Forum Replies Created
TMA
Yes, they lend on contract price. Only problem is, that’s not much use when the house is worth a lot more than the contract price. I can understand sticking to contract price when it’s just been sold, but when it’s a few years later, surely common sense suggests the house may well have changed in value. My first wrappees got stuck with that – in the time they’d had the house, plus their hard work, the house was worth at least $30k more than their contract price.
They had to go to a lender who self insured to get around it.
Mind you, we are talking about mortgage insurers here – I don’t know that common sense comes into the equation at all!Keep smiling
Felicity
It can also depend on whether or not you are seen to be in the “business” of wrapping. For example, I have many wrap houses, therefore I am a business, therefore I can spread out the Capital Gain portion.
However my sister, who sold a country property on a wrap because it was the only way she could sell it, is NOT a business because it’s a once off transaction, and she will be liable for capital gains tax upfront.
Very important to get a wrap savvy accountant!Keep smiling
FelicityRick’s strategies and presentation are VERY different to Steve McKnight’s. I’ve met a lot of property gurus in my time, and personally I give Rick 10/10 for genuinely walking the walk. He’s also a bit of a dag, which I rather like! But behind the dagginess there lies a brain which never ceases to amaze me, his ability to take a set of circumstances and create a deal that makes everyone happy is nothing short of astounding.
Keep smiling
FelicityMichelle
Your best way to meet wrappers is to check out the wraps association http://www.financewraps.asn.au and go to a meeting (next one scheduled for Thursday 21st July).Keep smiling
FelicityMichelle
You probably won’t find anybody in Melbourne using Steve’s techniques to do wraps in Melbourne. Steve likes to see the wrap repayment being the same or less than the persons’s current rent payment. Basically that’s impossible in Melbourne unless you’re subsidising them to an enormous extent. That’s why Steve and his students have focussed on regional areas.Keep smiling
FelicityI have heard Rick respond to this question, Robert, and you’re correct.
Keep smiling
FelicityThe problem here seems to be – what’s the purpose of the money? From what Rick has said in the past, if the money is being used to PAY for something, such as legal costs, stamp duty, repairs, etc etc, then it’s legal to do this. However if the money is going into your own pocket – no, it’s not. I have to say that asking for $10,000 to go to your lawyer smells fishy to me – since when does it cost $10k to look after a property transaction? It gives rise to the thought that the money will pass through the solicitor’s account and into the purchaser’s pocket.
Keep smiling
FelicityRobert
I have to disagree with you that the information is freely available. Maybe if you search long and hard you’ll learn it all, but most information on these types of strategies is American.
The thing I always liked about the wrap pack was the fact that it walks you through the process step by step. Step 1 – do this. Step 2 – do this. It outlined pitfalls and things to avoid. It gave suggestions about how to do things well.
The other reason I like it is because it means that when someone goes to do a wrap, they KNOW what they’re doing – not trying to piece it all together from whatever information they can find. I would like to think that means that the wraps are then performed in a more ethical and legal manner.
I have made back the money I spent on Rick’s stuff so many times, right from the first house I wrapped.
My only caution would be – if you’re going to spend this amount of money, be sure it’s a strategy you have a basic understanding of and are keen to implement. If you don’t use the information, you’ve blown a lot of money.Keep smiling
FelicityI find it interesting how many “high flyers”, when they fall from grace, seem to then collapse completely. It suggests an interesting level of connection between emotional and physical. Christopher Skase and Alan Bond are two others that come immediately to mind.
Keep smiling
FelicityIt may be helpful to mention whereabouts you are.
Keep smiling
FelicityInvesting Golden Rule #1
What are you trying to achieve?Seriously, unless you give some information about what you would like to achieve from investing in property, then there’s really no way to recommend a strategy to achieve it.
Keep smiling
FelicityHi Peter
Yes, it is. It’s very frustrating if you have plans for a large portfolio!
I remember when I started out I was mainly looking for high LVR and low interest rate.
Now I think about if it’s mortgage insured and who by, what sort of deferred establishment fees there are etc etc
Funny how your focus changes!
Mind you, I’d still like higher LVRs…. heheheKeep smiling
FelicityThanks Terry, I’ll check this out.
Keep smiling
FelicityYes, no money down deals are possible.
Are they easy to get? Definitely not (well, not the ones that rely on working something out with the vendor!).
Most Australian vendors and their agents only know one way to sell their property, and they’re not always keen to deviate from that.
However with the recent softening of the market, you may find vendors more willing to listen to something a bit different.
Be prepared to strike out a lot of times though!
To some extent it’s a numbers game – if you keep putting offers, somewhere along the line one or more of them will get accepted.
But make sure you have your bank finance lined up FIRST, and that they’re okay with you doing whatever it is you’re planning to do (ie vendor leaving 20% as a 2nd mortgage).Keep smiling
FelicityI agree with Stu.
I constantly get frustrated by the mortgage insurance limits. With only 2 insurers, buy more than $1 million of property and your loan options (particularly if you’re self employed!) shrink to almost nothing unless you’re willing to pay double digit rates or find 30%+ deposits.Keep smiling
FelicitySounds to me like lenders are going to have to start rethinking some of their legal requirements.
Have you approached them, explained the “uniqueness” of the situation and requested an exemption?Keep smiling
FelicityMy favourite comment is:
“When I found out that McKnight (and other wrappers) were buying from agents who were clients of mine, I told the agents to make the sellers aware if the agents knew (which often they didn’t of course, because the very nature of the wrappers is not to disclose their intention).:
Apart from the fact that it’s none of the vendor’s business what I plan to do with the property once I buy it, this is another classic “catch all” statement from Jenman. Very early on I bought a number of properties from a Jenman agent (they’ve since removed themselves from his network), and that agent was always totally aware of what I do. He certainly told a number of vendors what I planned to do, and they thought it was great that I was giving someone an opportunity to own their own home.
I’ve only ever had one vendor get stroppy about what I do, and when I pointed out to him that if he’d been willing to let me pay the house off for 25 years rather than at settlement, I’d have been willing to pay more for the house too, he actually apologised and said he hadn’t thought of it that way.
I get a little bit tired of being told what my “nature” must be because I wrap houses.Keep smiling
FelicityI have bought a house with some vendor finance involved.
One thing to watch out for – make sure your financier is okay with it BEFORE you start trying to find a willing vendor! Certainly low doc lenders in Vic won’t touch it, but I believe with full financials you’ll have a much better chance of getting it through.
It may also be worth having a draft loan agreement drawn up by your solicitor prior to approaching vendors, so that their solicitors can take a look at it.Keep smiling
FelicityThe website is actually http://www.rickotton.com
Keep smiling
FelicitySteven
Is this available only as full doc, or for low/no doc as well?Keep smiling
Felicity
