With a Second Mortgage CB facility the fact that the Vendor loan is not disclosed and if it is the vendor repayment would be consider as a liabaility (Haven't come across a lender that accepts these but could always be wrong if you like to let us know more).

With an Instalment Contract the simply wont lend where the property is being onsold under such an arrangement.

Most lenders clearly state this in the Credit Policy.

Do you disclose this ?

Sorry to come in at the end of the post comes of having a day at the beach but why would a Vendor sell a property $100K less than his own Bank have just valued. 

Even if his loans were cross collateralised it seems strange they would value the security when it is being sold.

Are you sure it is not just a case of Selling agents spin. 

Ryan i understand that you dont like mortgage brokers but can i just ask did you disclose to your financier that the Vendor was leaving in a second mortgage on your first deal and if you did what was there reaction.

For someone who has been involved in Vendor Finance running First Home Owners Group Pty Ltd for nearly 15 years i can assure you that lenders dont like lending on deals where they are subsequently onsold by way of an instalment contract or where a SMCB is being taken by the original vendor unless you are doing it by way of a full time business.

As you first deal i can only assume that your lender was not advised that the Vendor was providing some of the funding and that the application was lodged fraudulently

Wow Ryan rather a sweeping statement but sorry to hear that the industry has not treated you well.

Must admit i have also come across many a client i didnt trust and have given them the flick before we even started.

Yes in most cases a Broker earns a commission from the lender with whom he or she places your loan business with but surely you dont expect them to work for nothing.

Just out of curiousity are you a licensed Buyers agent and do you hold the new property investment license required to be able to offer such +cash flow properties for sale.

Might get D2 to answer that one because of Privacy.

I coudnt agree more.

Save your pennies and read as much as you can.

Maybe attend the odd investor get together in your area which are usually free and attended by like minded individuals.

Deal with people who have been there and done and give up there time for nothing rather than people who have something to sell you most of which you could research yourself.

Spend a dollar or two on Steve Mcknights book or grab similar from your local library and start to understand what sort of investor you want to be whether it for cash flow or capital growth or a combination of both.

See what you think your budget will stretch to as there is no point in spending $5000 on a seminar when you look at your income andf equity position and realise you are only to be able to afford one property at this stage of the game.

Not everything you read on the internet is free or genuine but you will be suprised how much useful and valuable information that is out there. Join in the forum and read others comments here.

You would suprised i have so many clients from the forum that have never been to a seminar and done thing else but get involved in conversation with other investors. Most of them seemed to have done alright and certainly have goals to aim at and achieve.

Pleasure Brian

Can be a very effective way of generating positive cash flow income.

Hi Brian

Good to have you in the forum.

I think the question is what is a Wrap ?

A wrap or a wrap around mortgage involves the investor buying a property and then onselling to someone else who is unable to obtain traditional style finance so pays back the original owner through a series of instalments.

The original owner charges a higher price because he / she may have to wait for upto 25 years for his return and normally a higher interest rate than his Bank are charging. The property Title remains in the name of the original owner until the last instalment is paid and the purchase can protect his interest by registering a caveat on the property.

Of course if i have totally missed the point of your question i apologise.

Sitting here in the sun it might have gone to my head and i may have misread the question.

Thats my excuse anyway and I am sticking to it.

Hi Jason

Hate to disagree but it is not that easy.

Most of the major lenders prohibit the owner signing a Tenancy Agrement for longer than 12 months without the mortgagee express consent. Now whether he does or not is a different matter.

With regards to a Instalment Contract their is no Tenancy as the purchaser has a right of posession albeit not ownership.

Of course this brings with it further issues of protection for the wrappee irresepctive of whether he / she has a registered caveat on the property. Caveats can easily be removed with a Court Order and have done this on a couple of ocassions.

Yes totally agree investors should get their own Tax advice.

Be suprised how many lenders have said they will not touch the scheme where a Head Lease is involved.