Hi Walter

Tony Cordato – 02 8297 5600

Cheers,  Paul

Hi Bambam

The great thing about Lease/Option's is that they are almost infinitely variable.  All the variables, such as strike price, term, option fee, on-going option fee and rent credit, can be setup to make it work for you and your new purchaser.  The reason we tend not to use them is because the Lease bit of the transaction comes under the control of the various Residential Tenancy Acts around Australia and we've found that L/O buyers tend to have a tenant's mentality.

Possibly consider selling with an Instalment Contract.  It's a standard Contract of Sale with an Instalment Payment Schedule added and your new buyers will be able to claim the FHOG if this paperwork is used.  In Qld the FHOG is paid after the Contract has been running for 12 months.  As it 's a real contract of sale our instalment contract buyers tend to have a buyer's mentality and we find that much more pleasant

Cheers,  Paul

Hi Damian

Their are/were a number of wrap kits/packs available in the marketplace.  Rick Otton's Wrap Pack is still available, Steve McKnight's Wrap Kit is no longer being sold and I think Paul Zelitis (not sure if that's the correct spelling) also has one out.  I don't know the name of Paul's but I do have both the others.

One point to remember about all these Kits/Packs is that any legal paperwork that's included is only an example and should not be used in a real transaction.

We get charged $980 to get our Instalment Contracts drawn up.  Who pays that $980?  The new buyers.  We tried doing it ourselves but it takes way to long and why would we bother, when the new buyers pay and we have confidence that our solicitor will get it right.

Also, we insist that every one of our new buyers gets independent legal advice.

Cheers,  Paul

Hi BamBam

Richards suggestions are spot on.

One small technical aspect however relating to the new National Credit Licence.  In Tony Cordato's "A Vendor Financier's Guide to the New National Credit Act", he mentions, "The use of Leases and Options for vendor finance is not affected by the new National Credit Act."

The Guide can be viewed at:
http://www.vendorfinance.asn.au/UCCC.pdf

Cheers,  Paul

Hi All

As Richard mentions, S.A. is the only State that will not allow the use of an Instalment contract in a real estate transaction (Wrap).

However, in 2009, S.A. also tightened up the rules regarding Lease/Options.  So much so that a good friend of ours, who had been using Lease/Options in Adelaide for many years, packed up his family and moved to Melbourne, so he could continue his vendor finance business.  In short, I'd suggest you give S.A. a miss when it comes to vendor finance.

And most "commentators" get their information from where?  Certainly not from our clients, who couldn't get a traditional loan, bought with vendor finance from us and have now refinanced into a traditional home loan.  For them it's been a great "stepping stone" process back into the traditional finance channel.

Cheers,  Paul 

Hi Heng

The "and/or nominee" loophole has been closed off in NSW for quite awhile now.  If used it will trigger double stamp duty.  I think it's the same in Vic but not sure.  I suggest you put this question to your solicitor before you consider using this clause.

A put and call option (if the call option is worded correctly) would work for this siutation but, if you think developers were negative about the and/or nominee" clause, they'll be even more unlikely to accept a put and call option.  It just depends how "motivated" they are to sell.

Cheers,  Paul

On the other hand, we bought a so called guru's manual in 2002, when we were living as expats in the middle east and decided to move home to do it.  We later attend some seminars, got some tutoring and now my wife and I both work this business full time together.

I agree, be wary and do your due diligence. Listen to the promoters and the nay sayers and you'll probably realise it's never completely black or white.  The middle road is quite often the winner 

Cheers,  Paul

Hi All

I think I'll stay out of the moral argument here, as there are obviously two very different views.

Regarding the method I outlined above, if the property is in NSW, there will be one amount of stamp duty payable.  This is because the resulting Contract of Sale will show that the title will transfer from the original owners to the new buyers.

However, with the new regulations in Victoria, full stamp duty on the strike price of the call option would be payable and therefore, to complete the transaction, with a call option, would incur double stamp duty.

Cheers,  Paul

Hi DC

We take an each way bet on that question.  That is, we utilise our vendor finance, positive cash flow properties to support our growth oriented, buy and holds.

As to the Aus Fin Review article, my crystal ball is a bit cloudy on the one

Cheers,  Paul