I have been having some trouble finding a wrappe for the current house I have got and would like to try finding the wrappee first with the next house, and then buy a house that they choose.
When using this method is there a set mark up you put on a property? I had thought to either add 20% to my purchase price not including purchasing costs, or to add 15% to the advertised price and then whatever I buy it for less than that is a bonus for me. Is this too much or not enough?
2% interest mark up.
thanks
That is around market price for wraps. I did some with a 20% markup on price and a 3% markup on interest rate.
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
Jeff
I beleive if you purchase the house first you limit your wrappees to those who want to live in your house. If you let the wrappee find the property then they will search and find something they want to live in.
There is a big difference to the way they treat and look after the property. In the all of the years i have been involved in Vendor Financing i have never purchased a property and looked to find a wrappee.
Do it the other way round and get them to approach you. You can then take over negotiations with the selling agent and set your onsale price according to what you can buy the property for.
Hope this helps although good luck in finding a buyer for your current property.
Cheers Richard
richard at castlewhite.com.au
Email me for details of our Qld wrap service.Richard Taylor | Australia's leading private lender
Thanks Terryw. When you say 20% mark up on price this is the price you actually buy it for? I have done some sums on this and after purchasing cost you do not make a big amount on capital growth, or even on the 2% spread, but I think that it makes a good win win deal for all involved.
I have found someone for current property now, and seem to have picked up a few people who want to discuss further how they can get into their own home. I want to sit down and look at their income etc and work out what price property they can look at, allowing for my 20% mark up.
Richard thankyou. Is that the way you do this or do you get them to choose property and then you work out a purchase price yourself without telling them how much you actually bargained it down too.
I can see that it will be good to tell them up front that we put 20% on the actual purchase price, on the downside if we get a good buy we still only get 20% when we may have been able to get a bit more, maybe 26% to cover purchase costs.
Thanking you
JeffBYes, I was suggesting 20% above what you pay for it. But you can vary this as you please. Some people believe you should not be making a profit when onselling a property. But you have to account for costs such as stamp duty and make a profit or it would be pointless.
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
Jeff
You are always better to be upfront with your wrappee and disclose to them what you are paying for the property as they can always find out.
To build a good relationship be honest and transparent with them and the will respect it.
In our indicative Letters of Offer we provide them with a senario of what they price would be and the likely monthly repayments so they don’t have any big suprises.
Cheers Richard
richard at castlewhite.com.au
Email me for details of our Qld wrap service.Richard Taylor | Australia's leading private lender
No problem. Thankyou both very much.
Dear All,
Thanks for your responses. I too have been converted to the idea of finding buyers first, rather than vice versa. I am involved in sandwich lease options (so far with only one slice of bread in place
and am suffering due to a decline in interest after the intitial contact with the client (end purchaser).
I was introduced to lease options via Rick Otton, and his literature is quite emphatic around this issue… ie always find the property first.I don’t want a forum argument to start around this issue, but some comments on the pros and cons would be appreciated particularly around ways to secure the buyer into the arrangement… eg what is to stop the buyer pulling out after identifying the house and asking you to enter negotiations midstream. A non refundable application fee didn’t stop one of my clients pulling out. Also… is your negotiation position substantially weakened when entering midstream?
Thanks in advance of your feedback.
and am suffering due to a decline in interest after the intitial contact with the client (end purchaser).You must be logged in to reply to this topic. If you don't have an account, you can register here.
