Vendor financing

Hi Guys

I am in process of purchasing my first investment property.

I know vendor financing isn't legal in SA however can you please share some light on how its carried out in your state? Does it still work?

I'd also appreicate if I can be pointed to right individuals lawyer, brokers etc who can work with me to carry out the whole vendor finance once I purchase my investment property?

Thanks
Sat

 

There are 3 forms of Vendor Finance
1. Instalment contracts
you pay the purchase price in instalments over a number of years with the right to take possession prior to settlement.

2. Vendor lends the deposit
$100,000 property. Vendor lends the buyer $20,000 and the buyer borrows $80k from a bank.

3. Lease Option
Buyer purchases a option to purchase the property, usually for above market price. The purchaser then rents the property. The rent is often above market value and sometimes part of the rent is used to reduce the purchase price.

 

Hi Thanks, I am going to act as a seller of the vendor finance arrangement not the buyer.

How do you help your client with such arrangement to come up with legal stuff?

 

If you're in SA why are you even looking at this?

 

Hi I am looking to buy my investment property in QLD so I am looking at purchasing it and then later selling it under vendor finance.

 

I don't help with this sort of thing. Too hairy

 

Why so Terry? Are rent to own schemes are best to avoid as a seller?

 

the purchaser will make more money than you, many legal issues, breach of contract with mortgagee etc.

 

Every vendor finance deal I've looked at has turned out badly in some way. Sometimes for the vendor financier, often for the end purchaser; occasionally it's bad for both. Fundamentally the problems which created the need for a vendor financier in the first place don't actually get resolved, they often get worse.

These days I have a very simple policy. If there's any vendor finance anywhere in the deal at all, I'm not able to help. Too much effort and risk for me to take on, and usually no reward at all. It's just not worth getting involved in on any level.

One interesting observation was made many years ago from a vendor financier doing wraps. She said that the vendor financing gave her great cash flow and supplemented her lifestyle quite nicely for a few years, but she regretted selling the properties. She said she'd have been a lot wealthier within a few years had she simply kept them for herself.

 

I've personally done 6 VF deals, made money on them all, but on most the purchasers cleaned up making way more than me.