Property rocks

Duncan Macgregor WNS is right but I don't think it is legal in NZ it is actually a lease to purchase tittle does not transfer untill last payment. One day late in a payment triggers a huge penalty interest payment and one week in arrears triggers an eviction. (please note detail may not be quite 100% correct but that is the basics of the deal.)

[duncan macgregor]

ENIGMA, A deal like that is legal anywhere. Vendor finance with a deposit at any level likewise interest rate. The point i make is the person silly enough to get involved in a deal like that is a sitting duck. The vendor takes an almighty risk, and has more to lose than the buyer. macdunk

[wns]

macdunk, I'd recommend you check something out properly before dismissing it and thinking ill of someone who adds a different perspective to the conversation.

You can call it what you like but I have and continue to make money out of it. There are several variations/methods but they all come under the vendor financing umbrella. Actually on the deals I've done, I've partnered with a guy who has done 60+ transactions like this, and all day every day he is spending time in the market - screening potential buyers and sellers and putting deals together. In each case we have purchased properties at 15-25% below market price.

Title doesn't pass to the buyer until they have paid the final payment or until they cash us totally out of the deal (by refinancing), so your points 1-4 don't apply.

The first two deals I did cashed us out within a year so I earned something like a 50-60% annualised return on my money. The other two I've got going, are ticking over, earning me a couple of hundred profit per house per month. Yes there are some risks but there are things in place such as systems and legal documents, to manage and mitigate them.

Mac Dunk not so as 24 hrs notice of eviction is all that is required and he can just repeat as he still has tittle and no mortgagee sale is required.

[duncan macgregor]

Seems that i am not up with the play in exploiting the vulnerable take it all back. I like the way i look however when i have a shave do you?. macdunk

MAC DUNK I never said I did it But others certainly are. And is that type of contract legal in NZ I do not think it is, would be very pleased if somebody could enlighten me.

[wns]

There’s no excessive penalties for late payments with the way I’ve done it and I certainly wouldn’t recommend anything that is unfair or unethical. In fact with one of our buyers, they did get a few weeks behind with their payments but we didn’t penalize them at all.
Having only been in the house for about 6 months, they sold the house (for a good profit) because they decided to move overseas. And we made our profit too. Win-win.

Another of our buyers could refinance with a bank but doesn’t want to because he hates banks. Fair enough that’s his choice.
For ALL of our buyers, the value of their homes are now worth more than what they paid for them 1-3 years ago. In fact we want that to be the case so that they can refinance and we get our back-end profit. That’s what’s called a win-win situation. These are people who are sick of paying rent and want to own their own home, but cannot at that moment in time get the finance through conventional means to buy a home. We are giving them a chance to either save and get extra funds together, or to repair their credit rating. Normally this takes 1-5 years. In the meantime they get the opportunity to buy a home and benefit from the appreciation in its value. Yes I absolutely like the way I look in the mirror.

I can not comment on the specifics of what is legal or not in NZ because I'm in Australia.

I was reading in the NZX forum yesterday and came across the following. I for one see the irony.

“I think that what you forget is the type of person that makes up a large percentage of the forum. Inclined to be petty, and condemn an idea before even considering it. Catfighting like spoiled brats etc etc .
Posters are scared to voice opinions, or new systems with the multitude braying for their blood in the background. I give the example of me explaining my time line system. In the end i thought i dont need this crap, and couldnt be bothered with their rail track thinking, and gave up. It is not if you are right or wrong that counts, its giving the others an idea they might never have thought up that they might incorporate into their own system. I refuse to hide behind an alias and throw mud. My real name is displayed that is what counts the idiots wont do that. I dare you major, and stock man to start the trend, tell us who you really are then we might end up with good honest opinions. Macdunk”

[duncan macgregor]

WNS, no irony in that post. I am always the first to say i got it wrong as indeed i did in this case. I pointed out however that i didnt like it. I prefer to make my money in a more honourable way. macdunk

[Halebop]

MacDunk its just a form of trading. I see no dishonour in it unless someones intentions are dishonourable. A developer can sell me a house he's built without vendor financing and yet know full well its already rotting from the inside out. It doesn't make the transaction more honourable just because I borrowed my full debt load from a bank or paid X versus Y.

Vendor Financing is a well established property "trading" technique (as opposed to property investing). In New Zealand it slips somewhat through the cracks in terms of legislation which is why there have been some negative media reports on the topic here due to various operators and their sharp (and certainly dishonorable) practices.

It meets a valid need and provides those with access to credit lines a potential source of revenue. WNS' partner is the interesting one because often they divert these transactions to 3rd party investors like WNS to reduce their own debt exposure but still earn management fees or profit shares. Now that's trading!

[wns]

Macdunk,

All I did was state a simple fact followed by a numerical example - to present an idea that some others perhaps had not heard of before (sound familiar?).

People can take it or leave it. If people are interested they will investigate it and evaluate the facts and see if its for them or not.

You first of all ridiculed the idea and now you have made (as evidenced by a few of your comments) moral judgments on the method I described, even though you aren’t informed with the facts of what I was talking about (sound familiar?) - as your first response clearly shows. It seems you aren’t even open to the idea I have presented. I don’t care if you do nothing with it, but I don’t particularly appreciate you bagging it when you don’t know what you’re talking about. If others just read your response they also would probably close their mind to the idea without exploring the facts.

I have some buy and hold rentals as well as those vendor finance deals and quite frankly I think the people who are buying their own home (and now have substantial built up capital appreciation) are getting a much better deal than the people who rent from me. Also, the cash flow is much better from the vendor finance deals.

I believe buy & hold and vendor financing both have their place in the market and both can be rewarding. But most people have only heard of buy & hold, which most of the time means negative cash flow unless people put in a sizeable deposit - so I wanted to let people know there’s an alternative.

Regards,
Warwick