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I use to sell realestate in Coolum and always believe that this area will boom. Is great for holiday makers, however, if you are getting a loan, the bank is less likely to be favourable in lending for a holiday let unit opposed to a permanment rental. If you ever want equity out of it in the future you may have a lot of diffuculty whilst it is only a holiday let. Banks dont see a lot of security here as it is often seasonal. I had sold a few holiday let units on the strand and the returns are quite good, but, for future security I recommend a permament rental. Either option could be taken for a lot of them anyway. You could start out with on a permament basis or holiday let and if one doesnt work out, then do the other. There is a lot of outgoings with holiday letting, you would be best to speak with an onsite manager to see what their charges are. Not many people consider this prior to buying. Do your research first.
If you live on the Sunshine Coast we have a builder who is happy to sell his new homes on Vendor Finance for as long as you need.
To be honest, we did not look at it as in "a margin". We were thinking of what the property would be worth aprox in 3 years if that was the term set. We know now that this is not the way to do it. How we explained this to the buyers was… "It is determined by the time frame of the term set." If they did not want to get the finance for 10 years then, would it be fair to sell at todays price when we all know values go up in ten years. This was excepted by buyers, just not solicitors. Now I dont even know if I except it anymore. Everyone says that there is no right way or wrong way. I just want to know if there is A WAY.
The sellers asking price was $460,000 (full sale price), we figured that if the term was going to be 3 years then why not sell it for $489,000. This would be considered an over inflated price for today but not for 3 years time. The capital growth is there. The builder only builds in brand new estates with quality built homes. Margin? I guess this would have worked out to be about 7% ??
We do not inherit any interest costs ourselves as we have gone in as a Joint Venturer (having no money ourselves) and taking 20% of the cash flow for setting it up, but , for the builder it was the difference between Principal and Interest on the $489,000… sorry, $479,000 as the buyers were to pay $10,000 up front, and, Interest Only for the seller on his cost price (which I think it was around $400,000) over 25 years.
We are based in Qld.I must say that I agree fully with Richard.
What most people do not realise is if they have multiple properties, the broker will arrange the finance so as to not securitize properties to make it easier for future investing or refinancing.
I have seen the mess that some banks have created unbeknown to some property owners. They may put in an application in for refinancing or restructuring etc and discover that a property or two has security over it and have been completely unaware of it.
The banks dont care what they use as security or how it is structured because they are only thinking of there own security, not the clients. Banks get paid a weekly wage. They dont care about you.
Building a relationship with a broker will save you a lot of stress in the long run especially if you intend on investing in the future. A broker can also assist you with how to structure a loan to assist you with your future plans. Does a bank do that?
A good broker relies on repeat business and referrals, and will therefore look after your interests right from the beginning.
I do believe that the banks make it difficult with the broker channel. They say that is not the case but we all know it is.
If you are doing a one off loan and never plan to get finance again, then go to the bank. They dont care, you wont care and they are quicker.
If you want to consider setting yourself up for you future financial security in property and retire in comfort. Make the effort to be patient with a broker you trust and you would be happy to create a long term relationship with. It is not their fault the banks discriminate.Thank you Mattnz. The builder is really excited about the concept of Vendor Financing buyers in on a regular basis. We started with a home that was completed already and had a standard contract with a real-estate agent fall over. He secures land with the developers on builders terms.- He has a contract to buy the land usually after the completion date of the construction. That way, when he sells the package, he then pays out the land with a simultaneous settlement. This could be a ongoing opportunity for both of us if we can only work out the best way to do it.
We have spoken to someone recently who does 'No deposit' loans. Apparently this is an IOU set up for the 10% deposit that doesnt really exist. A standard contract for sale is produced and the deposit simply says "paid". Obviously an agreement for the deposit is drawn up between the seller and the buyer. The buyer pays this back to the owner over an agreed amount of time interest free. This sounds so much simpler as the buyer still has to qualify for a loan, so everything checks out with them. They just simply do not have a deposit to get started. I would be extemely interested with what the implications of this process could be. There always seems to be a catch.
Lucky for you, the buyer you had was determind to continue to go to other solicitors. Ours ran a hundred miles and hour in the other direction and unfortunately feel that we had the contract set up to protect the owner and ourselves but not them as the buyer. I lost credibility with the buyers, which I find extremely disappointing. (I like to sleep at night) This is an opportunity that our buyers would not get for another 3 years due to bad credit and still, they could not see the risk is worth taking. I wish I had gone with them to the solicitor so I knew exactly what was said to them.
