David and Julie Siacci
- Thread starter Andy Pandy
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Hi David
An Instalment Contract is a credit contract and we are members of Veda Advantage and can place a default onto a purchaser's credit report. However most people are reasonable and, as I mentioned before, we normally help them "move on down the road".
Also, we've found that most Aussies we deal with will almost go without food, if it means keeping their home. We simply haven't seen people walking away because of a perceived drop in the value of their homes. Even in America, most people give the keys back because they can't afford the repayments, not because the value of the home has dropped. The UK is the same, i.e. they have huge numbers of "upside down" house.
Our application process under the old UCCC and new National Credit Code (NCC) has to be fully documented. This means we don't let people in who can't afford it at the time of application.
If their situation changes, e.g. job loss, in the early days before they've built up any equity, they prefer the idea of being helped into a rental as against dealing with solicitors, sherrifs, etc.
Cheers, Paul
An Instalment Contract is a credit contract and we are members of Veda Advantage and can place a default onto a purchaser's credit report. However most people are reasonable and, as I mentioned before, we normally help them "move on down the road".
Also, we've found that most Aussies we deal with will almost go without food, if it means keeping their home. We simply haven't seen people walking away because of a perceived drop in the value of their homes. Even in America, most people give the keys back because they can't afford the repayments, not because the value of the home has dropped. The UK is the same, i.e. they have huge numbers of "upside down" house.
Our application process under the old UCCC and new National Credit Code (NCC) has to be fully documented. This means we don't let people in who can't afford it at the time of application.
If their situation changes, e.g. job loss, in the early days before they've built up any equity, they prefer the idea of being helped into a rental as against dealing with solicitors, sherrifs, etc.
Cheers, Paul
Thanks again Paul.
Can I ask how you determine who is good enough to sell to (out of those who couldn't qualify for a bank loan)?
Some people might say that if a bank rejects them why would you want to take them on?
I suppose you'd want the people who 'just' didn't make it. Casual workers, self-employed, etc?
Can I ask how you determine who is good enough to sell to (out of those who couldn't qualify for a bank loan)?
Some people might say that if a bank rejects them why would you want to take them on?
I suppose you'd want the people who 'just' didn't make it. Casual workers, self-employed, etc?
Hi David
If you saw our Application Form you would think it came from a Bank ;-) Our qualification process has to be pretty strict because of the new National Credit Code and we're very much of the opinion that's a good thing.
In my opinion the major traditional lenders, "cherry pick" the market and, apart from us, there are plenty of lenders in the market that cover the bit of the market these major players don't want (Liberty, etc). We find we get a lot of solid Aussies, i.e. with good serviceability, etc but they may have a small telco credit hit or haven't been able to get the big deposits together that have been needed in the recent past. We find these people to be great clients and very thankful for the opportunity to prove themselves.
Cheers, Paul
If you saw our Application Form you would think it came from a Bank ;-) Our qualification process has to be pretty strict because of the new National Credit Code and we're very much of the opinion that's a good thing.
In my opinion the major traditional lenders, "cherry pick" the market and, apart from us, there are plenty of lenders in the market that cover the bit of the market these major players don't want (Liberty, etc). We find we get a lot of solid Aussies, i.e. with good serviceability, etc but they may have a small telco credit hit or haven't been able to get the big deposits together that have been needed in the recent past. We find these people to be great clients and very thankful for the opportunity to prove themselves.
Cheers, Paul
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Hello David,
What I have found over the last 20 years of investing in real estate is that it is controlled by banks willingness to lend. Sometimes they will give it out like candy but at other times they are 'difficult'. You need to remember that the banking institution run on a system of check boxes. If you fail to fill one box it's "APPLICATION DENIED". The best part of this whole thing is that they will not even tell why the finance was rejected, so you don't even know what to fix.
