Hi Harry

I agree with Terry, i.e. work out a percentage split that you're both happy with and adjust the percentage unit ownership.  It's really a matter of your negotiating skills and your ability to sell the value of what you're bringing to the JV.

However, as you do more transactions together, your experience will increase and you may look back and wish the unit split was 50/50.  One way around this is to leave the unit ownership at 50/50 and adjust the profit share for each project through the JV agreement.  This means you have a JV agreement for each property (a good idea anyway) and profit share and all other variables within the JV can be adjusted as projects vary and expectations invariably change.

Cheers,  Paul

Doctorate, geez I hope not!  The Diploma two day upgrade was about as exciting as watching the grass grow

Cheers,  Paul

Hi Andrew

One of the best ways to find owners who may be interested in giving you the opportunity to buy their property via a Rent To Own, i.e. a Lease with an Option, is to contact owners who have had their property up for sale and are now in the process of putting it up for rent.  We find property managers to be a great resource in finding these frustrated sellers.

Lease/Options are part of the real estate vendor finance industry, an industry you seem interested in from your post.  I'd suggest your first move should be to research and then do some more research A few web resources that may help in your search for information are:

https://www.propertyinvesting.com/strategies/wraps
https://www.propertyinvesting.com/str…/lease-options
http://www.jvpropertypartners.com.au…d=50&Itemid=75
http://www.vendorfinancelawyer.com.au/
http://www.vendorfinance.asn.au/  The Vendor Finance Association of Australia

Once you have researched and read as much as you can, it's worth considering how to get more detailed information/education. Possibly with one of the educators out there or via some hands on learning with an experienced vendor financier.

Cheers,  Paul

G'day Brad

Glad to see you and Monique are over the gastro.  We always use:

Tom Forster
Litigation Law Queensland
PO Box 777 Main Beach Qld 4217
Phone: 0428 777 007
Fax: 5591 5571
Email: [email protected]

Cheers, Paul

Hi All

Getting ACL coverage via the Credit Representative path does have it's limits as the legislation requires all Credit Representatives to act "on behalf of" their Licensees.  It's worth looking at what this limitation means, with regard to the "provision of credit" and the "provision of credit assistance".

If you provide credit, in the course of a business, Credit Representative status does not give you ACL coverage for that transaction, as it is you that is providing the credit not your Licensee.  If you, in the course of a business, are the lender on a consumer credit contract, you need an ACL that includes the authority to provide credit.  This also applies to real estate Instalment Contracts, i.e. the vendor is providing credit.

If you provide credit assistance, Credit Representative status allows you to give this assistance on behalf of your Licensee.  This means you cannot act independently.  Practically this means you must conduct all credit assistance transactions on behalf of your Licensee, on their paperwork.

ASIC have written a lot in explanation of the term, "in the course of a business".  An overview of this subject is available at:  http://www.screencast.com/t/uDWQu5MDIN5m

However, in summary, a specialist vendor finance lawyer in one State believes you will not be regarded as being "in the course of a business" if you sell one property, you own, with a vendor finance credit contract.  In another State, another specialist vendor finance lawyer believes you may be able to sell 3 to 4 of your own properties with a vendor finance credit contract, without being regarded as "in the course of a business".

As the National Consumer Credit Protection Act is relatively new, there is no case law to help firm up opinions on "in the course of a business" at this point.  My best advice is to make sure you get advice on the above subjects from your lawyer.

Cheers, Paul

Hi Johk

We discovered vendor finance (VF) in 2002 and did our first VF transaction in 2003.  Since then we have gradually built our VF business so that today we work in our business full time so, for us, it's been a great niche to get into.

One important point to remember when thinking of doing VF, is that you're selling the asset to generate cash flow.  I believe it's worth remembering that VF is a cash flow business but your real long term wealth is in the equity you own in real estate.  In short don't become so involved in VF that you neglect planning your buy and hold portfolio.

