Forums / Property Investing / Creative Investing / Getting into vendor finance

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  • Profile photo of SYKEMAKAVELISYKEMAKAVELI
    Member
    @sykemakaveli
    Join Date: 2013
    Post Count: 8

    Hi everyone,

    I recently read Rick Otton’s “How to buy a house for $1” book about vendor financing and I’m very interested in learning more and ultimately “taking action”.

    As a beginner to the vendor finance concept, and property investment in general, I was wondering if someone with experience in this field could help me with the following:

    1) Point me in the direction of more detailed info about “rent-to-buy”, “instalment” contracts and “sandwich leases” and variations thereof. Apart from Rick Otton’s book, are there any other books / internet resources that I should read on this topic? I’m a numbers guy, so if any one has any excel spreadsheets with examples that would be great!

    2) To those who have started vendor finance investment, once you understood the main concepts and risks, how did you actually get started? Did you team up with someone who had experience in the area or did you go at it alone? E.g. how did you find the right area to look, the buyers / sellers to target, best solicitors etc. Was it a manageable strategy with a 9 – 5 job?

    3) Can anyone comment on the use of vendor financing in a commercial real-estate context? How does this compare to its application in residential property from a risk / return (and tax) perspective?

    Thanks,

    Phil

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

    Hi Phil

    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 posted called '10 Mistakes to Avoid with Vendor Finance'. It's at:

    https://vendorfinanceinstitute.com.au/10-mistakes-to-avoid-with-vendor-finance/

    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/

    It is worthwhile researching all these educators and choosing one that suits your style.

    Some other research locations are:

    https://www.propertyinvesting.com/strategies/wraps

    https://www.propertyinvesting.com/strategies/lease-options

    https://vendorfinanceinstitute.com.au/about-vendor-finance/

    http://www.vendorfinancelawyer.com.au/

    Our experience has been that Vendor Finance works just as well with commercial real estate as it does with residential real estate.  I was in a full time job when we started out in 2003 and hugely enjoyed dropping the job in 2009.

    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 HomeLoanExpertsHomeLoanExperts
    Participant
    @homeloanexperts
    Join Date: 2007
    Post Count: 43

    From what I've seen with my clients it tends to be the sophisticated investors that do very well from vendor finance. If you are good at negotiating and have a sound understanding of real estate and credit risk then it is a good strategy.

    If you are time poor and inexperienced I would steer clear of it or find a good mentor.

    Good luck!

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

    We were none of the aforementioned so we got good mentors  ;-)

    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 Tamara43Tamara43
    Participant
    @tamara43
    Join Date: 2012
    Post Count: 57

    Hi Phil
    Just to narrow it down for you a bit more……in Paul Dobson’s blog he mentioned http://www.vendorfinancelawyer.com.au. This is Tony Cordato’s website which does have working examples of the strategies – good for you as the “numbers man”.

    Rick’s book only gives you a very basic intro into vendor finance. Doing his boot camp will provide much more detail. Podcasts, available via iTunes are excellent.

    You can also join Steve Donaldson’s mentoring group….www.creativeproperty.com.au. Steve was mentored by Rick. It’s not free, you will need to pay a fee & I believe it goes over 2 years. He also brings out a monthly newsletter which is good reading.

    On your question about getting started….my husband and I are doing this together and we juggle this between looking after our special needs kids. We often say we don’t know how anyone could do this whilst they are in full-time employment, but apparently people have done it that way!

    There are no “right” areas to look in. Pick 3-5 suburbs to start with and understand the market in those areas. Targeting buyers and sellers – we use lots of different marketing tools (still testing which ones work best). Best Solicitors – see Tony Cordato’s website.

    Commercial Property – best person to listen to is James Dawson (Podcast#18 on iTunes) – creativerealestate.com.au. James has produced a home study pack which you can purchase off this website.

    Any other questions you are more than welcome to email me direct – [email protected].

    Cheers, Tamara

    Profile photo of SYKEMAKAVELISYKEMAKAVELI
    Member
    @sykemakaveli
    Join Date: 2013
    Post Count: 8

    Thanks everyone for your responses! I like the idea of getting a mentor to start the ball rolling – are there any other mentors that anyone can recommend so I can compare? Also, I saw on Tony Cordato's website that they have a joint venture program for vendor finance deals.  On the face of it that sounds really useful as I could learn from someone more experienced…essentially on the job training. Has anyone had any experience with this?

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

    Hi Phil

    A list of vendor finance educators/mentors for you to consider is:

    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/

    It's worthwhile researching all these educators and choosing one that suits your style.

    Yes, we've had experience with joint ventures. In fact our whole vendor finance business revolves around JV's. Around 50% of these JV's happen via http://www.jvpropertypartners.com.au and the rest are with frustrated negatively geared property owners, via http://www.negative2positive.com.au

    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 Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Which State are you looking at startiing in Syke ?

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    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 Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Which State are you looking at startiing in Syke ?

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    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 SYKEMAKAVELISYKEMAKAVELI
    Member
    @sykemakaveli
    Join Date: 2013
    Post Count: 8

    Hi Richard, preferably Sydney, NSW.

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

    Hi Phil

    You may get a more 'friendly' ;-) price point in the Newcastle region and the market is not as hot as the current Sydney market.

    Cheers,  Paul

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

    An alternative way to finance your home.

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