Starting Wrap Business

Sounds like a lot of hassle for little rewards to me. It can also be difficult to get finance for wraps.

No way out of it.

You incur the duty and when you sell it to them under the instalment contract so do they.
Difference is that they may qualify for a reduction in the duty payable under the First Home Buyer concessions.
They may also qualify for the $7000 – $10,000 FHOG dependant in which State the property is located.

Wraps take a lot of work for little reward. You will make more money buy and hold – from my experience.

Also, most lenders will refuse to lend if they know you are onselling the property on an installment contract. Even if you are using lease options you are supposed to get the lender's permission.

Back to the original question. I too am in NSW. I have the property and the client, but don't know how to set up the deal or where I might point the client for finance. Anyone got any advice.

Bootstraps

Are you looking at wrapping the deal or have someone else who is looking at doing it instead.

If you are are looking at buying the and wrapping the property then finance for your client is not relevant. 

You would purchase the property in your name  / entity and then onsell the property using an installment contract to your client.

Terry point on wrapping is very relevant. The Company I own here in Qld holds a 170+ properties so makes the monthly cash flow an income in its own right however to do less than say 10 could be more day to day trouble than it is worth.

Hi Danish83

> Where do I start? I understand the basics of how the system works but how can I get information on the finer details?

As Paul says, Steve's Wrap Pack if it is still available (I was one of the first owners of one of the early versions back in 2003) or perhaps Rick Otton's which is still available. Although I have not seen Rick's we have wrapped over 30 properties using Steve's (and John Burley's) system.

> Is the Wrap Kit a good place o start? Is the information up to date?

Pretty much. Some newer techniques might squeeze a few more dollars out of the deal, but the principles are the same.

> Does anyone know a good solicitor who can guide me through the process includng contracts?

In NSW? Sorry, can't recommend anyone from personal experience as we have worked exclusively in QLD.

> Any advice on business structure? Via trust or Pty Ltd?

The classic advice is: Start in your own name. If you like the business and keep it going, talk to your solicitor and accountant. We did the first couple of deals in our own names, then went to a Trust, but after attending one of Steve's seminars we saw the benefits of a company. We now have several, but this is not a cheap way to go, so make sure you will continue before you invest in that sort of structure. The advantage of a company is borrowability, and some tax concessions are easier to obtain since you don't have to prove you are wrapping as a business.

> I can obtain finance easily and I am very confident I can source the right people and the right properties. Just want to make sure I get the right advice and information from the beginning.

Although some have commented that some lenders don't like vendor finance arrangements – and this is probably true, especially in the retail banking area – we have not had any problem with full disclosure to lenders. In fact once we became big enough to have access to Business Banking services, they seem to welcome wrapping since we have great cashflow from every (wrapped) purchase.

Actually, your being able to get finance easily is a bit of a red flag. Be careful. Those who start with little resources often create a better business base since they MUST make it profitable form the start.

One of the Brisbane "Reno Kings" Geoff Doidge once showed me a neat structure (on a napkin in an aeroplane on the way back from Steve and Dave's seminar, in fact) that has the appearance of a spoked wheel. There are about 6 wrapped properties around the rim paying for one upmarket buy-and-hold in the centre. Total taxable profit is negligible. The wraps are building your wealth in the buy-and-hold. Of course there are more details; that's the back-of-napkin sketch. This is the essence of one of the comments above. The wraps are the cash generators.

Best wishes on your wrapping. We're rapt!

Mr Fair Go