Hi Dr X

Presuming that you are making positive cashflow from the L/O each month, why not just extended the L/O for whatever period is mutually agreeable.

I’m sure your solicitor can come up with an agreeable “extension” document for little cost.

I hope this helps.

Cheers, Paul

Hi

“Wraps are legal everywhere in Australia except South Australia.” This is a quote from Steve, taken from this web site. In south Australia you cannot use an Instalment Sales Contract (a wrap) but you can still use a Lease/Option (and many people do).

“Consumers considering providing finance through a mortgage wrapping arrangement should be aware that it is illegal in Western Australia without the appropriate license. To provide this type of credit to WA consumers they must be licensed as a credit provider and comply with the Consumer Credit Code.” This is a quote from the Western Australian Department of Consumer and Employment Protection’s web site and, as you can see, selling a property in W.A., using an Instalment Sales Contract (a wrap) is legal in W.A. as long as you have a license and comply with the UCCC.

Considering the profitable nature of a well run Vendor Finance (Wrapping) business, I certainly would not hold back starting such a business in W.A. because of the costs involved in the license application process or the ongoing associated costs of the license. You can find an application for the license at:
http://www.docep.wa.gov.au/cp/dev_publications/forms/credit/2002/A4%20CP%20indiv%20app.pdf

I hope this helps.

Cheers, Paul

Hi Trajik

I agree with Fun, I regard it as “before tax effects”

Cheers, Paul

Hi Fun

With regard to second hand residential property, the FIRB web site says:
“Acquisitions of residential real estate that has been previously owned or occupied, that is second-hand houses, flats or units, are not normally approved except for the following two categories:

Foreign nationals temporarily resident in Australia, holding a current temporary resident visa which permits continuous residence in Australia for a further period of more than 12 months from the time of application. The dwelling must be used as their principal place of residence1 and not for rental purposes, and must be sold immediately when their visa expires, they no longer reside in the property or when they cease to reside in Australia.
Persons who hold visitor or bridging visas are not eligible for approval under this category.
This category includes students 18 years of age and over studying courses of more than twelve months duration at recognised tertiary institutions.
A general limit of $300,000 applies to the value of properties acquired by these students.”

Other rule apply to new residential real estate that has been approved for sale to non residents. For the full story, check out:
http://www.firb.gov.au

I hope this helps.

Cheers, Paul

Hi John

You may be able to turn this property into a positive cashflow situation by on selling it using vendor (seller) financing. A couple of good places to start reading up on these seller financing techniques are:
1. https://www.propertyinvesting.com/strategies/lease-options.html
2. https://www.propertyinvesting.com/strategies/wraps.html
3. http://www.financewraps.asn.au

I hope this helps.

Cheers, Paul

Hi Bennett

When you mention “investment property” I think you’re thinking of what I call a “buy and hold” investment property. May I suggest that as you continue to read Steve’s book you take the time to research the other positive cashflow “investment property” strategies he uses.

I’m not much of a buy and hold specialist so I’ll leave others to advise you concerning that strategy. However I can tell you that times are looking good for other positive cashflow strategies right now and an interest rate of 9% may even improve the environment for these techniques.

Good luck.

Cheers, Paul

Hi Terry & Mortgage Advisor

I’ve recently spoken with the vendor finance specialist lawyer, Tony Codato about this. He tells me that vendor finance is calculated on the contract price and only payable on completion of the Instalment Sales Contract.

Another interesting point, concerning wraps in NSW, is that Land Tax can be made to disappear for both the wrapper and the wrappees as long as the wrappees use the property as their PPOR. Section 26 of the Land Tax Act.

Love that section 26

Cheers, Paul

Hi Pete

You can now pay for it on a yearly basis on an “emerging profits” basis. Of course, when you are refinanced out by your wrappee, you are then liable for the remainder of the capital gain.

I hope this helps.

Cheers, Paul

Hi stilllearning

My suggestion would be to try to work with an accountant who is familiar with wrapping. I say this because your accountant seems to be unfamiliar with the ATO’s position paper on wraps where they talk about capital gains from wrap deals being treated on an “emerging profits” basis.

Wrap savy accountants seem to be few and far between but I’m sure you’ll get a recommendation from experienced wrappers if you place a post or two on the various forums. There is also a state based list of wrapping specialists on the Vendor Finance Association’s web site.

I hope this helps.

Cheers, Paul

Hi J

What would you have to give the bank to payout their loan, including any early payout penalties (deferred establishment fees)?

Cheers, Paul