So a lot of people simply don't qualify on the grounds of 'insufficient deposit'. You can earn as much as you like but without the 20% deposit, plus stamps, plus legals, plus, plus, plus.... Your up the proverbial creek without a paddle. Does this mean you riskier? Maybe, what we have found over the years is that people who can comfortably afford the payments exist. We sell them houses, and they pay their payments to us as their 'bank' for now. When they can get the loan from a regular lender, they do so and pay us out.
The shortest time we have had a vendor terms home with just such a client (110k income between them but only $7000 for a deposit on a 200k home in 2002) was 8 months. They got a loan through a mainstream lender and paid us out. The longest has also been with us since 2002. Same problem, 15 years employed with the same firm, 65k income at the time and 180k home. Tried to get him to get his own loan a few times but he doesn't want to, so he keeps paying us (yes we do it different now).
We have had those that have had changes in circumstances in our time. One such client last year had another child and had to drop a wage. They were struggling so we suggested they put the house on the market and sell it. We got what we were owed, they got the equity that was theirs, about $38k.
Its all about being fair, and being fair sometimes means saying no. Do this in a fair and moral fashion and it will treat you well, do it to rip people off and you will not last.
David & Julie Siacci
I question the wisdom of vendor financing : understand the aim may be to generate extra income to service the -ve cashflow properties, but it takes a lot of time and effort to find an investment property and then get the loan approved, also do too many loans and the banks may say you have too many credit enquiries and you can't get another loan for a long time. Is it worth all the hassles for that extra few hundred bucks a month, then have to look for another investment property every couple of years ? Invest in a relatively safe & high yield managed fund (if they exist ?) /whatever may be easier to get that extra income.
Hi there On the Move,
I think my retained super from the railways is in a safe high yield managed fund, its now half what it was 2 years ago and the recent statement I got said it had dropped again.
I found driving trains more of a hassle. Crappy hours, working 6 days a week, i was constantly exhausted and always short of cash. Always at the whim of my employer. Then if I chose to invest I was at the whim of the bank and then it lost money so I had to work harder. Never had real holidays and the idea of spare cash was great but not a reality.
Now we support our family, pay for our kids private education, university fees so they have no HECS debt; Just bought our daughter her first car, a 2007 Commodore, have a holiday house, boat, motorbikes, regular overseas holidays etc etc. All this thanks to Vendor Terms.
I know which life I choose....
David and Julie Siacci
www.siacci.com.au
Just curious, are your rates fixed at the time the contract is signed or are they floating as a margin with respect to a reference rate such as the RBA cash rate or BBSW?
If fixed, do you also fix your mortgage rates as a hedge or leave them variable? One has a problem with break fees if circumstances change, the other leaves you exposed to interest rate risk, no?
Hi brendio
All our vendor finance buyers have a variable interest rate, that's tied, as you say, to a reference rate. We therefore don't have any issues with fixed interest break costs.
As our buyers interest rate is tied to a reference rate, we and our buyers have the same interest rate risk as all people with variable rate home loans.
Cheers, Paul
All our vendor finance buyers have a variable interest rate, that's tied, as you say, to a reference rate. We therefore don't have any issues with fixed interest break costs.
As our buyers interest rate is tied to a reference rate, we and our buyers have the same interest rate risk as all people with variable rate home loans.
Cheers, Paul
Hi David,
Like anything that is new to us in any field we choose, the tasks can seem hard and even quite daunting. Once you have systems in place, you look back and wonder why you thought it was hard.
When we first started selling houses on terms we were dubious about whether people would buy on terms. However what we have found is that finding people who want to buy their own home is not a hard task.
Home ownership is very important to people in Australia, so you only have put it out there at a reasonable price and a reasonable weekly payment to attract the right kind of people.
David and Julie Siacci
www.siacci.com.au
We too stumbled across the Cash Flow For Life Real Estate Strategy By Accident and "Sack The Banks" Forever!
It is amazing how well this has worked for us. We have been fortunate now to take our experiences & what we have learnt & pass them onto other people here in Mackay selling our homes as Rent to Own. It is a win win situation. We sell a house & their buying a house!
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