Forum Replies Created
I had an interesting experience with the FHOG.
I had two contracts that went through within a week of each other, and after the 1st May. One got $12k, the next one (which settled later!) got $7k.
I have no idea why!!!
Needless to say, I’ve recommended the second owner ask some pertinent questions.Keep smiling
Felicity
Hi Misty
That answer will vary by state. In some states if the value of the property increases, then the wrapper can borrow against it.
In Victoria, however, once you have wrapped a property you cannot increase the underlying loan or refinance the property.
In all circumstances, I would definitely NOT recommend borrowing more than the wrappee’s outstanding loan, as you could find yourself in serious trouble when they want to refinance.
As for the wrappee, under my contracts they are entitled to any capital growth above the contract price, however they can’t access that until they refinance.Keep smiling
FelicitySupa Freak
It all comes down to whether or not you’re willing to put another $6000 of your money into the deal. Personally, I wouldn’t do it, but only because I wouldn’t want to tie up $6000.Keep smiling
FelicityMarisa
It could also be that many, many experienced wrappers no longer post here after a number of periods where they were consistently flamed and derided.
Although the antagonists have gone, so have the wrappers…Keep smiling
FelicityI believe it actually closed down for personal reasons.
Keep smiling
FelicityHi Marketmad
I can’t comment on the information etc as I don’t know much about it.
However to describe their marketing approach as high pressure is an extreme understatement. It took me 15 minutes to get the caller off the phone, and quite frankly I don’t believe I ever requested information in the first place. [angry2]Keep smiling
FelicityLeigh
In Australia you can use Interchange http://www.interchange-timeshare.com.au and there is no membership fee. You still pay a fee to exchange.
I’ve actually found them heaps better than RCI for Australian exchanges. They’re based in Qld.Keep smiling
FelicityHi Westan
We’ve had a timeshare week for many years, and have thoroughly enjoyed all the places we’ve stayed with it. Initially we did some international resorts and interstate, but more recently with small kids we’ve done all the resorts within driving distance.
Nowadays it doesn’t suit us, mainly because we’ve done all the close by ones, and with a floating week we can’t exchange into peak time (ie school holidays) and we now have kids at school.
But for people who can go any time, I think it’s a great idea.
Certainly my main advice would be – buy second hand, NEVER buy from a marketing company.Keep smiling
FelicityHi Wallflower
Good for you! I did all that you did and more.
I wonder whether I’d have had more success if I’d actually seen them EARLIER. BEFORE I had the first tax return with big purchasing expenses…
In the end, they were impressed with me, my presentation, my business numbers etc etc but they just couldn’t get past the tax return.
Sigh…
I’ll give them this year’s returns when they’re done, just in case they see fit to change their minds, but somehow I doubt it. I need to either stop buying houses or refinance lots before they’ll be happy! I had all the numbers showing the positive cashflow and massive serviceability, but it still didn’t work. My tax return showed a loss the previous year, and that was it.
In the end, you can be the most professional person under the sun, but if the number don’t stack up, or there’s something there that the bank doesn’t like, you’re still not going to get in the door.Keep smiling
FelicityJeff
Gimmicky marketing seems to be the rage with far too many seminar presenters these day!
Personally I make sure that any chance I get I listen to Rick talk, his ability to take a set of circumstances and turn them into a deal that makes everyone happy never ceases to amaze me.
I also like the way his techniques apply to any price house in any location.
I certainly wouldn’t be where I am today without Rick’s Wrap Pack and Boot Camp.Keep smiling
FelicityScott
I fully agree – it’s all about how you present yourself.
But then again, you can only present the facts in so many ways, without bending the truth.
As I said, I know that your bank was keen to have my business, until they sat down with me and realised that although I have a strong cashflow wraps business, there are other factors they weren’t so keen on.
Again, it doesn’t mean there aren’t other solutions, but I have yet to see a major bank do wrap loans for someone starting out FULLY DISCLOSED. They usually need to see enough runs on the board to put you into business banking before they’ll touch them.
And then it’s about your situation and how you present yourself.
I also think that the situation has become a lot tougher in the last 6-12 months, too. So perhaps you and Richard were lucky enough to get started with your banks BEFORE they began getting tough on wrappers. Now you can build on that relationship.Keep smiling
FelicityNAB are one of the “greediest” banks when it comes to holding enough security to cover their backsides. They are also incredibly inflexible on this.
Your only option is to speak to someone else at the bank if you’ve drawn a blank with your own personal lender.
