So if I buy a home at $100,000 and finance 90% of it and turn around and wrap it to someone else for $130,000 at a higher percent then what secures the original loan? If the title deed is transfered into the buyer’s name don’t I have to pay off the original loan because the property was the guarantee on the loan? Or does the property stay in my name until the buyer’s loan to me is paid out? What is the exact process?
Thanks for your time
James[cigar]JLC
I would do some hard thinking b4 you actually go ahead with a wrap…
If your Wrapper wants to refinance out and pay you off you will probably come up against the same problem on of my wrappers is comming up against at the moment..
Although the value of the property has increased by around 80% the banks with only refinance on the contract value and because of it’s position ie. Rural, They will only give him a 70% LVR and therefore not enough to pay out our contract.After looking at the benefits and then comparing them with the now known problems with refinancing out I would say that wraps are not such a good idea.. Sure we may have an ok income from a wrap and I mean ok not great around 9%. this only covers the interest by only 2% and we have absolutely no benefits of capital growth on it either, therefore no leverage other than a little serviceabilty. To top this we have around $40k tied up in it and at the moment no out..
For an income stream I am now looking at some thing a little more liquid but with the ability of capital growth and leverage thrown in too.I’ve found something thats paying 15% on my money.(sharing in property development profits) So if it’s income you want and you want to be able to use the leverage. These guy’s have a few options to look at.. I’d check em out b4 you do anything http://www.kaizengroup.com.au
Btw I have 8 other property that I have purchased over the last 3 years (2 years at only $30k income) so I have a little experience of the power of leverage..Good luck in what ever you choose to do…
Cheers
Calron
Calron the Alcamist
Turning things into gold is fun.
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]JLC, Someone else asked this questionr recently. The title is in your name until the wrappee makes their last payment to you. Your loan is securred by the proeprty.
I tend to agree with Calron. I have done 6 warps and would probably not do anymore. The cashflow sounds good in theory, but in reality there is a high opportunity cost as you are not gaining any of the growth and you could possibly be investing elsewhere with much higher returns.
Terryw
Discover Home Loans
Mortgage Broker
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 James
Have a look at:
https://www.propertyinvesting.com/forum/topic/16651.htmlBoth Steve and Rick(probably the two best known “wrappers” in OZ) recommend that, as a general rule, you wrap “standard” residential property, preferably with a minimum of 3 bedrooms.
In the last 13 months we have done 5 wraps and have made a paper profit of $175K and montly positive cashflow of $1.5K. Also our first wrapees are just about to refinance so it will be good to see some of that “paper” profit turn into the real stuff. We intend to continue wrapping.
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.
Originally posted by PaulDobson:
Also our first wrapees are just about to refinance so it will be good to see some of that “paper” profit turn into the real stuff. We intend to continue wrapping.I hope this helps.
Cheers, Paul
I wish you luck on you wrappees refinance… Please let us know how they got on and which bank they used as our’s is still aving trouble finding a bank to do the business,…
Cheers
Calron the Alcamist
Turning things into gold is fun.
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