All Topics / Creative Investing / Can i wrap it?

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  • Profile photo of kendo5181kendo5181
    Member
    @kendo5181
    Join Date: 2005
    Post Count: 27

    All you creative guys and gals out there, could you please share how would you approach a vendor to wrap a property for you? If for example the selling price was $100K what would be the terms and deal? The vendor is debt free and wants to use the lump sum to retire and invest completely passively.
    Would a wrap be a good suggestion here to save me coming up with settlement funds, so I could finance the deal more easily/cheaply… (I would have to use lo doc)
    Thanks very much

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

    It will be hard to do I think. Most people can’t understand the concept initially.

    I think all you have to do is to explain that you will give them a good price for their property, but you cannot pay it all now. You will pay them by installments instead, and you will give them a good rate of x% of the oustanding balance. Compare this to the rate they would be earning if they put their money into a term deposit.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Kendo

    Carrying on from what Terry has written i think you will struggle in getting the Vendor to wrap the property for you.

    You state that “The vendor is debt free and wants to use the lump sum to retire and invest completely passively”.

    Certainly by wrapping the property to you he will not enjoy a lump sum but a series of installment payments over a given period of time.

    Why not suggest to him that he agree to leave say 20% of the purchase price in the property by way of a registered 2nd mortgage and then you finance 80% of the purchase price up front.

    That way you will be able to obtain a low doc loan at a sensible rate of interest (80% and above the interest rate gets a little higher) and he will receive a lump sum and then a higher rate of interest on the balance.

    Email us if you need any more information on the 2nd mortgage route.

    Cheers Richard
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    http://www.yourstatefinance.com

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    Profile photo of kendo5181kendo5181
    Member
    @kendo5181
    Join Date: 2005
    Post Count: 27

    Thanks Terry and Richard, both great suggestions. I will see if I can make it work…

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