Why is it not a good idea to wrap units? Why does the strategy only recommend houses? If an investor is not interested in long term capital gain then why not use units for wraps?
You can use anything you want.
If the numbers work for you, go for it.
When I grow up, I want to be a storm trooper!
Dear Mortgage Wizard,
Do you have both units and houses you are using for wraps?
Help me everyone, it seems only logical that units are far more attractive in terms of comparable rental yields for intending purchasers than houses, so therefore if capital gain linked to underlying land component is irrelevant why wrap anything other than units/flats?
Mortgage Wizard???
What help do you want?
If the numbers work AND the demand is there, why not do it?
What else do you want to know?
When I grow up, I want to be a storm trooper!
MORTGAGE WIZARD
Doesn’t McKnight recommend only wrapping houses? Does he say this or I have mis-read the material?
You obviously mis-read the material seeing you could not even read my name. Or maybe you are just being rude!
I will ignore your future posts.
Good luck with your strategy.
_____________________________________________
The poster formally known as The Mortgage Adviser
When I grow up, I want to be a Storm Trooper!
Hello JPG632
I believe both Steve and Rick SUGGEST that houses are better than units because people who buy units tend to be more transient. That is, a lot of people buy a unit because they can’t afford a house but they are still aiming for a house in the future. This is obviously not a hard and fast rule but if you are looking at doing long term wraps then clients who buy a house from you may be more likely to stay in that house for the long term.
I hope this helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Paul
What would happen if the wrapee just up and left? Would you just rent the property out or wrap it again? If the wrapee decides to leave, are there any obligations on the wrapper? Would there be a clause in the contract to cover this sort of thing, and what might it say?
Cheers
Kez
Hi Kez
If the wrappee just “up and left”, i.e. did a runner and could no longer be found, then they would be in default and the property would probably revert back to the wrapper.
This is not hard and fast as you may have clauses in your contract which endevour to give defaulting wrappees their accumulated equity back (after expenses). This idea of returning accumulated equity to wrappees seems to be relatively new but IMHO will grow in strength as wrappers see that a mechanism like this does help to protect wrappers from the “tabloid” media repots we are subject to from time to time.
If you as the wrapper did get the property back, it’s absolutely up to you as to whether you would turn it into a buy and hold, i.e. rent it or wrap it again.
I hope this helps.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
TO: Paul Dobson
Thankyou for explaining the distinction between houses and units as wrap possibilities.
TO: BIG ROB
Apologies for expressing your former name incorrectly.
Thank you JPG, much appreciated.
_____________________________________________
The poster formally known as The Mortgage Adviser
When I grow up, I want to be a Storm Trooper!
JPG
From a numbers perspective, no, there’s no reason why you can’t wrap units.
I think it does come back more to looking at your target market. Mostly people who want to buy my houses want just that, a house! I had one house on a subdivided block, and the number of people who lost interest once they found out it was subdivided was a very high percentage of the calls.
However I believe Rick Otton recommends lease optioning units, rather than wrapping. This probably makes sense, because people in units tend to be more transient, and therefore having a lease option would fit what they’re looking for.
I did eventually wrap the subdivided house, by the way, so it can be done. Took a while though!Keep smiling
Felicity
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