The best market conditions for a wrap

Hi PJ

A period of high capital growth.  This is because it enables your VF buyers to refinance as soon as possible and give you your back-end profit, i.e. the difference between what you bought the propery for and what you on-sold it for, less what they've paid off while they were with you.

However, interestingly we manged to start 2003 and, of course, at the end of 2003, capital gain in NSW slowed dramatically and hasn't done terribly well since.  This has forced us to structure our VF business so it works well in both high and low capital gain environments.

Cheers,  Paul

Hi PJ

Some aspects of our business we will keep confidential   However in relation to your question about our VF buyers attitude towards capital gains, I'd say it's almost non existant.  Normally our buyers have been locked out of home ownership for some time because of their inability to get a traditional home loan and they're usually pretty unhappy about that sittuation.

Their focus becomes home ownership.  They know they pay a premium price when they buy from a vendor financier but it doesn't seem to worry them.  I've told buyers what I've paid for a property and they certainly know how much it's costing them.  Their response, almost without fail is, "you've got to make your money" and we move on.  They also know they would probably never save the deposits required by traditional lenders, so they've worked out that, over time, they'll recover the premium they've paid.

Cheers,  Paul