Hi DNA

So far we have sold 5 homes using vendor finance Instalment contracts, i.e. Wraps. All in NSW. Two of the 5 received the FHOG. One couple paid us a $3,000 deposit and the other couple paid $1,000.

I’d suggest you have a chat with Tony Cordato. I believe he should be able to give you the correct info.

Cheers, Paul

Hi

Andre, sorry I can’t help you much with your finance question. However, Algenon I can help you with what the FIRB has to say about Lease/Options to non-residents.

If a lease for a residential property is less than 5 years (including any possible extensions), FIRB approval is not required for that lease. If longer than 5 years then it is required.

The FIRB also suggest that when writing up the Option you include wording which only allows the Option to be excercised if the Option holder is granted permanent residence prior to the expiry of the Option.

I hope this helps.

Cheers, Paul

Hi easymoney

I’m not sure if I’m able to mention a thread on another website but here goes anyway. The couple that are featured in the latest issue of API, post regularly in another forum under the name “quiggles”. They have written a very informative series of posts about their U.S. investing experiences at:
http://www.somersoft.com/forums/showthread.php?t=18101

I hope this helps with your research.

Cheers, Paul

Hi Frano

There are 3 wrap friendly lawyers listed for WA on the Vendor Finance (Wraps) Association of Australia website. On the “Wrap Specialist” page. The Association’s website can be found at:
http://www.financewraps.asn.au

Cheers, Paul

Hi Scottie

I can think of 3 options. There probably are more.

1. When I was a mortgage broker we had access to a lender who would supply loans to 105%, 110% and 115% of valuation. You have to be perceived as a very “solid” risk by the lender to get one of these. That usually boils down to a great employment history (among other things). The interest rate is usually up to a couple of percent above the norm.

2. Purchase a property from somebody who supplies vendor (seller) finance using what is called an “Instalment Sales Contract”. With these you can usually “get in” for a deposit as low as $1,000. You won’t get the FHOG so we’ll discount that. I know suppliers of this type of finance who “sell” their money from as low as 6.2% all the way up to 9%.

3. Another form of vendor (seller) financing is the “Lease/Option”. Here you lease a property for anywhere from 1 year to 30 years. At the same time you buy an “option” from the seller to purchase the property for a fixed price at anytime up until the expiry of the option. A lot of suppliers of lease/options also credit a portion of your rent towards your deposit. Thereby allowing you to build your deposit while actually occupying your future home and , at the same time, benefitting from any capital gain over and above your agreed option (strike) price. Once again, I’ve seen people “get into” a lease/option agreement for as little as $1,000.

This web site has some great information on both lease/options and Wraps (Instalment Sales Contracts). I’d suggest you do a search and read about both. Also, contact a good mortgage broker and check out if the 105%, 110% and 115% mortgages are still available.

I hope this helps.

Cheers, Paul

Hi Garry

If you are looking for software to manage your clients’ loans then I’d agree 100% with Scott, i.e. Loan Alert is the best around.

If you are looking for Accounting Software to do the books for your wrap business then I don’t think there is any specific software available. We use MYOB but we found that the finances of a wrapping business do not fit the “normal” mould within MYOB. Another friend who is a wrapper uses Quick Books and has the same problem. The problem is that most of your software entries end up having to be done as “journal” entries and this isn’t an intuitive process for non book keeping types.

Our solution was to hire a MYOB specialist book keeper to get MYOB up and running for us. And we still use her once every couple of months to get the “books” up to date.

I hope this helps.

Cheers, Paul

Hi Kez

If the wrappee just “up and left”, i.e. did a runner and could no longer be found, then they would be in default and the property would probably revert back to the wrapper.

This is not hard and fast as you may have clauses in your contract which endevour to give defaulting wrappees their accumulated equity back (after expenses). This idea of returning accumulated equity to wrappees seems to be relatively new but IMHO will grow in strength as wrappers see that a mechanism like this does help to protect wrappers from the “tabloid” media repots we are subject to from time to time.

If you as the wrapper did get the property back, it’s absolutely up to you as to whether you would turn it into a buy and hold, i.e. rent it or wrap it again.

I hope this helps.

Cheers, Paul

Hello JPG632

I believe both Steve and Rick SUGGEST that houses are better than units because people who buy units tend to be more transient. That is, a lot of people buy a unit because they can’t afford a house but they are still aiming for a house in the future. This is obviously not a hard and fast rule but if you are looking at doing long term wraps then clients who buy a house from you may be more likely to stay in that house for the long term.

I hope this helps.

Cheers, Paul

Hi Prodontia

I live in a free standing house so please check the following with a good insurance broker.

The structure of you apartment block, i.e. the building, is usually covered by building insurance which is purchased by the Strata Title Committee (or Manager). Your only input to this is the “say” you have as an apartment owner and therefore a Strata Committee member.

You are then left with the responsibility of getting “Contents” insurance for the “stuff” in your apartment. This “Contents” policy will normally cover you against loss of the contents of your apartment, caused by fire, theft and other “defined” occurrences.

I hope this helps.

Cheers, Paul

Hi Lucifer_au

Couldn’t agree with you more. Any suggestions from the NSW “vendor financiers” for a time and a place for the first NSW meeting? My personal preference is sometime in Feb.

Taking a leaf out of Felicity’s book, I propose Tony Cordato as NSW’s first guest speaker. I’ll wait a couple of days before contacting Tony to make sure people don’t have a problem with this.

Also I don’t want to be seen as stepping on any toes here so if Jack Dempsey or Rick want to slide in here and take over the organising of this meeting, please just say the word.

Re the location. We have quite a number of people in Sydney and quite a few in Newcastle and elsewhere. My 2 cents worth for the location of the first meeting is somewhere on the Central Coast (half way).

Any other ideas?

Cheers, Paul