Low/Nothing Down deal help?

Ok, I am no wrap expert, but I will have a go.

If you have $25,000, and buy the property for the asking price (you can always make a lower offer) of $225,000

then you will need to borrow $200,000+closing costs which will be about $11,250.

So you need to find a lender who will loan you on a LVR of about 94%. (thats if valuation comes up to $225,000)

OR>>> Borrow 80% from bank (easy) and get 2nd mortgage or seller to leave money in the deal for the other 14% ($31,250).

Assuming you get 7% on all the money you borrow, you should have outgoings of:
Principal and Interest on loaned monies = $16865.40
Rates/Insurance $1800 p.a.(wild guess)

You could then wrap property to a client for about $271,687 (15% mark up on your acquisition costs of $236250)

Your wrap client would pay a deposit of say $10,000 and give you their FHOG of $12000 (in Victoria) So you have put $3000 ($25000 – $22000) of your own money into deal.
And you could loan them the remaining $249,687 at 8.5% so they would then pay you:
P&I at $23038.56 p.a.

So the wrap client would then pay your incomings of
Loan Installment amounts $23038.56 p.a.
Rates/Insurance $1800 p.a.

Wrap client pays Total of $477.66 per week (i hope the market rent for this house is not too far away from this or you may have trouble finding clients)

But if you could find a client then your incomings ($24838.56) minus outgoings ($18,665.40) would mean an annual cash return of $6173.16 p.a.

Giving you a tidy return of 205% p.a. for as long as the contract lasts.

So the trick is
1. Find a client who can afford and will pay that much. This is where affordability of wrap compared to renting blows this example out of the water. [drummer]

lifexperience