amount was used for the deposit. He doesn’t care as long as he only owes $420k, gets the property without paying and fees or deposits.b.a.1989 wrote:just an update.I’ve found out that price on the contract is actualy $510k and not
$420k but his bank loan amount is $420k.
He said the bank has valued the property at $510k but he doesn’t know how the discounted amount was used for the deposit. He doesn’t care as long as he only owes $420k, gets the property without paying and fees or deposits.This amounts to fraud if it is being done to deceive the bank. It probably involves the vendor rebating part of the purchase price to the purchaser. From what you have said the bank is probably unaware of the rebate being involved.
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
I don't think this will be the last we hear of this…….
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
He doesn’t get any rebate.
The propery business uses a call option on the contract so they deal with all the paper work, he just signs and provides pay slips so there might be a rebate but he doesn’t see it.The interesting part is my uncle’s solicitor said it’s legal and very smart???
b.a.1989 wrote:He doesn’t get any rebate.
The propery business uses a call option on the contract so they deal with all the paper work, he just signs and provides pay slips so there might be a rebate but he doesn’t see it.The interesting part is my uncle’s solicitor said it’s legal and very smart???
That is interesting because the law society of NSW has advised solicitors not to participate in any schemes involving a rebate.
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
I don't know of any rebate happening but he did mention that on the contract it states call option on one of the annexure
I then found this article
So by stating $510k on the contract is that business inflating the market?
That article probably describes exactly what is happening in this situation.
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
You must be logged in to reply to this topic. If you don't have an account, you can register here.
