All Topics / Overseas Deals / Vendor financing in NZ

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  • Profile photo of dkfchucklesdkfchuckles
    Member
    @dkfchuckles
    Join Date: 2004
    Post Count: 8

    Hi

    Does anyone know if it is legal to use wraps in NZ?

    Best regards

    DKFChuckles

    Profile photo of GramyreGramyre
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    @gramyre
    Join Date: 2004
    Post Count: 110

    It is not illegal to wrap in New Zealand

    http://www.propertytalk.co.nz/posts1733-highlightwrap.html

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    I know I can, I know I can

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    yes. I have heard there are a few people wrapping over there.

    Terryw
    Discover Home Loans
    Mortgage Broker
    North Sydney
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    Profile photo of Steve McKnightSteve McKnight
    Keymaster
    @stevemcknight
    Join Date: 2001
    Post Count: 1,763

    Hi,

    It is not illegal, but from discussions I have had with NZ solicitors it is viewed very dispassionately, even more so than in Australia.

    It sounds like there have been all sorts of unusual terms included in contracts that limit a purchaser’s equity and waters down their rights to next to nothing.

    Despite what the scaremongers might have you believe, vendor finance in Australia is well regulated within the confines of the UCCC and stated based Fair Trading Laws (as well as State based property law too).

    I’m not sure the same level of protection is available across the Tasman.

    Cheers,

    Steve McKnight

    **********
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    Profile photo of MiniMogulMiniMogul
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    @minimogul
    Join Date: 2002
    Post Count: 1,414

    As far as I know vendor financing (either entirely, or even just leaving 20 percent in the deal) is as old as the hills in NZ and predates the term ‘wrapping’ by decades!

    Profile photo of kerwynkerwyn
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    @kerwyn
    Join Date: 2004
    Post Count: 145

    Hi MiniMogul
    I asked a couple of agents if the vendor would leave 20% in a deal on some units, met with a real lot of resistence. Even more than in OZ.

    I could be wrong but I have been told that L/O deals are viewed a bit better than warps but not by much, maybe try that dkfchuckles instead of a wrap.
    Kerwyn

    Profile photo of MiniMogulMiniMogul
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    @minimogul
    Join Date: 2002
    Post Count: 1,414

    Hey Kerwyn

    it’s basically how you negotiate it. What are the vendor’s options? How do you set it up? What are the vendor’s needs? What other offers do they have? What are their choices? that sort of thing. Also every purchase is different with a different vendor or agent or both

    Profile photo of chrisholt452chrisholt452
    Participant
    @chrisholt452
    Join Date: 2005
    Post Count: 26

    First Timer Post:

    Does anyone know if the title of the property has to be in your name before on-selling on terms in a vendor financing transaction.

    Thanks Teach.

    Just about to get into P/I in a large way with an aim to early retirement and having fun along the way.

    Profile photo of RentMasterRentMaster
    Member
    @rentmaster
    Join Date: 2003
    Post Count: 85

    I have never done any wraps, so this may not apply, but you might like to know this anyway.

    In New Zealand, you can put the name on the purchase agreement as ‘Chris Holt or nominee’

    The ‘or nominee’ bit allows you to transfer the owner of the property prior to settlement. It is also useful if you are looking to set up a company or trust structure, and dont have a name for it at the time of writing the agreement.

    Personally I would always use ‘or nominee’, just in case. You dont have to nominate anyone if you dont want to, but it gives you that flexibility.

    Andrew
    http://www.rentmaster.co.nz
    Software for Landlords

    Profile photo of DiniDini
    Member
    @dini
    Join Date: 2005
    Post Count: 7

    Wraps or Rent to Buys or Lease Options are similar but all have different legal curlies.
    Many people have done them here especially after a John Burley courese or Boot camp.
    The main hurdle was the BANKS and GST.
    The banks were VERY uncomfortable lending to an owner and then finding out that the Payments were made by a third party and the third party had an interest in the proeprty but were not named on the title. Some people got into wraps as they would claim the GST on purchase date and then sort of forgot that they had to pay GST when they sold it and the GST would be more as the price was higher. So there have been issues and opposition but you can do it. Most people that I know who have doen it are getting out or not doing any more. In a rising price market why settle a price for someone else to beenfit from when you could onsell for a higher price. Every technique has it’s day. And Wraps may be good in a flat or dropping market but no so in a rising market.

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