Hi Jeff Sally

We use Tom Forster for all our Qld vendor finance transactions.  He can be contacted at  0428 777 007.

Cheers,  Paul

Hi Jeff Sally

Are you using a specialist Vendor Finance solicitor to, at a minimum, look over your lease and option documentation?  We always use the services of one of these specialists to cover our position in each transaction.

The reason I ask is, if you are using such a specialist and he/she hasn't told you how to apportion your incoming funds correctly, then find another solicitor.  If you aren't using the services of such a specialist solicitor, my suggestion would be to contact one asap.  He/she will get you sorted out on this point quickly and can check out the rest of you paperwork at the same time.

Cheers,  Paul

Hi Peter

It's fashionable these days to put down Negative Gearing as a tool for building your property portfolio.  However, in the Australian market, it seems to be an underlying truth that initial negative gearing translates into substantial capital gain over the long term.

By using only negative gearing, the number of properties you can add to your portfolio is limited.  Limited by your ability to cover your portfolio's cash shortfall, i.e. the shortfall between the rent you receive and the mortgage you have to pay.  When you can no longer afford the shortfall of an additional property, your portfolio building comes to a grinding halt.

However what if there was a way to:
1.  Buy a property that generates fixed positive cash flow and has fixed capital gain
2.  Use this positive cash flow to subsidise a negatively geared property that has good long term capital gain prospects?

Let's go through that again:
Cash Flow.  The first property may have, for example, positive cashflow of $400 per month and the second property may have a cash shortfall of $400 per month.  A cash flow neutral situation.
Capital Gain.  The first property is setup so that it generates a fixed level of capital gain, for example $40,000.  The second property is purchased in an area with good future capital gain prospects and has unlimited capital gain potential.

Question 1.  If we use only negative gearing as a portfolio building tool, how many properties can we buy?  Answer: As many as we can afford.

Question 2.  If we use a system where one property subsidises the next property, how many properties can we afford?  Answer: As many as we can find

Cheers,  Paul

Hi SUN553

We've owned an IP in Toormina (near Coffs Harbour) for 3 years, that's in an area that has quite a few Housing Commission places.  I believe it was all Housing Commission once but, over the years the've gradually been sold off to private owners.  This transition to private owners definitely seems to have a beneficial effect.  We sold it with Vendor Finance and the lady that bought it reckoned it was a good area to live in.  We only got this information recently, as she's moved on and mentioned the info when we were picking up the keys from her.

If you can get access to RP Data, you can look at a plan of the area and see who owns what.  We then go an talk to neighbours who are private owners.  We find they're more than keen to tell you what the area's like.  Good luck.

Cheers,  Paul

Great minds think alike   We've been working in Greta (just down the road).  Co-incidentially the example on our web site (on the joint Venture page) is the last property we did and it's in Greta.

Cheer,  Paul

Hi Steelar

We usually secure a property with a call option and a lease, both with the same term.  This is step one and it's important not to go past this step unless you are assurred that all this paperwork is correct and you secure your interest in the property correctly (based on your States procedures).

Once this paperwork is in place, you have a large degree of control over the property.

Of course, there's no point in entering into this transaction unless you know your exit straegy for the property.  Are you going to:
1.  Rent the property and keep it as a buy and hold
2.  Renovate the property and re-sell it.  This will require specific clauses to be added to the paperwork mentioned above
3.  Possibly even re-sell the property at a higher price.  This also will require extra clauses in the above paperwork.

For starters, I'd suggest you pick an exit strategy that suits you best.  Then learn the best way to find these properties. Along the way, you will need to become familiar with the paperwork mentioned above.

A word of caution.  Don't skimp on making sure your paperwork is correct.  Do utilise the services of a specialist solicitor.

Cheers,  Paul

Hi Sean

If you asked my opinion, I'd warn you off wrapping your property to an existing tenant.  My experience is that they hardly ever move from a tenant's mentality, to a buyer's mentality.

However, if that's your decision,PM me and I can put you in touch with a reputable Vendor Financier in NZ who will be able to help you out.

Cheers,  Paul

Hi Surrealist

Back in 1998 I looked into Vendor Finance as it relates to residential real estate.  A bunch of U.S. promoters were in town that year and they were talking about wraps and lease options.  In my "wisdom" I worked out that this couldn't be done in Australia!  Sheer brilliance

It was 2002 before Karen and I looked into it again.  We started our Vendor Finance business in 2003 and haven't looked back.  Needless to say, I'm very wary of people who say "it can't be done here" these days

Cheers,  Paul 

Interestingly, all lawyers who offer a no win/no fee service, don't offer this service to anyone that walks in off the street, with any old case.  The case is looked at and weighed up very closely before no win/no fee is offered.

Anecdotal information tells us that 80% of people who go to any form of seminar, to learn something new, will do absolutely nothing with the information.  Does that mean we should not allow these seminars to continue?  Or should we ask the presenter to give away all his/her aquired information and knowledge to 80% of the attendees and make the other 20% pay?

I've got to admit, I have paid for a few seminars and happily remained in the 80%.  However, in 2003 my wife and I grabbed hold of the information in one seminar and actually did the required activity/work. We were pretty lousey at it at first but the result is that we are now working full time, in the business that has grown out of this activity/work.

There are always two sides of the story

Cheers,  Paul

Hi Steven

Exactly as Richard says for Instalments Sales Contracts that are often called Vendor Financing.  Just be aware that if your girlfriend were to buy the property via a Rent To Own, i.e. a Lease with an Option, she would not qualify for the FHOG until such time as she exercises the Option and buys the property.

Rent To Owns also come under the generic banner of Vendor Financing but, as the seller has mentioned that she'll be eligible for the FHOG, I'm guessing they will be using an Instalment Sales Contract.

Cheers,  Paul