I'd suggest your first move should be to research and then do some more research A few web resources that may help in your search for information about vendor finance are:
https://www.propertyinvesting.com/strategies/wraps
https://www.propertyinvesting.com/str…/lease-options
http://www.jvpropertypartners.com.au…d=50&Itemid=75
http://www.vendorfinancelawyer.com.au/
http://www.vendorfinance.asn.au/ The Vendor Finance Association of Australia

Once you have researched and read as much as you can, it's worth considering how to get more detailed information/education. Possibly with one of the educators out there or via some hands on learning with an experienced VF'er.

The reading above should give you a lot of answers to the questions you've asked above.  Feel free to come back again with those that aren't answered.

Cheers, Paul

Hi All

We discovered vendor finance (VF) in 2002 and did our first VF transaction in 2003.  Since then we have gradually built our VF business so that today we work in our business full time.  We received our education from many VF educators, including Rick Otton, Steve McKnight, John Burley and Joe Arlt.

If you do decide to use the services of a VF educator it is worthwhile knowing what's available in the market.  Here is a list of some of the Australian based VF educators; Rick Otton, Sean Summerville, Paul Zalitis, Dave & Julie Siacci, Gordon Ku, etc.

I'd suggest your first move should be to research and then do some more research A few web resources that may help in your search for information about vendor finance are:
https://www.propertyinvesting.com/strategies/wraps
https://www.propertyinvesting.com/str…/lease-options
http://www.jvpropertypartners.com.au…d=50&Itemid=75
http://www.vendorfinancelawyer.com.au/
http://www.vendorfinance.asn.au/ The Vendor Finance Association of Australia

Once you have researched and read as much as you can, it's worth considering how to get more detailed information/education. Possibly with one of the educators out there or via some hands on learning with an experienced VF'er.

I also suggest you listen to Richard's advice very closely.  If you are thinking of entering the VF industry, planning how you are going to ensure you do not run foul of the National Consumer Credit Protection Act and how to operate with traditional lenders should be an important part of your due diligence.

Cheers, Paul

Hi Stewart

Thanks for your call and sorry we couldn't help with an Instalment Contract (IC).  As Richard mentioned IC's are controlled by the National Credit Code (NCC).

Considering the dollar value of your unpaid payment defaults, I'd probably consider putting the house purchase on the back burner for awhile and get those payment issues to show as 'paid' on your Report.  Because, even if you were able to 'buy' a property via a non NCC regulated Rent To Own, you'd probably only get the Rent To Own for a maximum of 5 years and those payment issues will still be there when it comes time to finance out of the Lease/Option (Rent To Own).

Cheers,  Paul

Hi Maurice

You can buy the property with a vendor finance Instalment Contract (IC) but in this case it may be better to control the property with a Lease/Option (L/O).

However the challenge with either the IC or the L/O is the security required for the construction finance, i.e. you aren't on Title and therefore can't supply this property as security.  One way to overcome this may be some sort of JV with the title holder, allowing the security to be provided to the lender.

I would also suggest you contact the excellent finance brokers in the Finance sub forum here.  If you consider the JV idea, I'd suggest you have a talk with Lewis O'Brien at:

Lewis O’Brien & Associates
Suite 113 
89 High Street 
Kew   Victoria   3101

phone: 03 9888 6388
fax: 03 9888 6366

Lewis is very familiar with the structuring of JV's. 

Cheers,  Paul

Hi Darren

I notice you mentioned that you can't rent it because 'the money is needed'.  May I ask, how much of the money is actually needed?

The reason I ask is, if you were to sell it with a vendor finance Instalment Contract, you may get sufficient money from the deposit to cover what's 'needed".  It's normal to get a $10K to $20K deposit and often you'll get surprised by a purchaser having more.

If the deposit covered your immediate needs, you could structure the remainder of the Instalment Contract to give you around $500 per month positive cash flow (possibly more).

Cheers,  Paul