Hi Tyler

I won't make any comment on ethics here but you may be interested to learn of the different types of Agency Agreements in WA and how these effect the payment of commission.  The WA government has a publication at:
http://www.reba.wa.gov.au/Content/Buyers_and_sellers/Information_for_Homebuyers_and_Sellers.html

Go to page 10, where it starts, "There are five types of Authority to Sell.  These are:"

Cheers,  Paul

Hi Max

A 5 year term I/O, amortized over 25 yrs with the balloon payment works as follows:
1.  The term of the second mortgage is 5 years, or whatever you can negotiate.  The longer the better, for you.
2.  Interest Only – self explanatory
3.  Sorry, it's Interest Only, so you just make I/O monthly payments.  If it was going to be a Principal and Interest loan, you can make payment as if it were a 25 year loan and pay the remainder (the balloon) at the end of the 5 years.
4.  In the I/O case you would just pay the original principal owing at the end of 5 years (the balloon).

Cheers,  Paul

Hi Max

Like NSW, stamp Duty is payable within 3 months of Exchange of Contracts, i.e. you have 2 months to register the documents/transfer and 1 month to pay.

I usually deal with residential property so I'll stay out of the GST question.

I'll assume the property is not zoned residential as that will mean your loan(s) on the property will be unregulated by the new National Credit Code.  I'd guess that the 60% you get from a traditional lender could easily be structured as I/O for at least 5 years.

You could then offer the Vendor a second mortgage for the remaining 40%.  To make it more attractive to the Vendor, you may offer him/her a 5 year term, I/O, amortised over 25 to 30 years (to keep your monthly repayment reasonable), with a ballon payment, for the remainder of the loan, after 5 years.  All secured by a caveat.

If I was the vendor, I wouldn't accept your offer but it's worth as try.  You did mention he/she is motivated 

Cheers,  Paul

Hi Joe

The MFAA have some interesting career information at:
http://www.mfaa.com.au/default.asp?menuid=42

Cheers,  Paul

Hi Errol

Thanks for the call. It was good to talk.

After making all the "newbie" mistakes in the world, we ended up making $19K from our first VF transaction.  If I had done it with an experienced VF'er, the transaction would have had a total profit of about $35K.  Having done it with an experienced VF'er would have given me about $17,500, i.e. not as good as what we managed to achieve ourselves.

The challenge was, the "newbie" mistakes took a while to disappear, i.e. they carried on into the next few tranactions, effecting our earning capacity seriously.  I believe hands-on "doing" is one of the best education systems.  Sitting in a classroom, for however many days, is how we started but I wouldn't have, if "on the job training" had been available back then.

Cheers,  Paul

PS.  Thanks duckster

Hi Daniel

We could do the plumbing ourselves but we budget to use a plumber.  To us, paying property management fees to a GOOD property manager, is far more preferrable than the sheer frustration of working within the Residential Tennancies Act.

Our favourite property manager had a great nickname, "The Terminator"     i.e. make sure your property manager is fair but tough and meticulous when it comes to regular inspections.  It doesn't overcome all the challenges generated by tenants but it sure keeps a lot of the rubbish away from us.

Cheers,  Paul

Hi PJ

Steady employment and good serviceability.  We also look at how often they move their PPOR and we make a point of visiting their PPOR if possible.  How they treat the property they're currently living in, will be mirrored in the property you're selling them.

If you get hold of a traditional lender's home loan application form and look at their questions, you'll see all the important points.  We may reduce the deposit requirement and accept some small "paid" defaults on potential clients credit reports but otherwise our application form looks pretty much the same as a traditional lenders.

Cheers,  Paul

Hi PJ

Some aspects of our business we will keep confidential   However in relation to your question about our VF buyers attitude towards capital gains, I'd say it's almost non existant.  Normally our buyers have been locked out of home ownership for some time because of their inability to get a traditional home loan and they're usually pretty unhappy about that sittuation.

Their focus becomes home ownership.  They know they pay a premium price when they buy from a vendor financier but it doesn't seem to worry them.  I've told buyers what I've paid for a property and they certainly know how much it's costing them.  Their response, almost without fail is, "you've got to make your money" and we move on.  They also know they would probably never save the deposits required by traditional lenders, so they've worked out that, over time, they'll recover the premium they've paid.

Cheers,  Paul

Hi PJ

A period of high capital growth.  This is because it enables your VF buyers to refinance as soon as possible and give you your back-end profit, i.e. the difference between what you bought the propery for and what you on-sold it for, less what they've paid off while they were with you.

However, interestingly we manged to start 2003 and, of course, at the end of 2003, capital gain in NSW slowed dramatically and hasn't done terribly well since.  This has forced us to structure our VF business so it works well in both high and low capital gain environments.

Cheers,  Paul