Hi Nicole

With your mention of being a student of Robert G Allen and doing some Lease/Options, the following information will help you get up to speed with real estate vendor finance in OZ.

The three most popular Vendor Finance strategies are:

1.  Rent To Own.  This is documented with a Residential Lease and an Option (you are obviously already familiar with these)
2.  Deposit Finance.  This is often documented with a second mortgage.  This is where the Buyer gets a traditional loan for the property and the Vendor finances the remainder.  This strategy has become quite difficult to use due to traditional lenders tightening their rules since the GFC and the new National Credit Code.
3.  Instalment Contract.  Sometimes called Vendor Finance and at other times, a Wrap.  See the links below to see how these operate.

We've been operating in the Vendor Finance industry since 2003 and it's worked for us.  If you'd like to learn more about vendor finance in Australia, I suggest you do a search for Vendor Finance here and in the Somersoft forum.  You'll get an immense amount of reading material in both these forums.

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/strategies/lease-options
http://www.jvpropertypartners.com.au/index.php?option=com_content&view=article&id=50&Itemid=75
http://www.vendorfinancelawyer.com.au/
http://www.vendorfinance.asn.au/   The Vendor Finance Association of Australia

Cheers,  Paul

Hi Robbie

We were able to use the "prior learning" path so I'm not sure what the CPP40307 will give you.  Craig will be able to give you that info.

Cheers,  Paul

Hi Robbie

Yes the NSW REI and the NSW Consumer Affairs Office are excellent NSW contacts for the information you need.  Another NSW based resource for your enquiries is The Australian College of Professionals ( http://www.collegeaus.com/index.html ).

Not only do they run the courses mentioned above, they are also very good at being able to assess any experience you may have to see if you qualify for any prior learning credits.  A guy there by the name of Craig Swan, I found to be particularly helpful.

It was Craig that mentioned the forthcoming National Real Estate Licence to me.  He mentioned that the original plan for the National Licence had it coming into being on the 1st January 2010, or possibly 2011, can't remember.  Other instructors at the College mentioned that this National Licence is heavily bogged down in Inter State discussions and not to expect it for "awhile" yet.

I have nothing to do with the College, other than having been a student.

Cheers,  Paul

Hi Intrigue

You couldn't get a better description of Rent To Owns (Lease/Options) than Anthony's above.  However I think your friend may have really been asking you to look at the Vendor Finance angle, as a Rent To Own is one of the available Vendor Finance strategies.

The three most popular Vendor Finance strategies are:
1.  Rent To Own.  This is documented with a Residential Lease and an Option (see Anthony's post above)
2.  Deposit Finance.  This is often documented with a second mortgage.  This is where the Buyer gets a traditional loan for the property and the Vendor finances the remainder.  This strategy has become quite difficult to use due to traditional lenders tightening their rules since the GFC and the new National Credit Code.
3.  Instalment Contract.  Sometimes called Vendor Finance and at other times, a Wrap.  See the links below to see how these operate.

We've been operating in the Vendor Finance industry since 2003 and it's worked for us.  If you'd like to learn more about vendor finance in Australia, I suggest you do a search for Vendor Finance here and in the Somersoft forum.  You'll get an immense amount of reading material in both these forums.

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/strategies/lease-options
http://www.jvpropertypartners.com.au/index.php?option=com_content&view=article&id=50&Itemid=75
http://www.vendorfinancelawyer.com.au/
http://www.vendorfinance.asn.au/   The Vendor Finance Association of Australia

Cheers,  Paul

Hi Cazzie

I'll get to your questions first.

You only need one deposit because as you say, when it comes time to transfer to a traditional loan, it is treated as a refinance.  This wan't always the case but we now have a channel into one of the Big 4 that's agreed to treat it as a refinance.  A refinance is usually treated more favourably by a lender as the existing loan is "seasoned", i.e. you are able to show your capacity to repay the loan over a number of years.

We write our vendor financed loans over 30 years, to keep the weekly repayments down as low as possible.  We find most of our clients refinance into a traditional loan in 2 to 5 years.

