@Wrappers (yes you Richard ;))

Hi Emil

We find demand varies.  We've sold every house we had for sale with Vendor Finance and yes, some of them did have more than one couple wanting the place.

We started by buying the properties first and then on selling them.  We now do both.  Steve, in his Wrap Kit, tends to recomend finding the people first and Rick Otton, in his Wrap Pack, suggests buying the property first.  We started out with the Wrap Pack so that was the way we went.  We now have the Wrap Kit but probably still buy properties first more than find the people first.  Most people, when starting out, tend to worry that, if they buy the property first, they'll be left stuck with it.  We definitely haven't found that to be the case.

We structure our wraps to generate around $300 per month positive cashflow.

Right from the first time we meet our buyers, we encourage them to refinance into a traditional loan as soon as possible.  We explain that they will normally be with us, depending on the available capital gain in the marketplace, two to three years.  Some Wrappers look for long  term cash flow and structure their transactions so that their wrapees stay with them as lomg as possible.  We, on the other hand, are looking for our wrapees to refinance asap so that we can get access to our backend profit and the wrapees can get back into the traditional lending system and get the title in their name.

If the solicitors get their act together you could get it done in three weeks, even less.  We always insist that our buyers get independant legal advice.

Normally Wrappers self manage their first  few wraps and then as the paperwork increases they move off to a management company.  We know of two Wrap mamagement companies in NSW.  I'm sure there are more in other states.  A lot of Wrappers use the software Loan Alert to manage their wraps.  It's UCCC compliant and generates all the statements and notices you need.  The two Wrap management companies I mentioned also use it.

If it were boom times we could probably refinance our wraapees in 12 months.  In this market we're finding that they refinance in 2.5 to 3 years.

I hope this helps.  Good luck.

Cheers,  Paul

I think Paul has adequetly answered the question so I wount go over old ground.

I am not sure many Vendors would be too happy on accepting an offer on the property subject to you finding a buyer on the house at a higher price.

Why not forge relationships with real estate agents and get them to refer you deals where the buyer has found  a property gone through traditional lending sources and been declined. They want the house and will be happy to listen to alternatives.

It also goes a long way to the transparancy of the whole deal which we prided ourselves on for 9 years. You tell up front the buyer that if they find a house for XYZ you will re-sell it to them for XYZ + $$$$. When you try and buy a property under value and then sell it the buyer at a inflated price this is where problems of non disclosure can arise.

With regards to wrap management we employ 2 full time staff to manage our properties so thankfully i have nothing to do now with the day to day running of the business. Managed properly you would like to think your repossession where under 3% and yes where they happen it is unfortunate but you need to act quickly and legally in order to recover the property.

Hi Emil

We get the Wrapees to pay for all outgoings, i.e. water rates, council rates and building insurance but we'd suggest you get the bills sent to you and you pay them and get reimbursed by the Wrapees.  You certainly don't want a nasty surprise like the house burning down, only to discover the Wrapees forgot to pay the insurance.  You also need to monitor the Wrapees loan payments and record their payments into some form of software that will produce a loan statement for them, at least, every six months.

While the above doesn't sound like much, in terms of time required, it certainly adds up when you start to get numerous wrapped properties in your portfolio.

With a Wrap you are selling with an Instalment Sales Contract.  You are therefore seen to be "supplying credit" under the Uniform Consumer Credit Code and must abide by all the UCCC procedures.  This means your Instalment Sales Contract has to be compliant with the UCCC.  Also, the UCCC procedures for re-claiming the property in the event of default are quite clear.  We use the following protection to make sure we comply with the UCCC, especially at times of default, i.e. a very experienced Wrap savvy lawyer and good UCCC compliant software.

If you plan to pursue Wraps, I'd give you one more of advice; don't skimp on your education on this subject.  Good luck.

Cheers,  Paul

Hi Emil

We statarted with Rick's Wrap Pack and it certainly got our business going.  Apart from Steve's Wrap Kit that seems to be currently unavailable, you're right, there's not too much avaiable by way of a step by step manual.

Some experienced Vendor Financiers (Wrappers) do training type Joint Ventures with people who are just getting into the business as a training/hand holding exercise.  Looking back we wish these had been available when we started.

May I also suggest you have a look at the web site for the Vendor Finance (Wraps) Association of Australia at
http://www.financewraps.asn.au/  They have regular meetings in Vic and NSW.  I'm not sure about Qld.  These meetings are great fornetworking with other Vendor Financiers.

One of the Wrap Management companies in NSW charges 4% and the other charges 4.5%.  I'm not sure what's available in Qld.

I'd also suggest that you give Richard (above) a call.  He will definitely set you on the right path.  Good luck.

Cheers,  Paul