Hi all,
My wife and I hope to start wrapping in about 2 weeks and have two questions to ask on issues we are not sure on.
1. What margins do most people put on their wrap. Steve talks about putting 20% on the value of the property and an extra 2% on the interest rate. Is this the general consensus. We thought about having a tiered system by where we would charge say 3% if the client had no deposit apart from the FHOG, 2.5% if the client had $1,000 deposit and 2% if the client had over $2,000 deposit. I would like to hear from other people as to what they charge.
2. In the wrap kit Steve talks about getting the clients to direct debit the repayment each week into your account. How is this organised? Is it something the client needs to arrange with their bank or do they sign a form authorising you to take the money from their account?
I look forward to hearing you comments.
Thanks,
Gavin
Hi.
I have just one more question, is the FHOG available for wraps in NSW. The Wrap library says that it is available in Victoria but not sure in NSW. Can anybody confirm this please.
Thanks
Gavin
We have been doing wraps in NSW for about 2 years and yes you are able to get the FHOG.
Hope this helps
Tracie
Gavin,
I am about as green as you but here are my thoughts. I am currently in the process of my first wrap. I would never accept anybody without a deposit. (Being in Qld means no FHOG until 1 year later which I leaver to the clients discretion for spending – with my subtle suggestions of repayment.)
Even with only FHOG it means the people have put nothing into the deal themselves. No commitment may lead to problems down the road. If people have their money in the deal then it means they may lose thier money (not Govt money)if they default.
The deal I am currntly doing I bought for 61200 and will wrap for 73000. I could have gone more but felt that this was all I was comfortable with morally and wethically. It means they get a house for less than rent and I get a cashfloe without tenant issues. WIN- WIN as Steve says. Hopefully this will settle end of this month….party at my place….
As to interest I am charging 2.5% above my rate. I am very open about that and the people do not seem to mind at all. I have tried to be as transparent as possible in all my dealings so there is no propblem later. (hopefully)
I have another house under contract at the moment where I have bought for $69600 and will wrap at $87-90K. This margin is much greater but the market allows that margin with the prices of houses.I also have a renovator in the process of being worked on and it should be done in a few weeks and it will cost me $102K all up but I will wrap it at $145-150K because that is what I could resell for (top dollar) I think margins are what you can get and what you feel comfortable with.
Hope this helped.
Enjoy
AD [:0)]A great deal of talent is lost to the world for want of a little courage. Every day sends to their graves obscure men whose timidity prevented them from making a first effort.
-Sydney Smith
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