Vendor finance is actually pretty simple when you do understand it. Instead of the bank lending you money you assume the loan with the buyer. This is perfectly legal and done everyday! It is even more common in America.

This post on creating cashflow with vendor finance covers the basics and may help you to get a better understand.

In regards to the lenders I have the follow tips.

1. Find lenders who take into account 80% of the full market rate for the rent. Not 80% of 4% rental yield. What if your rental yield is 10%?
2. Don't lock everything in with one lender
3. You may need to find lenders who offer a higher interest rate for the increased risk.
4 Over time get your properties REVALUED and get the rental income from them revalued also. Hopefully this will add to your serviceability

Ryan McLean
CashFlow Investor

ps. Another article that may help is how to buy more property.

Hey Kevin,

Very nice of you to offer some free stock. Looking forward to getting a review copy.

Hopefully your product has got the goods and I can mention it to the readers of my blog. I had a quick look at your squeeze page and it looks like it may be appealing.

Hope to hear from you soon

Ryan McLean
CashFlow Investor
Find CashFlow Positive Property For Sale In Australia

The question is not "What can you buy for $600k in Sydney" but "How can I buy a house in Carlingford for $600k". I don't know why you have your heart set on that area.

Are you going to live in the property or simply rent it out?

If your goal is to eventually live in the city (but you can't afford it yet) then maybe it might be an idea to rent in the city and to buy investment properties further out with good rental yields.

Mount Druitt is the extreme, as obviously it is a pretty rough area. I'm not saying it is a bad investment, but you may want to look at investments in western Sydney, or even small towns just out of sydney and build up your portfolio.

As these properties increase in rent and value you may be able to use the equity to buy your dream home.

Ryan McLean
CashFlow Investor
Read my most popular blog post on 10 Places You Can Find Positive Cash Flow Property For Sale In Australia

Sorry but just to clarify. Are you wishing to purchase this property and run it as a business?..getting in people to manage your land and your yields?
Or are you wishing to purchase this property and rent it out to some body so that they can run an agricultural business on the land?

#7 – Get Educated
Learn about property by reading books, attending seminars, reading blogs and joining in discussions on forums like this one. If you aren't learning then you will find it very hard to succeed at investing. To start check out this list of the Top Ten Positive Cash Flow Property Books Reviewed

#8 – Manage Your Cash Flow
You won't be able to service your loans if you don't manage your cash flow. Look for a mix of positive geared and negative/neutral geared and stay on top of your expenses. Increase rents in line with the market and don't rent out your property for below market rent. Increase your cash flow and you can increase your portfolio.

Ryan McLean

I would only consider option 2 if you are in an extremely high tax bracket and you wanted to offset your tax using the depreciation of the property. I don't know if that specific area is high capital growth though…

I prefer older houses as you can add value to them through cosmetic renovation (painting a bathroom does wonders). This can increase your rent AND your equity almost immediately. With increased rents it could actually cost you less to hold than option 2.

Also the larger land gives you more options in the future. Add a granny flat to the back and rent it out, subdivide and put another house on the back. You have a lot more options to work with.

Ultimately it is up to you.

Ryan McLean
CashFlow Investor

ps. I think this blog post I wrote may be of help to you. Check out Do New House Offer Positive Cash Flow?

Hi Ry,

Like said above you need to set your goals and work back from there.

First thing to ask:
Do you want cash flow or capital gains?

It is generally best to focus on one or the other.

Second thing to ask:
How much cash flow or capital gains to I want to achieve?

Third thing to ask:
What is my exit strategy? Do I sell the properties, hold onto them? Pay them off completely or just keep them ticking over etc?

Ryan McLean

ps. If you are interested in owner finance then I suggest you read my blog post on How To Make Any Property Cash Flow Positive Using Owner Finance

I would definately be careful with one of these companies. You may be losing out on the sale of your land.

A few things you should check:
– Talk with your lender as they may need to value the property WITHOUT the backyard. You may be then forced to pay down some equity.
– Work out yourself what you think the backyard will go for…speak to a real estate agent in the area and find out if it is worth doing
– As Colin said it may be worth getting the help of a local surveyor…ask around and find out who can help you apart from one of those companies.

You then have more options with what to do with your backyard….you could sell it, build on it, build a granny flat, build a block of flats, keep it etc.

Ryan McLean
CashFlow Investor

ps. You may find this blog post useful 7 Reasons You MUST Consider Investing In CashFlow Positive Property

The biggest thing you have to think about is NOT the banks or the lenders…it’s your MUM.

People always give gifts (especially big gifts) with invisible strings attached. It seems your mum isn’t giving you money to do what you want with it. She is giving you money to do what SHE wants with it. So your easiest option is to just buy a 2-3 bedroom house for as close to the $250k as possible. Live in it or rent it out.

As time passes and the property goes up in value you could then borrow against the equity to re invest. That way you aren’t touching any of your mums money (cos in her mind it is still her money) you are only borrowing against the added value on top of your mums money.

Money always gets funny when you mix it with family. Keep it simple and avoid being too greedy. You don’t need to “get rich quick”. You can use your mums money to get into the market and then use the growth/rental income you get to grow your portfolio over time.

Ryan McLean
Check out my list of Top Ten Property Investing Books Reviewed

Great to see that you are getting creative. Looks like you are in a tight spot because you can’t afford to own your own home PLUS an investment property. That is UNLESS you look at positive cash flow. Unless a property can pay for itself you are going to be stuck with a one property portfolio.

I can’t give advice because I am not a financial planner but here is something to think about.

1. Buy discounted property, renovate and rent – buy property that needs work so you can get it at a good price. Do the work yourself and then rent it out. This could give you higher returns and generate you a positive cash flow.

2. Dual Occupancy – again because you can do a lot of the work yourself you may want to look at properties that you could rent out for 2 incomes. A house with a granny flat or a 4 bedroom house turned into 2 x 2 bedroom houses.

It seems to me cashflow is always going to be an issue for you unless you look at property that increases your cash flow. Or if your income goes up significantly.

If you simply sell your home and buy a house to live in while doing it up are you going to expect your wife to live in a construction zone for years? It might be alright for you, but women have different needs.

Some food for thought