Hubby and I have not yet wrapped a property but are considering our options. We have a 3 bed brick with triple garage, bore, on 3 acres that we paid 230K for in December, and are in the process of subdividing 1.75 acres off to sell. Supposedly the house is still worth 220K after subdivision. Tenanted at 250pw. So it’s not majorly CF+ until we sell the land (150K).
We also know of a local 4 bed fibro home that we can buy for 140K and rent after a 10K refurb for 250pw and is currently valued at 180K.
Which, if either, would you wrap, and why?
Redhaven.
I would strongly advise you to stay away from ‘wrap’ deals in a falling market. What happens when the wrappee sees that their house is worth far less than what they are paying for it? They can walk away, leaving you with the negative equity. On the other hand, you could try to structure the contract to enable you to chase them for the difference, but god help you when ACA or Today Tonight hear about that![blink]
Cheers, F.[cap]
Hi Redhaven,
Both sound like very good deals to me. I am not sure the market is yet falling in all areas, but I reckon it will.
Like Foundation, I would be scared of wrapping except in a boom market. But that is just my humble O.
Good luck
GIDDO[exhappy]Giddo and foundation
Would you sell your own home if it went down by 10-15%?? I dont think so and nor will many others…INCLUDING wrappees!!
I take it both have not constrcuted a wrap deal???
Oscar [cigar]
why bother wrapping at all? If you wrap you may get short term cashflow, but in the end the wrappees will end up with the property and the capital gains.
In a negative growth market, wraps would work well – for the wrapper that is. This is becasue you would receive a deposit and cashflow, and if the wrappees ened up walking away, you would stil be left with the property. It may have gone down in value, but you would have the deposit and cashflow to offset the ‘loss’ – which wouldn’t really be a loss anyway until you sold.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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You can have a rew strategies as fail over plans if one goes wrong then you can employ plan b then plan C and so on.
I suggest testing the market to see if there is a demand for the type of strategy you are planning to deploy. (waste of time and money if you are spending big bucks on marketing and getting no response because Today Tonight just ran a “Rubbish the Wrap” Campaign a week ago.
Most people do not worry to much about the price ( and those that do I question them to see if they have bank finance ready to go and if so how much do they have-never know it might be a quick sale outright)… so much as the affordability of the weekly amounts and how much deposit is required. There are many things you can do such as Wraps, Lease Options, Equity share agreements, Joint ventures and many more I am sure your imagination can come up with.
BEst of luck,
KiwiLooking for Positive cashflow solutions?
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We are investing in NZ so if you are looking for + cashflow properties…contact: [email protected] to join our database.Originally posted by oscar:Would you sell your own home if it went down by 10-15%??
Not sell my own home, but I most surely would leave a hire purchase scheme if I could walk away without penalty and buy a bigger, better house down the street for less money!
Cheers, F[cap]Wow guys, certainly a lot of food for thought. We’ve written to the tenant of the brick place and offered it for sale if he’s interested (outright or otherwise) and if he bites then we’ll look at buy/reno/rent the other one. No reply yet.
Foundation, there’s not many times I agree with you as you often come across pessimistic, and I tend to be an optimist, however, I agree with your last post. I, too, would walk away if a better, cheaper home beckoned…! Thanks for the input.
Redhaven.
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