Hi Disco

The hurdle you're facing revolves around the number of transactions you be undertaking, i.e. around 50.  Obviously, these transactions will be undertaken with consumers and 'in the course of a business' (ASIC's wording).

As both 2nd Mortgages and Instalment Contracts are credit contracts, in both cases you would be providing credit and would need ACL coverage from a licence that has the authority to 'engage in credit activities as a credit provider.'

Is there someway you can get an ACL?  Give me a call if you'd like to talk about getting ACL coverage for these transactions.

Cheers,  Paul

Hi Paul

We have been working in the residential real estate vendor finance market place since 2003 and you may be interested in a blog post I've posted called '10 Mistakes to Avoid with Vendor Finance'. It's at:

https://vendorfinanceinstitute.com.au/10-mistakes-to-avoid-with-vendor-finance/

The Vendor Finance Association is a great place to meet vendor financiers. Dates and details of meetings are available at: http://vendorfinance.asn.au/meetings-and-memberships/

If you decide to do a VF course, there are numerous educators to choose from. Some that spring to mind are:

Sean Summerville – http://www.thepropertyking.com.au/

Rick Otton – http://www.rickotton.com/

Dave & Julie Siacci – https://vendorfinanceinstitute.com.au/siacci-system-of-vendor-finance-1997/

Paul Zalitis – http://www.aussiewrapper.com/

It is worthwhile researching all these educators and choosing one that suits your style.

Some other research locations are:

https://www.propertyinvesting.com/strategies/wraps

https://www.propertyinvesting.com/strategies/lease-options

https://vendorfinanceinstitute.com.au/about-vendor-finance/

http://www.vendorfinancelawyer.com.au/

I was in a full time job when we started out in 2003 and hugely enjoyed dropping the job in 2009.

Cheers,  Paul

Hi Ausprop

Regarding Instalment Contracts, Stamp (Transfer) Duty is payable, in all States except Victoria, within a certain number of days of 'exchange' of contracts.  In Victoria, the trigger for the payment of Stamp Duty is the transfer of title (for Instalment Contracts).

Yes, it is difficult to cover increasing interest rates using the Rent To Buy (RTB) technique but it can be covered by using an Instalment Contract.  I guess it boils down to no one technique being all things to all buyers and sellers.  In some cases we put buyers in a RTB for 2 or 3 years, to save the Stamp Duty and then roll them over into an Instalment Contract.  It's just a matter of working out what's best for your buyer.

Cheers,  Paul

Please take very close notice of Terry's warning regarding the the unlicensed foreign finance 'firm'.

Also, a number of people here have been alluding to Deposit Finance, i.e. the buyer gets an 80% or 90% LVR loan and the seller provides a second mortgage for the remainder.  In this scenario it's important to remember that the lender under the second mortgage (usually the seller) will be providing credit.  Not only, providing credit but more than likely providing credit 'in the course of a business'.

Providing credit, 'in the course of a business' means the second mortgage lender will require an Australian Credit Licence (ACL) with the specific authority to 'engage in credit activities as a credit provider'.  Not something to be ignored as penalties for acting without an ACL very significant.

Cheers,  Paul

If the LOANS section of the Particulars of Sale section, on page 3 of Part 1 of the standard Contract of Sale of Real Estate has not been filled out, then you don't have a Contract that is subject to finance.

And paying the full 10% now places you in danger of the Contract going 'unconditional' at the end of the cooling off period, not the 'subject to' period.

As with your previous experience, when the LOANS section is completed correctly, you normally pay a small holding deposit now and the remainder of the 10% deposit after the 'subject to' period runs out.

I suggest you read clause 14.1 of the Contract (on page 7), i.e. 'All money must be immediately refunded to the purchaser if the contract is ended'.

I've been doing this for awhile now and always get my solicitor to look over every Contract before I authorise it.  My suggestion is you do the same.

Cheers,  Paul

We were none of the aforementioned so we got good mentors 

Cheers,  Paul

Hi Tom

We use Joint Venture (JV) agreements for most of our vendor finance transactions.  Around 50% of our core business is JV's with investors who want to get into vendor finance (VF).  This involves buying a property traditionally and then on-selling it with VF.  The other 50% of our core business is JV's with frustrated, negatively geared landlords.  This JV involves our negative2positive process, i.e. selling a poorly performing IP with VF to improve cash flow.

In both cases we don't need to use a lease/option during any part of the transaction.  Unless we decide to sell with a L/O but that probably wouldn't be the case in Vic 

Cheers,  Paul

Hi Carmen

Jules Lewin – Solicitor

Charthill Legal

88 Cresswell Rd

Dianella, WA 6059

Phone: (08) 9375 5161

(m) 0417 921 428

(e) [email protected]

I haven't used Jules personally but we do manage a couple of Instalment Contracts he's drawn up.  He's also mentioned on Tony Cordato's website ay:

http://www.vendorfinancelawyer.com.au/vendor_finance_specialists.htm

Cheers, Paul

Our favourite PM's nick name is 'The Terminator'.  Boy is she tough but straight down the line.  I wish we could clone her 

Cheers,  Paul