Forum Replies Created
But Camel, what’s in it for the vendor???
If I have a house that I have financed $200,000 at 30 years, 7% interest, my weekly payment is over $300 a week.
why would I want to lose $107 a week?
Now if you wanted to buy it from me for $500,000, at $384 a week, there might be an incentive for me.Keep smiling
Felicity
mrsimba2
What’s your definition of “relatively close” to the CBD? I would interpret that as within 10km, say, and I think you’re pushing the proverbial uphill.
Plus you need to think about WHY a suburb is cheap. Usually there’s a very good reason! That doesn’t always mean things don’t change, of course, but I would suggest that instead of putting a cap on your price to choose a suburb, you might be better looking for a suburb that is relatively undervalued compared to its neighbours. You may well find that buying in the undervalued suburb gives you better returns in the long run than picking a cheap suburb.
Try getting the latest issue of Australian Property Investor, sit down and go through the list of median prices. Have a map of Melbourne in front of you and write the median prices on each suburb. You’ll soon get a good feel for the market in various sections of Melbourne, and can then start to work out whether a suburb is undervalued or cheap & possibly nasty.Keep smiling
FelicityHi Apprentice Investor
It’s all up to you! People have been successful with both strategies.Keep smiling
FelicityHi Camel
I’m not sure what to recommend you use to search, but I do believe someone posted some information on a thread a while ago which talked about financiers who specifically work with religions that can’t pay interest.
Otherwise I’m sure you could work out something with vendor finance.
I’m trying to think it through (from the wrapper’s perspective!). I suppose when a loan is first set up, if interest is calculated on the total loan, then you end up with a “total amount” paid over say 25 years.
As an example, take a loan of $100,000. 25 years at 9% would give a total interest bill of almost $148,000. Weekly payments would be $193 roughly.
Now, instead of running this as a normal loan, you could start with a loan of $248,000 and you, as the wrap buyer, would then make principal only payments of $193 per week. No interest would be charged.
If you wanted to pay it out prior to the 25 years, that could be tricky, but again, if I as the wrapper ran 2 spreadsheets, one with the principal only loan of $248,000 and another with the $100,000 using P&I, then at any point in time your payout figure would be taken from the P&I loan. I have no idea how to document that!!!
I guess that’s one way to solve it, but I have no idea whether or not that would be acceptable from your perspective.
Mind you, it would be nice to buy a house in Melbourne for $100,000, but these figures are only for illustration purposes!
Anyone else with some ideas?Keep smiling
FelicityWith the incredible growth in property prices over recent years, I think positive cashflow properties are MUCH harder to find. Yes, they exist, but for most of us in the major capital cities, they are not likely to be right on our doorstep.
This means that an investor has to make a commitment of time and money to go and search out these properties – ie spend a week in NZ or a regional area far from home. For people who are full time investors or at least have good job flexibility, this is a lot more achievable than for Mr Joe Blow working 60 hours a week.
Yes it can be done – but reality is that it takes work, time and commitment.
Because of this, I can understand why Mr Joe Blow would decide it’s easier to pay a spotter’s fee to someone else whose prime task is to source such properties.
Certainly there are other strategies to create positive cashflow properties, but I am purely talking about buying a property which fits this category upfront.
There is more than one way to get rich with property, it’s up to each of us to find our own path and accelerate the journey in whatever method fits us.Keep smiling
FelicityRichmond
I do remember the positive story on Steve – and another one done by Today tonight on Rick Otton.
I still stand by my statement “Happy people living happy lives tends not to be the stuff of which sensational tag lines are made….” although perhaps it should be senationalist rather than sensational!
You should also note that I said “tends not to be” not “all” – that’s not a one colour statement at all!
Current affairs programs do promote positive stories at times, but certainly their promos are overwhelmingly for sensationalist stories. This is their bread and butter.
Newspapers publish some positive stories, but again, their main content is news stories which are about less than positive events in the world.
There also tends to be waves of stories. Right now the media is having a whale of a time producing a bucketload of negative stories about property – hence their lack of interest in happy stories about wrap buyers.
A couple of years ago, the media was full of positive stories about property – hence the shows on ACA and TT back then which profiled Steve and Rick in a positive light.
I don’t agree that issues are only black and white – they involve infinite shades of grey.Keep smiling
FelicityPerhaps reality is that different solutions suit different people.
If you’re negatively geared to the max and banks won’t lend you money, positive cashflow properties are a way of improving serviceability.
If you’ve got cashflow but perhaps want the capital growth that tends to be elsewhere in order to leverage your investment dollar further, then you might buy a negative cashflow property for equity purposes.
