Hi Guys, im new to this forum and also am very interested about wraps.
i have been thinking about turning my parents negative gearing property into a cashflow positive property by using a wrap.
ill explain:
they purchased the house for $250,000k (in the south coast region (callala beach) which was about 3yrs ago now and its on a interest only loan at the moment.
Cut a long story short its costing them about $1000 p/m. (loan repayment is $1800 and rent is only $800). Now instead of trying to sell it for around $290,000 and close out on a loss (not sure how much but its cost them over $40,000 for the time they have held it) i thought i might aswell wrap it and sell it for $290,000 but have the finance in place that will provide me with a positive outcome.
A 290k p/i loan at 9% (25 yr term) with no deposit down will amount to around $2433 p/m.
(Its Valued at $295,000 which is a bank value so its over 300k which means its undervalued).
So i will still lock in a profit but also receiving profits aswell from the finance.
Considering that a 100% financed loan is hard to get and also its at least over 8.5% then i thought no money down for 9% is a win/win scenario.
And at the end it will turn my mums losing $1000p/m property into a $600profit p/m.
What are your thoughts?
thanks
Adrian
You could do that. It would give them income in the short term, but in the long run they may be worse off. What if the property increases by $50,000 next year, or even the year after. They will have given this away in return for saving $600 or so per month.
THey have to work out if they want the short term income in return for losing any future gains. Some people do, others don’t really, but think wtaps are the secret technique to wealth (I was like this).
Questions
How likely is the property to grow in the next few years.
Do they need the income now?
How will the income affect their pensions, if any
etc/Terryw
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Originally posted by Terryw:Questions
How likely is the property to grow in the next few years.
Do they need the income now?
How will the income affect their pensions, if any
etc/* Property Growth i personally feel wont be until at least 3-5yrs. (The reason why they have lost money is because my dad has held onto it and didnt want to sell because he thought the market would keep going up, an obviously a losing deal you either need to cut your losses or adjust it into a profit).
As for the income well it would be great for them to free up some cash. Even if payed for the mortgage that would be better than now.
There sole motive is to sell the property now so i thought it would be a great way to make some income whilst waiting. (P.S if the buyers do decide to own it completely after the 25yrs then my parents would have earnt over 600k from the interest component.
Not bad eh
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