Hi bb

We bought quite a number of properties this way prior to the GFC and the new NCCP Act 2009.  Just like your transaction, this week a seller offered to carry back 20%.

Over the last month or so I'd heard that lenders had been "lightening up" so I thought I'd give it a try.  I spoke with two of the most respected brokers from this forum and another forum, to see if it would "fly" and, in short, it still seems to be a non starter.

Don't get me wrong, we still buy with carry backs, we just have to do it another way.  I won't put that "other way" up here but feel free to call.

Cheers,  Paul

Hi TNA

I'm guessing you're trying to refinance out of a Lease with an Option?  If the experts here in the Finance sub-forum can't help and your option term is running out, you may consider asking the Vendor to give you an Instalment Contract.

As a matter of interest, if it is a Lease/Option, could you give us more details?

Cheers,  Paul

Hi Mac

Welcome to the forum.  We all hope you enjoy your time here.

As Terry says, if you do a search, you'll find many posts regarding options.  You'll find two main thread types for options.  They are:
1.  Using options to secure property, while you secure a DA and possibly do a development, or
2.  Use options to buy (control) and sell property, as part of a Vendor Finance strategy.

We have built our Vendor Finance business using options, instalment contracts, vendor financed mortgages and joint ventures.  Risk management has improved over the years.  Mainly because we've become more competent and because there is more legislation attached to the business and this has helped weed out the cowboys.

As far as returns go, Karen & I live off our business and it also supports our buy and holds.  A few web resources that may help in your search for information about options and 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
http://www.vendorfinanceinstitute.com.au

Cheers,  Paul

Hi Rippah

I'll just talk about the nature of the option you can use, not the challenges involved in getting a vendor to agree.

I've got to agree with Terry, i.e. simultaneous settlements are nail biting affairs.  We've done them but, apart from the excitement   we had to find a way around the double stamp duty issue.

As Terry says, assigning the option is one way.  However the challenge with that is your buyer sees the price you optioned the property for, i.e. the strike price.

To overcome these common pitfalls of the "standard" call option, the "Blind Option" was developed.  It makes the strike price completely invisible to the buyer throughout the whole transaction and, because it is a creative form of assignment, it solved the double stamp duty issue for us.

Cheers,  Paul

Hi Bardon

This is the process we call negative2positive.  There are two sets of legal paperwork that you could use to achieve what you're looking for:
1.  A Lease/Option or
2.  An Instalment Contract

Cheers,  Paul

Hi Adam

We're based in Port Stephens, NSW.

Selling a property with vendor finance means you are selling into a market that's very different from selling to traditional buyers, i.e. traditional buyers can usually get a home loan.  For whatever reason, people who buy with vendor finance can't get a traditional loan and, on the whole, they're pretty annoyed at not being able to buy their own home,  They know they'll pay a premium price for a VF property and they are more interested in the opportunity to get into their own home, than they are in the finer points of the property and any limitations in the finance.

We insist that all our buyers get independent legal advice and if the 5 year lock-out clause does not suit them, they will not go ahead.  My experience says they will not worry about this at all.

Vendor Finance in residential real estate was the norm, until the banks started lending on resdential blocks of land in the 80's.  A good place to find out how long vendor finance has been around is:
http://www.negative2positive.com.au/index.php?option=com_content&view=article&id=50&Itemid=75

Also, the government regards a sale via a VF Instalment Contract as a real sale because they pay the FHOG to eligible purchasers buying their first home this way.

Cheers,  Paul

Hi Mark

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 and then, buy another property with resonable capital gain prospects but negatively geared to the tune of $500 per month 

Obviously that's a idealised example but buying buying one and turning it into a cash cow to support our buy a hold is what we've been doing for a few years now.

Cheers,  Paul

Hi Keiko

Based on the lack of responses and my gut feel, I'd guess, probably not.

Cheers,  Paul