What would these numbers change to after applying a wrap strategy, for this example?
Rent = 110
Occupancy rate = 3 Weeks
11 Second Solution = $51820.00
Asking price = $38000.00 (7000 FHOG taken off)
Deposit 20% = $7600.00
Deposit + Other Closing Costs = $12275.00
Annual costs = $1550.00
Loan = $30400.00
Cash On Cash Return = 8.34 %
Cashflow Positive Weekly = $19.69This has included a $2000 allowance into the purchase costs for cosmetic changes to a property.
This seems to be about demographic arrangements.
You haven’t given all details but,
Resale price would be about $45,600 (20% more than asking price).
The wrappee would pay a small deposit, which would reduce your upfront costs.This deposit would come off their purchase price and the remainder would be a loan to you. The interest rate is usually set about 2 to 3% above standard variable rates.
There would be no vacancy rate and annual cost for you would be greatly reduced – maybe only insurance.
You profit would be their loan repayments to you minus you repayments to the bank. Plus when they cashed you out, you would receive a gain of their remaining loan to you less your remaining loan to the bank.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Would you not put 20% on the sale price of the property? Which was $45.000, with the $7000 FHOG taken out (the amount i would pay for the property for this example property is $38,000) but the market value is $45,000.
In the first example it was:
Loan Principal & Interest = $30400
Interest rate = 8%
Term = 25 Years
Weekly repayment = $54.15So the deal i might offer a wrapee might be something like these numbers? Is this correct?
Asking price= $54000.00
Offer price (accepted!) = 50000.00
Deposit = 10000.00
Loan P&I = 10%
Term = 25 Years
Weekly repayment = $83.88$83.88 – 54.15 = $29.73 Cashflow Weekly.
If the wrappee was to rent the property for $125 (after the cosmetics which would have been done by now!) the numbers would be:
Rent = 125
Occupancy rate = 100 %
11 Second Solution = $62500.00
Asking price = $50000.00
Deposit 20% = $10000.00
Deposit + Other Closing Costs = $12425.00
Annual costs = $1990.00
Loan = $40000.00
Cash On Cash Return = 1.19 %
Cashflow Positive Weekly = $2.85Wrapee would just about break evan(not saying this is what the wrape would do, but saying this is the situation if he did!).
Plus when they cashed you out, you would receive a gain of their remaining loan to you less your remaining loan to the bank.What does this mean how mutch could it be? So the only other cost associated with the wrap deal is to pay my loan repayments and the properties insurance. Is that right no other costs?
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This seems to be about demographic arrangements.Hi Jaff
Yes, I misread your post, you would put 20% on the purchase price – before the FHOG was minused. Your numbers seem correct, but an 8% interest rate seems a bit high.
But from your original figures if you rented it you would be getting $19.69 per week +ve cashflow. If you wrapped it you would be getting $29.73.
So for getting an extra $10 per week you would be giving away any capital gain. You have to consider if you are better to just keep it and do a buy and hold (and/or reno).
BTW with a wrap when they cash you out (ie when they refinance) you will get some cash too. ie their loan to you less your loan to the bank.
The only other costs should be accounting.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Hi,
Here i was thinking i didn’t get a reply. I didn’t get any subscription email.Yes,.. it gets diffucult doesn’t it [
], so many variables. Need to take care that you get it right!
I think with 25 years and no hassles of property managment and things. Wrapping seems ok given the right curcumstances.It adds another responability on my shoulders, because i wouldn’t want the wrappee to have a good deal.
Ok well if i got them figures right, then i will take that on as the way wrap set ups go.
Onward and upward i’m still learning , thanks for that little insite on that.
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This seems to be about demographic arrangements.That doesn’t read right! And i don’t know where the edit feature is gone on this site.
I ment i wouldn’t want the wrappee to get a bad deal.
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This seems to be about demographic arrangements.
], so many variables. Need to take care that you get it right!You must be logged in to reply to this topic. If you don't have an account, you can register here.