A couple of good places to look for vendor financed homes are:
http://www.renttoownhome.com.au &
http://www.vendorfinancedirectory.com.au/
I don't have any interest in these sites, other than advertising on them.

Another good spot to track down available vendor financed properties in your area, is to check out the Classified ads in your local community newspaper. Not the glossy real estate section, the Classifieds.

I won't argue with the contention that vendor finance buyers pay a premium for not being able to access a traditional loan at the time of their purchase.  However I think emails like the following I received on 28/3/11 tend to overcome this perceived disadvantage:

"In April 2004 I saw a house advertised in the local paper as ‘vendor finance’. Having recently done the divorce settlement thing I was a little cash poor and this looked like an ideal opportunity to get back into my own house with little deposit. Having had little experience of vendor finance arrangements I was a little nervous and did a bit of investigating of the process.  No one I spoke to had experience of this either and there were a few voices of gloom advising against this.  Nonetheless, I took the plunge and contacted the vendors.  Once speaking to Paul and Karen I had no doubt that this was a great opportunity and their honesty and forthrightness immediately alleviated any concerns I had.  From the very beginning they were friendly and supportive, providing any information I needed, and much more.  At every step in the process they provided that little extra helping hand so that it all went very smoothly.

It has now been seven years since my purchase and I am very happy in my house. Over the years my financial situation has improved and with prompting and support from Paul and Karen I have moved from the vendor finance arrangement to full title ownership (well…me and the bank!).  I can wholeheartedly recommend Paul and Karen’s business to anyone in the situation to take advantage of it."

Cheers, Paul

Hi Be_Rich

I might be tempted to buy a property and on-sell it with vendor finance, so it generates, say, $500 per month positive cash flow.

We've been operating in the Vendor Finance niche since 2003 and it's worked for us as a great portfolio building tool.  If you'd like to learn more about vendor finance in Australia, I suggest you do a search for Vendor Finance here and in the Somersoft forum. You'll get an immense amount of reading material in both these forums. 

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/strategies/lease-options
http://www.jvpropertypartners.com.au/index.php?option=com_content&view=article&id=50&Itemid=75
http://www.vendorfinancelawyer.com.au/
http://www.vendorfinance.asn.au/ The Vendor Finance Association of Australia

Cheers, Paul 

Hi Becjohnno

The following is a quote from our website on the subject of ACL Coverage for Vendor Financiers:

"As one of Australia’s most experienced Vendor Finance lawyers wrote recently, “anyone serious about vendor finance cannot be a one trick pony – that is, do lease options only.“

The new National Consumer Credit Protection Act requires anybody or any company who “in the course of a business” provides consumer credit or consumer credit advice, to hold an Australian Credit Licence (ACL) or to be a Credit Representative (CR) of an ACL holder.

• You do not need a ACL coverage if you only plan to use Lease/Options.
• If you plan to use Instalment Contracts and/or vendor financed Mortgages in your vendor finance (VF) business, you need to be an ACL holder or a CR.
• All Vendor Financiers who intend to become VF Joint Venturers, or who desire to advertise on websites or in the media need to obtain an ACL or be authorised as a CR."

A lot of Vendor Financiers have been spooked by the new Australian Credit Licence but it's not difficult to get ACL Coverage for your business if you plan to use strategies other than Lease/Options.  More information can be found at our website at:
http://www.vendorfinanceinstitute.com.au/home/?page_id=10

Jason is spot on in his referral of Tom Forster.  I believe Tom is the most knowledgeable vendor finance solicitor in QLD.  Co-incidentally his mentor in Vendor Finance made the "one trick pony" comment 

Cheers,  Paul

Hi Glenn

Just in case you think I'm suggesting something new and "out there", this link may help:
http://www.jvpropertypartners.com.au/index.php?option=com_content&view=article&id=50&Itemid=75

Cheers,  Paul

Hi Paul

I've sent you an email.

Cheers,  Paul