Forums / Community / Buy, Swap & Sell / The Siacci System for Vendor Financing

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  • David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    Hi,

    I am interested in learning more about Vendor Financing

    The Siacci System for Vendor Financing seems appealing based on iClub videos, but I am open to looking into other courses too

    Feel free to post in here or shoot me a message if you have courses related to this topic

    Cheers,

    David

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    What do you want to know? I have done a few vendor financing deals before but probably would not do again.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    Hi Terryw,

    In the July 2012 iClub Video series at approximately 20 minutes, David and Karen Siacci mention that you don’t need to go to the bank to purchase a property for Renovation.

    https://www.youtube.com/watch?v=Om4knEBO7YE

    They state that you can come to an agreement with the Vendor for a fixed price, have early access to the property for renovations, and then sell it for a profit, without ever having to settle it under your name and paying stamp duty.

    This concept is appealing to me, as I do not have sufficient funds for both the 20% deposit and the renovation.

    What do you think about applying this to Renovation?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    I would say it would be extremely difficult to find an owner to agree and it would be risky to renovate a property you do not own.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    What if you focus on just simple cosmetic renovations such as painting, changing the carpets, landscaping, which aren’t as risky and costly as structural renovations, but also hire out professionals in their trades that know what they are doing, and take out additional insurance for peace of mind? Maybe even offer to split the Stamp Duty Savings?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    it could work in theory, but what stamp duty savings!

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    If you were to purchase a $300,000 property in Victoria under your name, wouldn’t you need to pay around $13,000 Stamp Duty?

    I was under the impression that with the Siacci System, because you never transfer the property under your name, you don’t need to pay stamp duty i.e. it would be the buyer of the renovated property that would pay.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    The stamp duty will depend whether it is a dutiable transaction. If there is a contract to purchase land, an option or an assignment etc it would be a dutiable transaction and duty would be payable.

    If you don’t have any of the above how will your secured you profits?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of daniel vicdaniel vic
    Participant
    @daniel-vic
    Join Date: 2013
    Post Count: 120

    Hi david
    This can work I am doing a deal simerler ATM actually
    We were going to get jv agreement with a agreed price to advoid the stamp duty , how ever the vendors laweyers told her we couldn’t proceed as I paid the deposit in last years tax I don’t believe it but didn’t want to push it and look shady .

    I have how ever stil secured the property with 5 months and 4 months early access to fix it and sell it I only am paying the 10% deposit and Reno money and not getting no loan :)

    Like Steve says you have to do things differently to make it today’s world and it’s so true
    Keep searching mate and Iam you can put one of these deals together

    David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    @terryw: I’m not really sure – that’s why I wanted to learn more about the Sciacci System, and how their strategies can be implemented for renovations… Maybe this is more like an Option to Buy the property for e.g. $300,000, whereby you have early access to the property for the renovation, and then you onsell that option for $400,000? I don’t know…

    @daniel Vic: Thanks for sharing your personal experience with this. What I don’t quite understand is why you need to pay a deposit – Doesn’t that mean that you will eventually need to settle on the property under your name i.e. 5 months from now, and pay other 90%?

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Just make sure you get good legal advice along the way, otherwise an unexpected stamp duty bill could turn a profit into a loss.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of JaxonJaxon
    Participant
    @jaxona
    Join Date: 2014
    Post Count: 282

    Hey David,

    I have the read the last few posts you put and it explained a lot, you have a fair understanding of creatively and smartley moving forward and trying to find the right options that fit your mould, I would like to state there are straight forward deals that I am guessing are within your limits e.g.

    Found property west brisbane (logan) sale price $120,000 for a 3b that needs major work,
    get loan for $150,000 at 80 lvr, use your remaining cash for the $50,000 of work needed,now you have a property worth $220-245k renting for 230-260 per week and done all that within a 2-4 month timeframe.

    I like your mindstate and if you can find someone willing to meet your terms thats great and good work. but being open to other tried and tested avenues isnt bad either.

    Kind regards

    Jaxon Avery

    Profile photo of AaronCAaronC
    Participant
    @aaronlchen
    Join Date: 2017
    Post Count: 5

    Hey David,
    Found property west brisbane (logan) sale price $120,000 for a 3b that needs major work,
    get loan for $150,000 at 80 lvr, use your remaining cash for the $50,000 of work needed,now you have a property worth $220-245k renting for 230-260 per week and done all that within a 2-4 month timeframe.

    Hi Jaxon,

    If David does this, sold the property for 245k, made the profit around 245-50-150=45k, but this happened within 12 month which means no capital-gain exemption, the net profit will only be 20k roughly, is it worthy to take so much risk for 20k? please teach me, thanks a lot.

    Best regards,
    Aaron

    Profile photo of JaxonJaxon
    Participant
    @jaxona
    Join Date: 2014
    Post Count: 282

    Restudied the property,

    for exacts and scope last night Aaron,

    So purchase 120, spend 45k to turn to a property renting for $310 per week thats

    165k over $16120 PA = ROI of 9.76% not bad.

    plus the revaluation will be $250ish

    So why sell? you now built 80-100k in extra equity in 2-5 months (if the market does not change), a positive cash flow of around $150 a week (rough estimate but very likely) on a PI loan, thats

    a yearly income of $7,800 on the first year, which means it pays itself off in 10.

    No incentive to sell in any way? keep it and use as a stepping stone.

    (Nathan Birch has done this the best in OZ IMO)

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    Hey David,
    Found property west brisbane (logan) sale price $120,000 for a 3b that needs major work,
    get loan for $150,000 at 80 lvr, use your remaining cash for the $50,000 of work needed,now you have a property worth $220-245k renting for 230-260 per week and done all that within a 2-4 month timeframe.

    Hi Jaxon,
    If David does this, sold the property for 245k, made the profit around 245-50-150=45k, but this happened within 12 month which means no capital-gain exemption, the net profit will only be 20k roughly, is it worthy to take so much risk for 20k? please teach me, thanks a lot.
    Best regards,
    Aaron

    CGT probably would not apply in this situation – just income tax.

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    Hey Jaxon,

    Thanks for your kind words and sharing your words of wisdoms…

    Those numbers definitely look quite enticing :)

    I’ll probably need to work on educating myself first with Renovations, and probably start a project closer to home

    Warm Regards,

    David

    Profile photo of AaronCAaronC
    Participant
    @aaronlchen
    Join Date: 2017
    Post Count: 5

    thank you Jaxon well explained, good on you mate!
    thank you Terryw

    Profile photo of JaxonJaxon
    Participant
    @jaxona
    Join Date: 2014
    Post Count: 282

    Anytime guys,

    One of the biggest things I have learnt is not under valuing yourself and believing that something is possible or can happen.

    If you don’t you will shut your mind off to that and miss the opportunity. I know this may seem trivial but I assure you, the more I believe I am worth and work for that, the better outcome and results I have found and secured.

    but in saying that, hard work and study is required. there is no free lunch.

    Kind regards

    Jaxon Avery

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    There was an article in the newspaper today about Rick Otton, a promoter of vendor finance strategies.

    It is an interesting read:
    http://www.abc.net.au/news/2017-08-11/buy-a-house-for-$1-claims-slammed-as-deceptive-misleading/8798492

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    David Thiu
    Participant
    @david-thiu
    Join Date: 2017
    Post Count: 75

    Hey guys,

    Just want to let you know I’ve managed to get a copy of the Siacci System.

    Thanks Shane! :)

    David

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