Long term success in any endeavour requires flexibility. Flexibility to change as the market changes, to change your plans and goals as circumstances require, and to use all the strategies that help to move you forward rather than being stuck in a rut of doing things one way because that’s the way you’ve always done it.Keep smiling
FelicityHappy people living happy lives tends not to be the stuff of which sensational tag lines are made….
Keep smiling
FelicityHi Fish
The VFA is working on a system of membership/accreditation, so that wrap buyers can be confident that they’re working with someone who adheres to minimum standards of good practice.
Also, a couple of times when Rick has been interview by shows that are planning to do a hatchet job, he has offered to get in touch with some of his wrap buyers so that they can show the positive side too. They’ve never been interested. I wonder why?Keep smiling
Felicityyack
As Steve pointed out, anyone who registers can be tracked back through their IP address. So I hardly think he would have jumped on that post if he wasn’t positive about the person’s identity.Keep smiling
FelicityTerry is correct. Your solicitor asks their solicitor for an extension.
I also will ring the estate agent as a courtesy and explain what’s happening, particularly if it’s looking positive but I just don’t have a final answer. That way they can contact the vendor, and if the vendor understands that it’s just a minor hiccup, they are more like to agree.
Understand, though, that once you get into the territory of extensions, a lot of people get nervous, and it can be very stressful!Keep smiling
FelicityHHH
If you do a search of the forum, there are comparisions that have been posted in the past. Steve has recently released his new Wrap Kit, though, and so those comparisons may be a little out of date.
Still, it should give you some more information to think about.Keep smiling
FelicityLucifer
As I said earlier, this is a very grey area, as this type of loan facility didn’t exist when the Vic legislation was drawn up (and I don’t have a clue about other states!).
I agree, keep it simple, your loan should always be lower than the wrap buyer’s.Keep smiling
Felicityse7en
You’ve missed the point of Steve’s message, and I quote…
“not because you have a different opinion, but because I’ve had enough of the name calling and negativity”
There’s nothing wrong with different opionions and debating topics because we all learn from that. But it should be done in a polite spirit. I’ve seen plenty of posts on here that would never be delivered in a face to face verbal discussion, and it frequently seems to me that people don’t seem to believe that common courtesy applies to this type of medium too.
I’ve had quite a few ex members of this forum tell me that they got fed up with all the rudeness and nastiness and so gave up coming here. Let’s get back to making this a positive forum where we can discuss issue in a friendly, constructive spirit.Keep smiling
FelicityOr you could look at buying a house with vendor finance, with the intention of refinancing on to a bank as soon as you can.
Keep smiling
FelicityI think you’ll find that Freestylers has ceased operations, hence the closure of the website.
Keep smiling
FelicityHi Lozza
I’m blushing!
Regarding the IO thing, it’s a very grey area, and legal opinions vary. When the applicable legislation was written there was no such thing as an IO loan, so therefore it’s not mentioned – so it’s not illegal.
However the spirit of the legislation tends to suggest that IO loans are not smiled upon.
The legal opinion I’ve received is that it’s not illegal, but he doesn’t recommend it either.
Personally, if I use IO loans I only do it short term, and I would certainly NEVER allow my loan to be higher than my wrap buyer’s loan.Keep smiling
FelicityHi Darren
Good on you for having the courage to seek answers, even if they are a little outside the square.
I think you have two options here – scale down your vision of what you want, or find a bit more money each week.
At 9%, $300 week will buy you something worth a bit under $160,000. Even if you have a wrapper who is selling at market value, there’s very few houses in Melbourne at that level. My cheapest one at the moment is $342 per week, and that’s definitely way out in the outer suburbs!
So I think you’re going to be looking at a unit, and probably quite a long way out and fairly old at a guess.
This is not the sort of property most wrappers buy, generally they go for bulk standard family homes.
But hey, by asking the question you’ve at least given yourself the chance of finding an answer.Keep smiling
FelicityHi Lozza
You might also need to think about the fact that wrapping may well be a very new concept to the area you’re in. Not everybody is going to see your ad or signs and immediately ring you. Sometimes the first few wraps in an area can take a while because you need to educate people about what it is and how it can be an option for some people.
I know I did that when I first did some wraps, now I seem to get a lot more people who’ve heard of the concept and done some research on it, then see my ad or sign and ring. One even said they’d been actively looking for a wrapper in that area!
Having said that, sometimes it just takes a while for the right buyer to come along.Keep smiling
FelicityThere’s also a good book on trust be N.E. Renton. Try the book shop attached to Australian Property Investor magazine, I think it’s http://www.apimagazine.com.au
If not do a search!Keep smiling
Felicity
