Presentation on theme: "Real Deal Ollie Hooper Director - The Vendor Finance Experts."— Presentation transcript:
Real Deal Ollie Hooper Director - The Vendor Finance Experts
Background Been in the Vendor Finance business for 7 years Hold an Australian Credit License, MFAA, COSL memberships & P.I. Insurance – Fully Qualified in the business Work with existing owners / landlords to “Stop the Bleeding” on their negative geared properties and to maximise the sale price in today’s market. Work with investors to buy under market properties and on-sell them using Vendor Finance to create safe, secure long term cash flow with built in profits and upfront exit strategies in place. Day to day mortgage broker working with the Big 4 banks & 20 other lenders doing regular home loans.
Real Deal Owner Joint Venture with Vendor Finance “Combo” on-sell Location: Beerwah, SUNSHINE COAST
Scenario Sellers contacted me via the web June 2011 They had a problem; their investment property was not selling by the real estate agent and they were “bleeding” cash. They needed a sale or at least to stop the monthly “bleeding” Property values were heading south They had a high level of debt on the home.
The Sellers Numbers Debt: $378,000 Int Rate: 7.13% Payment: $2,245 Water: $83 Rates: $112 Insurance: $45 Total Monthly: $2485 Rent Income: $380 p/w Agent Fee’s: 9% Net Income: $1498 Total “Bleeding”: $987 + vacancy & repairs??? Net sale proceeds in current market = $370k
Sellers Options 1.Do nothing, hope and wait for a sale @ $395,000. Keep paying $987 shortfall ! 2.Dump the price for a quick 30 day sale. (Need to be sub $380,000 less commission = net $370,000 best case) requires $9,000 + cheque to settle !! 3.Sell Vendor Finance, stop the “Bleeding” & maximize the sale price
Joint Venture Agreement Agreement said that we would market the property using a Vendor Finance Strategy. We would share equally in any profits created over and above the existing debt of $378,000 Owners pay for marketing TVFE manage the whole process a- z
Marketing Classified ad’s Local flyers Websites Signs
Buyer Found Nov 2011 Imperfect credit due to business purchase going wrong All debts were re-paid and debt agreement was discharged March 2009 but no due to fall off Veda until Sep 2013. Solid PAYG income of $73,000 + $42,000 No other debts $2,500 deposit due to prior debts
Purchase Agreement Low deposit but capacity to make higher payments We agreed purchase price $410,000 Payment $3250 pcm Deposit Credit of $18,100 after one year At year 1 option to purchase with a bank loan Or roll into installment contract $391,500 with interest rate premium of 1.00% increasing
Turn Around for Owners After: Upfront deposit: $2,000 Income: $3250 Less Costs: $2485 Cash flow: $765 x 50% = $382 in the bank! Back end Profit: ($391,500 - $378,000 x 50%) = $6,750 Before: Net Income: $1498 Less Costs: $2485 Shortfall: - $987 + Quick sale = $9,000 + instant loss
Outcome for TVFE No money down ! $1,250 upfront $382 cash flow per month ongoing $5,750 back end profit (down the track)