All Topics / General Property / Who gets to use capital growth on a wrap?

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  • Profile photo of Misty1Misty1
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    @misty1
    Join Date: 2004
    Post Count: 348
    July 25, 2004 - 3:33 pm

    During the term of a wrap,does the wrapper,or the wrappee get to access/utilise any capital growth/equity in the property?[confused2]

    Profile photo of FWFW
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    @fw
    Join Date: 2002
    Post Count: 478
    July 25, 2004 - 9:46 pm

    Hi Misty
    That answer will vary by state. In some states if the value of the property increases, then the wrapper can borrow against it.
    In Victoria, however, once you have wrapped a property you cannot increase the underlying loan or refinance the property.
    In all circumstances, I would definitely NOT recommend borrowing more than the wrappee’s outstanding loan, as you could find yourself in serious trouble when they want to refinance.
    As for the wrappee, under my contracts they are entitled to any capital growth above the contract price, however they can’t access that until they refinance.

    Keep smiling
    Felicity 8-)

    Profile photo of westanwestan
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    @westan
    Join Date: 2002
    Post Count: 1,950
    July 25, 2004 - 11:13 pm

    Hi Misty

    you have hit the nail on the head why wrapping hasn’t been the best strategy for the past 6 years.

    However that doesn’t mean its not the one for the next six.

    (i don’t do wrap deals)
    regards westan

    I live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database

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