investn.com.au

Sounds like they only have a 2% deposit.

 

If investn can get them finance they should be able to get it elsewhere, there's obviously more to the story

 

10% gifted funds for deposit and costs is not an issue with majority of lenders
I suspect it's because of the 10% ownership structure, but poster said the company doesn't own any of the property, trying to get them to think about that bit which is why I asked them the question...

 

Its probably specialist lending because of the ownership structure.

 

I am also new to investing in property, before I signed up to start the initial process, they explained in detail how they earn money and I felt it was a fair arrangement.

My assumption is that they are acting in my best interest as they have an interest in the property growing in value.

I don't see that I paid anyone to find me the property, I suggested the location on where I wanted to buy and the estate which they were fine with it once they did their research.

Didn't think using a buyers agent was an option for me as I only had $15,000 to invest, if I were to invest via a buyers agent how do they make money?

 

I wonder what happens if investn goes broke/sued etc. I would think that creditors would come for that 10%?

 

If they are not on the title, it would be a separate legal agreement. Will there be a caveat on the title? Can they sell this 10% interest in the sales proceeds?

 

Yeah I suspect specialist lending where their lender holds 10% and lends the proceeds and holds security over title. ie a closely held lender. A few traps to that sort of deal. I wonder what happens if they want out ? In some ways it has elements of a reverse mortgage but on the way in. And elements of cash converters. Given the limited equity I cant imagine they will be at all tolerant if there is a financial squeeze and the loan repayment is a concern. Probably a clause which allows the 10% equity partner to list and sell the property from under the 90% owner.

 

As a mortgage broker, this comment is especially alarming. It basically means there's very little flexibility in the lending arrangements.

If the lender decides they want to raise the interest rates above the market (and they will) there's no option to move elsewhere.

If you want to access equity for a future purchase, you've got really only one place you can go. Too bad if you no longer qualify with that lenders criteria. You've also got to get permission from the co-owner (whoever that might be).

Lenders that would consider this sort of arrangement are going to be very far from the mainstream. This likely means a non-conforming lender, which comes with a higher risk of the lender getting into trouble themselves (it happens more often than you'd think in this space). Quite a few lenders got into trouble during the 2008 GFC. It wasn't a good experience for their borrowers.

When investing in property, the right finance is often just as important as the right property. It's incredibly important to get it right and for it to be flexible when you need it to be. Any investment that's very hard get finance for should be a very serious red flag.


The only thing that really looks appealing in all this is you don't need to come up with the 10% deposit. There is a very good reason why lenders require people to have a deposit and it's because they need to have some discipline around money. You can't tell me that it's impossible to save a deposit, I've seen people with all sorts of challenges do it. If you can't save money, then you're not in a possition to be borrowing money.

 

To the mortgage brokers. Would mainstream lenders look at this sort of deal? Provider of 10% deposit not on title and not related to buyer. Because it seems unlikely the 10% provider will be on the loan.

 

The question is how is their interest registered on the mortgage? I can't imagine they'd be comfortable with a simple caveat, they'd probably want a second mortgage or some sort of actual ownership arrangement. Mainstream lenders would be very uncomfortable with this, especially with a 90% lend.

 

Are you sure it is 0.44% of the purchase price management fee ?
Seems very high
Anyway if you are 90% there ( in purchasing ) just go the extra mile and keep the last ten percent hence avoiding the extra owner who is going to bleed your profits forever and ever.

 

Hi, I also recently came across something like this, I had some discussions with them.

1. 10% ($50000 if property price is $500000) they will deposit and you need to pay for costs like stamp duty etc. around 10K to 15K.

2. 4k annual fee which will covers your property management.

3. You need to pay for mortgage.

4. Once you sell they will take AUD 50000 + 10% of profit, provided you are not selling it before 10 years or before property price is doubled.

5. If you sell it less than 10 years and property didn't double its price then they will take AUD 50000 + 20% of profit

6. If you want to sell, get equity, you don't need any approvals, you can do it.

7. It's only your name on the title.

8. They have arrangements with a one of the popular retail banking company for loans.

9. If they file bankruptcy 50000 will be like any other investment and they won't ask you return it back.

Considering I can sell, get equity without approvals, thinking it's not a bad deal but I am newbie in IP and not sure about it.

Any suggestions on this are most welcome.

 

Sounds like a nightmare IMO
What's appealing to you about it?

 

hmm that helps !
Only thing appealing to me was that I can come into IP business with 15-20K.