Steve,as I said in my email I had just been made aware of your site [about an hour or so ago ]which was 2 nights ago now and wondered whether you could help.I trust the way in which this message is posted is okay.
I have a property that I bought about three years ago for eighty thousand dollars and I’m about to try to sell it as it’s only returning a bit over 4%. I have had the property revalued at around $140,000 and I asked my financial adviser about becoming the bank and it came up that I would still be getting a very low return on my investment. From what I’m understanding after reading your information his may not be the case. My present tenants would love to buy the property but can’t quite raise the funds with stamp duty etc. Rent on the property is currently $170.00 per wk.Would wraps work in this case? and
could you please provide a few other names of wraps users for references if possible.
If this information is going beyond reasonable bounds I will not be offended with negative response.
Looking forward to further interaction.
Regards
WayneHi Wayne,
Steve and co. are in Sydney on seminar, but to me it sounds like an ideal opportunity for a wrap. Are the current tenants First home buyer’s? Where abouts (which state) are you in, this will also determine your options.
Another thing I learnt (not sure from where) is that you make money when you buy well, not sell. If it is a wrap then the rules change slightly (from what I can make out) but you’ve had good capital growth on the property.
I might suggest you find a bank or lender that knows about vendor finance as some banks are a bit of a brick wall when it comes to anything creative (I can see those stones flying towards me now [
]).Congratulations on your first posting, I guess that’s always the hardest.
Cheers and hope you have a great week
Sooshie [
]It’s all our imperfections that make us perfect!
Hey Wayne,
Sounds like a great wrap. The reality is though you either need to know how to wrap or get someone to help you do the deal. It is not a difficult process but not a simple one either. The questions I have for you is do you want to do anything with the extra cash in the deal. (140K revalue says to me that you have 48K extra equity to play with). Do you want to keep the property or do you want to sell it and get a deposit base??
As to there deposit, which part of the world are you in ?(FHOG)On my quick numbers it seems to me that the repayments on a $140K wrap with a 2.5% interest spread is $249/week(ish) plus outgoings. (assuming an 80000 debt on the place the cashflow per year is around $7000/year and a back end of $60K……nice).
Can the tenants afford about another 120-130/week extra to own the place. Is 140K a real price or is it worth more. Remember that a valuer may undervalue the property to it’s real selling price.
Hope these thoughts helped you.
Enjoy
AD [:0)]P.S. To really understand wrapping you probably need to buy a Wrap Pack. Education is worth the expense.
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 SmithHi Wayne, the guys are offering good advice here.
One thing to keep in mind, it doesn’t make sense to sell a property that is achieveing strong capital growth. Ultimately, cashflow gives you lifestyle, but assets give you wealth.
I’d recommend using the equity in this property to fund wrap transaction. This will allow you to keep a property that will function as your “equity bank”, and you may even enjoy cashflow lifestyle as well.
Further to that, if you need a hand finding someone to do wraps for you, shoot me an email and I may be able to help. [email protected]
As AD has mentioned, it can be quite complex.
Hope this helps,
Mike
Remember, life’s about Family, Fun and Finance (probably in that order).
Mike
Director
http://www.PositiveCashflow.com.au
“Positive Cashflow for a Positive LIFESTYLE”
because
“Life’s too short to be Negative”Hi Wayne
Have to agree with AD here, in that you can’t learn all about wraps by reading a few posts. Steve McKnight’s or Rick Otton’s wrap products will take you through, step by step, the entire process and are well worth the money if you are going down this avenue. I have both and, though I am not wrapping, consider them to be info packed regardless.
You need to be clear here on your goals. It sounds to me as if you are doing pretty well with this property in terms of return and capital growth. (a property that cost you $80K and returns wkly rent of $170 is actually getting you a gross return of 11%- which is excellent!!) You are more than likely putting money in your pocket on this one, so why sell?
If you need the cash in a hurry, then why not just sell it outright? A wrap is useful for continued cashflow but you are taking your set profit in the price that you put on the property. Also, it sounds like your tenants won’t be able to afford to buy the place anyway. If they are currently paying you $170 in rent and you wrap them the house for $140K at 8% over 25 yrs (with a $7 deposit) then their payments will increase to $236 a week. You need to find someone who can afford this amount.
Just some thoughts anyway. If you want more detailed info on the packs, feel free to email me
Cheers, Jacque
Anyway,Jacqueline
Hi Wayne,
I’ve read the posts here and agree totally with what’s written.
I’d add that in property the way to make money is to match a problem with a solution.
In your case you’d want to make sure that your client could afford the repayments based on a win-win financial model.
If this is a problem then maybe you could lease-option it to them???
Hey… this is starting to sound like what we covered on the week-end [
].Have a great day and keep asking questions.
Bye
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Sooshie,AD,Mike,JP,Jacque& Steve sorry I went missing but I posted my
question the night before going away for a few days.Just getting back to business now, however I will be away for another week from friday 22nd nov.
Thank you all for such a welcome and the valued comments.
In answer to your question on my location, I live in a placed called Mildura which is on the vic’ nsw border.
Further to my posting there are a couple of issues that will probably affect the way things could proceed and that is that the property is owned by my company and from the postings the tenants may not be able
to afford it any way.
AD,I’m having bit of trouble understanding some of the comments
in respect to the amount of cash flow and backend, however I’m sure I
will get it as I go along.Sooshie,sounds like most banks are tarred with the same brush but I think things are changing slowly.
Steve,I was Most interested in your comment about lease purchase as I had persued this idea with my old accountant and he could understand what I was talking about.Is there any information available on the subject at all ? I think I better leave things at that and look forward to further discussion.Sorry Wayne I didn’t meanto confuse. With Wraps there are two ways to make money and they are the monthly cashflow and the back end profit.
Here is an examlpe to explain.
If I buy a house for $80,000(10% deposit) and wrap it to someone for $100,000 (5% deposit). My interest is 6%pa and I charge 8 %to my new buyer. The difference between my repayments of $463.90 and the clients payments of $733.23 is $269.33, this is my cashflow. The back end in this deal is $20,000 which is the difference between my $80,000 purchase and the $100,000 resale.Hope this clarifies for you.
Enjoy
AD
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 SmithAD,sorry I’ve taken so long to respond to your posting and to the the other members that responded to my original posting.
However, I was wondering whether I could persue the matter further in respect to the posting I added to my original one of “To sell or wrap my existing investment property” as it is owned by my company which could be claimed on in the event an insurance claim hence the reason for a possible sale.
Also, AD,your explanation made everything clear in what you had stated
]).
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