Are Wraps viable in Sydney?

Have you looked at Rick Otton’s business?
http://www.rickotton.com/ and http://www.webuyhouses.com.au/

edit: oh and I would not mistake everyone here for an expert. Most are people just like you and me just starting out, looking for answers.
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I know I can, I know I can

Hi alexp
As Gramyre said have a look at Rick Otton for wraps and lease options. Rick is doing a bit of business with the lease option strategy at the moment. I am just waiting for his latest CD on L/O to turn up. L/O is a bit less complicated that wraps. Have a look at L/O also.
Kerwyn

Alexp, you seem to have got the answer you were looking for, but I also have queries about the viability of wraps and lease options.

If an investor wants to do multiple wraps, where do they get the equity each time for each new venture? As a self employed person I would need to use lo doc loans for every aquisition myself – if lenders want 20% equity for each property, where does it come from?

Cheers
BillyRay

That just happens to be my limosine right outside

Hi Terry

Thanks for your reply.

Exactly my point though. If a wrappee can put together a large deposit, and a lo doc loan doesnt require substantiation of income, why would they need the wrapper?

I’m just trying to work out what mindset and financial position a wrappee would be in to be interested in such a deal.

Cheers
Billyray

That just happens to be my limosine right outside

Hmm, quite so.

However I have to say that in my situation, when we applied for our owner occupied home loan, the broker blindly accepted “X years” as the time I have been self employed.

They never asked for proof, never looked at our business name rego certificate, never did any significant due diligence, just ticked the box. We had good equity, but not much to indicate serviceability. It really was a bit too easy I thought. We got a pretty good rate also – low to mid 7%.

Which is why I keep thinking if you can scrape together a deposit (equity) you should always be able to find institutional money??

I guess I would really like to hear from a wrappee and find out what their circumstances were to look for a wrap loan as their favoured option. How hard did they look before entering into their wrap?

Any wrappees out there??

Cheers
Billyray

That just happens to be my limosine right outside

A big potential market for wraps is investors who have maxed out. As you know, most people use up their deposit money quickly, and banks stringent serviceability requirements mean the average investor could only get a few properties before maxing out. So you could wrap to these investor’s who would then rent the premises out – probably negative gearing it.

It would be easier to kick them out if things went wrong (not cover by the UCCC) but having a tenant in there may complicate things.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]