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Real Deal Ollie Hooper : Director The Vendor Finance Experts.

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Presentation on theme: "Real Deal Ollie Hooper : Director The Vendor Finance Experts."— Presentation transcript:

1 Real Deal Ollie Hooper : Director The Vendor Finance Experts

2 Background Vendor Finance Business for 7 years Mortgage Broker, Money Quest Finance Licences, Memberships & Qualifications: –PAMDA Full Real Estate Agent Licence # –Australian Credit Licence # –Mortgage & Finance Association of Australia (MFAA) Full Member # –Credit Ombudsman Service Limited (COSL) Full Member # M –Certificate IV Financial Services FNS40804 –Diploma Financial Services FNS50504

3 2 BIG Problems in Todays Market

4 Problem # 1. Negative Gearing … The landscape HAS changed GONE are the days of rampant growth Buy, Hold & Hope is NOT working anymore What other long term investment can succeed when less money comes in than goes out on a month-to-month basis? Staggering 70% of Landlords claim a rental loss!! - ATO

5 Problem # 2. Finance is Tough… Not enough deposit – GONE No genuine savings – GONE Credit Defaults – GONE Low Doc Lending – Max LVR 80% Lenders Mortgage Insurance (LMI) Is Expensive

6 The Bottom Line …. Negative geared rental properties are now a BAD investment in most cases Buyers that can afford a bank loan cant get a bank loan

7 What is the Solution ??

8 Vendor Finance … Its Powerful!

9 What is Vendor Finance?

10 A conduit for buyers and sellers to transact without being dependent on bank finance. Benefits: -Fast -Flexible -Beneficial to both parties -True Win / Win

11 Real Deal Location: Redbank Plains, BRISBANE

12 Scenario Owner contacted me via this group in April 2012 Any guesses what the problem was …???

13 Monthly Numbers Debt: $225,000 Int Rate: 6.85% Payment: $1,474 Water: $33 Rates: $126 Insurance: $50 Total Costs: $1,683 * Maintenance & Vacancy not included Rent Income: $290 p/w Less Agent Fees: 9% Total Income: $1,144 Total Shortfall: -$539 pcm

14 Landlords Options 1.Do nothing, wait & hope for rent increase, keep paying the shortfall 2.Put on the market & sell (conventional way) 3.Remarket with Vendor Finance to; a. stop the bleeding b. maximize the profit on the property

15 Current Market Position Comparable Sales: $240k - $265k Ave Days on Market for Suburb: 156 Hopeful Sell Price for Cash Sale: $250k Less REIQ Commission: $7,370 Holding Costs: $2,695 Net Sale Proceeds: $239,935 Cash at Settlement: $14,935 ($239,935 - $225,000)

16 Re-Marketed with Vendor Finance

17 Buyer Found June 2012 Income ( $76,000 Gross Annual) Employment: (PAYG Coles, 4.5 years ) Credit: (1 x paid default; $771 Origin Electricity finalized Apr 2009) Consumer debt: (None) Savings: ($10,000) Issue: Lack of Deposit + Paid Default Rejected CBA

18 SOLD – July 2011 SOLD – Installment Sales Contract Price $270,000 $265,000 (vs $239k 4 cash) Deposit $6,000 Loan Amount $259,000 Interest rate 8.35% Payment $1,964 pcm (vs $1,256 rent) + Water, Rates, Insurance & Maintenance

19 Monthly Cash Flow Turn Around After: I.C. Income: $1,964 Less Mngt Fee: $235 Less Costs: $1,474* Total Cash Flow: $255 * Loan only. Buyer pays for water, insurance, rates & maintenance Before: Rent Income: $1,256 Less Mngt Fee: $112 Less Costs: $1,683* Total Shortfall: $539 * Loan + water + insurance + rates. No maintenance & vacancy included Total Monthly Turn Around = $794

20 Leverage !

21 TVFE Fees Lower of standard REIQ commission or upfront deposit collected on sale Ongoing management 12% Cash out - Nil

22 Follow Up Hot Seat Event Tuesday 7 th August 2012 Tingalpa 6:30 pm $20.00 Donation to Mothers Milk Bank Bring your property details, put me on the spot!

23 Thank you & Questions ?

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