I should add that while I admire Montrose's win or be dammned valour, it was that spirit that when misfortune ( and employee negligence) arose meant I lost everything and now have to start again.

I should have listened more to the I Ching ( Chinese Book of Change) where some ancient sage wrote:
"Thus, the Superior Man, taking thought of future misfortune, arms himself against in advance"

Happy Hunting

Hi Angel,

I appreciate your feedback on the scenario I proposed.
Especially from someone with the "cojones" to take on a deal like yours, it underlines the soundness of my thinking.

I have to admit though, having been burned financially in the past due to reliance on others ( hence my need for assistance to put a PPOR deal together to get started) I wouldn't be able to sleep at night for the next 5 years till the deal was concluded, my liabilities covered, and my after tax profit banked.

When I was young, my mom taught me to never gamble more than i can afford to lose. The one period of my life when I forgot that advice and didn't establish "stop-loss" positions and protections, left me exposed to misfortune and when it came,  I lost everything.

I wish you every success with your deal – really I do….. but let me assure you that I will never be a competitor…..I've lost my appetitie for large lunches. Hehehehehe.

regards

Andy

Hi Folks,
The refindhouses.com.au site listed in xdrew's post is excellent. I had no idea thes ewere around so thanx very much for the info.

Really, really, useful stuff.

regards

Andy

Hi Folks, some feedback on a deal I'm working on is needed . . .

There's a 4 bedroom house that has been tenanted and neglected (and some damage) over the past 5 years of rental.
The owner has put it on the market at $195,000.

Generally, in this part of the sth coast, 4 bedroom homes within major towns rent for $300 to $350 per week and are valued at $280k to $350K even without a unique selling characteristic. Throw in views of the ocean or pasturelands and you can add considerably.

The reason for the cheap listing is that virtually every room requires renovation. The kitchen & bathrooms are all original and over 20 years old (prob closer to 30)

Every room has plaster damage, stained carpet etc.

I am confident that the property could be purchased for possibly as low as $180K with a quick settlement but even at full cost of $195 it is a good buy.

It is the worst house in the street, other properties are owner occupied and street / house proud. It offers ocean views (approx 2 kms away) and scenic bushland. The land is relatively flat and lawn/landscaping/gardens are easily added to improve street appeal. ( no rocks, boulders or protected bush habitats)

My calculations are that with much  less than $40k of work, the property should revalue at around $300k+ or higher.

Because we are already committed to purchasing an acre elsewhere in July, we cant divert our savings from the land, to put down as a deposit to purchase this one. (We are unlikely to meet the bank's T&C or the LMI)

However, given that we have good incomes of around $80 – 90K pa ( by country standards) with no debt (own our cars, boat etc) and if we were owner occupying the property we could pay $750+ per week towards a mortgage./ finance deal if we needed to in order to "buy" equity and secure the deal.

So, if we offered the vendor 2 years interest only payments at 7.5% ( based on 180k purchase) = $13,500 pa ($1,125pm)
and
10% deposit ($18,000) payable by December 31st, 2011
and
Vendor's Equity in capital appreciation of $25,000, payable at time of settlement (plus the $162,000 balance)

= $211,975 at settleement on a $180k property purchase  then worth over $300K

Is that a good offer that would be attractive to an investment property owner willing to let us have an extended settlement or lease to buy option  ?

If required, the interest can go higher and  the CG share too and we still come out on top within 24 months.

The idea is of course that over the two years, we use our strong cash flow to fully renovate and improve the property, as well as saving a larger deposit, so that when we approach a bank / lender in 18 months to 2 years, we have significant equity, as well as a cash deposit, to ensure the loan to pay out the vendor is approved.

Keen to know if its any good, or which parts need to be improved.

For the investors out there looking for cash flow positive investments, does this kind of "wrap / vendor finance" deal apply ?

This is a post I put on this forum elsewhere recently and on reading the past 5 pages of this thread, i realise the people on here are the ones I need to talk to.

Our plan is to build a portfolio of 3-5 properties over the next 7 years but our start is proving more difficult than expected (We're ready but the access to finance isn't).
The acre we have bought is in two 1/2 acre lots and ready for modest development to return rentals of about 11% p.a. on each. More importantly, they will provide a C.G of around $120K each within 12 months of commencement.
However, the first step is the important one and this property will provide us with an owner occupied home for our family, significant equity value to finance the other future deals, and ultimately, it will make a solid I.P. in its own right (5 +years later)

We just need someone to help us get into it.

I leave it here for your comments.

Andy
[email protected]  (if you think you can steer us to success)