Hi All,
I am currently investigating buying property to sell via vendor finance and have arranged to meet a lawyer this week. Below is the letter he has sent me after our initial telephone conversation.
My plans are to get legal advice, buy a house in a “Aussie battler” suburb and offer it for sale via vendor finance at a price that covers my costs and provides a nice profit for my time.
Currently, I have a family trust that has myself as the trustee. On advice from my accountant, and pending the green light from this lawyer (due to me living in a different state to my accountant and him requesting I seek local advice before making any changes) a pty ltd company will be setup to become the trustee.
As this will be the first time I have engaged a lawyer/soliciter, my questions to the forum are:
1. Do the fees seem fair?
2. Are there any special questions I should be asking?
3. Should there be a separate trust for rentals and wraps?Thanks
Glenn
>>Glenn,
Further to our discussion last week, we confirm our meeting on Thursday.
We outline our fee structure as follows:
We will charge for our time spent at our meeting, and for our subsequent letter of advice, on a time cost basis of $225 per hour, plus GST.
We estimate a minimum of 2 hours to meet with you and provide the letter of advice.
More time may be needed, depending upon the complexity of the matter and the advice you are seeking.
We require a payment in advance of $550 prior to, or at, our meeting on Thursday, on account of our costs and disbursements.
Please confirm this is acceptable to you.Regards,
Greg
Hello Glenn,
Welcome to the Property Investing.com community and thanks for making your first post.
You ask:
quote:
As this will be the first time I have engaged a lawyer/soliciter, my questions to the forum are:1. Do the fees seem fair?
2. Are there any special questions I should be asking?
3. Should there be a separate trust for rentals and wraps?Well, here’s my opinion…
1. Fees
$225 per hour seems steep from first glance, but if the solicitor has information that you don’t then perhaps it is value for money. For example, my wrap library is proced at just under $2,000 which some people will feel is expensive, but if you use it and make $30,000 on your first deal then it’s cheap, right?
So I think that the answer re: fees is dependent on how soon you will use the information and the degree to which your are committed to your plan.
I would say though that if your in Victoria then I’d just use our solicitor and if in NSW then Tony Cordarto seems to be the recognised expert.
As best I can tell, these guys won’t charge for a contract provided you use them for conveyancing… at which point they are more expensive than average, but they provide an above average service.
Special Questions
I’d like to know what the “letter of advice” you’ll be getting is… is it just a written summary of what is said at the meeting? Or will you be receiving something more?
It’s difficult to provide more help here because I don’t know what you already know!
I am wondering what it is that makes your lawyer an expert in wraps… what special knowledge does s/he have? How many vendor finance deals have they handled?
Be sure to ask the impact (if any) of your proposed trust / company structure on the legality of generally buying houses (such as the use of nomination clauses etc.)
3. Separate Trust
Perhaps… perhaps not. Personally I’d so no since I don’t see a reason to differentiate.
I tried to in the beginning, but a few tenants became wraps, so then what could I do?
However, I would say that you should replicate the structure when you feel you have more to lose than to gain.
It’s a costly exercise to replicate.
OK – well, thanks agan for your post and I hope that this has helped.
Bye
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi Steve,
Thanks for your reply.
I am located in Perth, and after contacting a couple of the lawyers from the Vendor Finance Wraps Association website and not really getting the answers I wanted, my financial advisor (also a good mate) suggested this lawyer to me. After speaking with him, he said that he had advised several people in Perth about vendor finance for property but not actually written any deals.
If anyone could recommend anything different, please let me know. Please feel free to let me know if I would be better off lighting 5 hunjies and smoking them!!
Glenn
PS. I would love to hear from anyone wrapping in Perth.
Hi Glenn,
Light 5 hunjies and smoke them? [
]Perhaps I need to get to Perth a bit more often…???…
Why not go with the lawyer then… ’cause stuffing around is something to be avoided at all costs.
It might be a bit more expensive, but not compared with missing out on a deal that could make $$$$ and pay for all those hunjies!
Learn and move on!
Bye
Steve
P.S. Brent in our office wants to know what a ‘hunjie’ is. And to think… he’s going to Uni… what do they teach the youth of today anyway?
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Hi all, speaking of good lawyers conversant with lease / wraps, does anyone know of such a person in QLD?
We own several capital growth properties (cash flow neutral to positive) and are just starting to learn about wraps. Meanwhile, a family situation has arisen and we want to help my husband’s sister buy a house in Ipswich (outer Brisbane). She has a low income and is on a single parent pension, presently receiving rent assistance.
We hope to do a lease – buy wrap for her with us as the vendor, making no profit, using a minimum deposit and using her rent assistance for a few years to help pay the mortgage. However we are baby wrappers and need guidance. Since it is a family deal, we really only need a lawyer who can draw up a contract that will satisfy the govt. especially the tax dept. We also need wrap friendly finance. We have heard that income from wraps is taxed at normal rate with no CGT. But how sure are you about this – we do not want to pay capital gains tax in 5 years time (a possibility even in Ipswich these days!) Also as we are foregoing profit, we will have no income from the deal to pay tax for – I wonder if we could claim a loss???
Is there any way we can avoid paying double stamp duty? If we sign purchase contract ” us …or nominee” would this sort of lease option survive 5 years or so in Qld without paying two lots of SD.
Also we have heard that if you sell to a relative, a new valuation is mandatory to stop people rorting SD/CGT tax, i.e. we cannot sell it to her for $1.
Sorry to ask so many questions, but we have never done a wrap before. (Am still trying to talk my husband into doing a wrap course – this could be the painless way to ease him into it as he really wants to help his sister….) All suggestions and advice are very welcome. CarolHey ACM,
After much discussion with a few differenet Solicitors I have just done my first wrap using David Barlow of Bennet& Philp solicitors. His number is 3229 0494.
Tell him you got his number from me and hopefully he will take care of you.
Enjoy
AD
Andrew DeeringA 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 SmithHi Steve,
You can let Brent know that a Hungie is in fact, $100 and that 5 Rock Lobsters make a Hungie! Too much study and not enough beer makes Jack a booring lad!
Glenn
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