The problem with cross collateralising, brahms, is that if you want to sell off one property, you usually then have to pay more fees to get your loan redone, and if their new valuations don’t stack up to cover the properties you still hold, you can really be in trouble. It gives them a huge amount of control over your portfolio.
It could also be as simple as – what happens if when you took out the loans you were employed, and now you’re self employed? What if NAB decides your risk profile has changed and doesn’t want to continue to lend against the houses they hold once you sell off one?
It’s not all bad, but it can be avoided.
By the way, I have friends (one of whom works for NAB) who hold loans through them, and they’re all stand alone. Go figure.Keep smiling
FelicityScott
Well, they might love you, but I certainly haven’t found that the case – even after your bank were the ones who wanted to talk to me!
I don’t say that to criticise, but just to point out that finance being “easy” may be true for you, but not for everyone.
I have certainly never found it particularly easy.
However if I had masses of cash/equity to use for deposits (financiers get jittery with vendors leaving money in deals or investors putting in the deposit) and I also had some form of job income, it would be easier!
I also think that the first 2-5 properties are relatively “easy”, from 5-? is “hard” and then it gets “easier” again – usually when your early buyers start refinancing.
This is because your first houses can usually fall within standard criteria for the bank. Beyond that most people run out of deposits, run out of serviceability (yes, even with positive cashflow, because a lot of banks won’t count the whole amount), run out of mortgage insurance (no, borrowing 80% or less doesn’t usually alleviate this as the loan mostly still will have LMI againist it), and then hit the problem of providing business tax returns.
The initial stages of a wraps business are quite yukky looking to a financier, as the proper accounting treatment counts all your buying costs and deposits paid as expenses, as well as the cashflow in and out. This means that for the first year or two, if you buy a lot of houses, you are going to have massive expenses and small income. So even a bank which understands how a wrap business works (and I’m talking about Scott’s bank!!) still got nervous when they saw my tax returns that looked like that. This is why turning your houses over quickly helps, because of course when you’re paid out, all that deposit money and profit comes back as income, and the figures look much nicer!
The bottom line is – there are always solutions, it’s a question of whether you’re willing to spend the time finding them if you need them, and if you’re willing to pay the price.
I should also point out that the banks that DO this sort of “business” finance generally won’t consider you until you have an established wraps business. Which is why I said it should get easier again when you have enough wraps.
Getting to that point is the fun part! Because of course the same banks won’t lend you money for wraps under their normal home loan criteria.
Good luck!Keep smiling
FelicitySt George might be a possibility, they self insure, but I don’t like your chances of getting 95%!
I haven’t really found anything reasonable above 80% in the lo doc market with no LMI.
Even at 80% a lot of them charge higher entry fees, some stiff “early repayment” fees and a higher interest rate.Keep smiling
FelicityHi Todd
Look at lo doc / no doc and asset lends.
I suggest talking to a broker experienced in those types of loans.Keep smiling
FelicityI haven’t wrapped a house in that price range myself, but I know Rick Otton always says that at that level you need to use a lease option rather than an instalment contract. Apparently it’s just more appealing.
Also, things are a bit quiet here in Melbourne, being winter and with so much negative press on property, it could be that you’re encountering the same thing in Sydney.
The good thing is that it only takes one buyer to sell the house, and at least you’re getting enquiries, that’s a start.Keep smiling
FelicityOops!
I must have spelled the name wrong last time, I didn’t get any results. [blush2]
This time I did, thanks!Keep smiling
FelicityLooks like your question to me has been answered kay!
Naturally this is not suitable for all vendors, but it can be done. I had one guy (an investor) who was cashing up prior to the boom ending, and he wanted to know why nobody had ever offered to buy a house like this before. He figured he more than paid off his mortgage, plus he got his extra money paying a better rate of return than a bank. He was happy!
I do reiterate, though, that you MUST know your bank’s feelings on vendor finance before even trying this. I had 3 deals lined up that all fell by the wayside because I couldn’t find a lo doc lender who would do it.
You also need a very good agent who is willing to take your different idea on board and sell it to the vendor – I’m astounded how many agents close off the second you suggest something outside the norm.
Heck, I even have trouble sometimes putting in a deposit less than 10% with some agents!!!Keep smiling
FelicityHi lifex
Terms varied, but usually there was a 2nd mortgage involved, and mostly I paid around bank rates in interest.Keep smiling
FelicityWell, I don’t know why you don’t think it sounds like a wrap Greg – it sounds exactly like a lease option with a few conditions. They usually get lumped under the wrap umbrella.
Celivia – the name of Victor Ollis rings a bell, care to elaborate?Keep smiling
Felicity
