John Burley

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From: Mike .


John Burley Seminar
From: Darren
Date: 5/19/00
Time: 12:17:33 AM

I attended a John Burley seminar tonight in Melbourne and was blown away on a session about how to turn your negative geared properties into positively geared. The concept he uses is called a wrap, which is widely used in America, but not here. Basically, it is like a car lease, except with a house. I buy the house, and the vendor leases from me with an option to purchase at some stage in the future. I repay the loan, the tenant pays me a lease payment and pays all costs - rates, repairs etc. Basically, on a $100,000 house, I would make $300.00 profit per month - it makes me the banker.

Burley said that most people or advisors will say you can't do that or thats illegal. It is done here on a small scale, mainly because people don't understand the technique. He showed examples of advertisements in Australian newspapers, with people who do it here. He claimed one guy in Melbourne has 20 properties alone on a wrap around mortgage, - $6,000 per month positive? If you want further information go to a Burley seminar or go to www.creonline.com - newsgroups. Why invest in negative cashflow properties, when you can do this.

 

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Crystal

Reply: 1
From: Mike .


Re: John Burley Seminar
From: Crystal
Date: 5/21/00
Time: 10:56:03 PM

Just finished reading "Creating Wealth" by Robert G Allen author of "Nothing Down" which teaches Americans to buy property in the John Burley way. It sounds like a licence to print money. I checked with Jans book "Building Wealth - Story by Story" and she comments on this technique at the end of story 92 which reads... "I have often seen ads in Australian newspapers for offers to buy houses with nothing down, but it doesn't work here, as assumable loans are very uncommon and vendors require cash for their next property." So if there is an Australian "nothing down" method, I'd love to hear about it.

 

[WebBoard]

???

Reply: 1.1
From: Mike .


Re: John Burley Seminar
From:
Date: 6/25/00
Time: 10:40:24 PM

Hi Crystal, I don't know the nothing down strategy, but you can purchase a deposit bond or bank guarantee, for $500 - $1000, that will allow you to put a deposit on a property. This system is what Henry Kaye teaches.

 

[WebBoard]

Andrew G

Reply: 1.1.1
From: Mike .


Re: John Burley Seminar
From: Andrew G
Date: 5/22/00
Time: 6:45:51 PM

I have never come across any assumable loans in Australia and when it comes down to it there are not that many in the US.

As you would have seen in Allen's book the chapter on "cookie cutters" shows 8 ways to buy with nothing down and not all of them require assumable loans. Many of these can and are done in Australia. Where there is a will there is a way.

Andrew.

 

[WebBoard]

Geoff1

Reply: 1.1.1.1
From: Mike .


Re: John Burley Seminar
From: geoff
Date: 5/19/00
Time: 7:11:44 AM

Hi Darren, yes it is a great strategy... cash positive all the way! We saw it over a year ago but got stopped at putting a legal contract together. We had a copy of the USA contracts but didnt believe they were suitable for our legislation. The average (non investor) solicitor has a problem getting their mind around this concept. Has anyone succeeded in putting a legal "wrap" contract together? Are there any investor/ solicitors out there? I'd like to meet and exchange info on making the wrap "package" work. I can easily find the properties to wrap.

 

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Darren

Reply: 1.1.1.1.1
From: Mike .


Re: John Burley Seminar
From: Darren
Date: 5/19/00
Time: 11:23:35 AM

Maybe you could pose the question on the http://www.cashflow.com forum (Kiyosaki) and see what sort of feedback you receive. I'm trying now to find a solicitor. As previously mentioned, it is done here, so there must be some way around it.

I found US web site http://www.legalwiz.com that has documentation, that you can possibly get changed to suit Oz law.

Regards

 

[WebBoard]

Andrew G

Reply: 1.1.1.1.1.1
From: Mike .


Re: John Burley Seminar
From: Andrew G
Date: 5/19/00
Time: 9:08:19 PM

I have written to people on the Kiyosaki board who claim to have done "wraps" in Australia. Some of them offer to do all the work for you. I looked into them but found the legals too much of a headache to deal with and thus made the selling process a little more difficult. As a result I have taken the L/O path which is much more simple and more common (used in so many other areas it isn't funny. Eg Radio Rentals whole business is based on it.)

The end result however is the same, properties with +ve cashflow and profit margin at the back end. It is easy to pick up $5-10K a deal with very little work. This is the kind of stuff my web page is dedicated to. I hope to have it up and running soon.

Andrew.

 

[WebBoard]

Darren

Reply: 1.1.1.1.1.1.1
From: Mike .


Re: John Burley Seminar - Andrew G
From: Darren
Date: 5/19/00
Time: 10:55:37 PM

Thanks for your reply. Would you explain how you do your lease options. It sounds the same as what Burley is doing, except for the terminology. He called them wraps, but said the concept was the same as a l/o for a car. I saw an add in a Melbourne local paper last week and it read - "House for sale by owner. No bank qualifying, minimal deposit. Affordable monthly payments. Minor repairs neccessary. Motivated seller" I would assume this guy is offering a lease/option. Anyway I thought a l/o and a wrap are the same thing, just American terminology. Any ideas? Thanks

 

[WebBoard]

Andrew G

Reply: 1.1.1.1.1.1.1.1
From: Mike .


Re: John Burley Seminar - Andrew G
From: Andrew G
Date: 5/20/00
Time: 10:31:18 AM

A wrap is where you say buy a IP worth $120K with a mtg of $100K @ 7%. You then sell this on to someone for $130K with a mtg of $130K @ 8%. This new mtg wraps around (hence the name wrap) the old one. This way you add $10K to your net worth and add $65 per week to your cash flow. [($130K x 8%)-($100K x 7%)]/52 = $65pw.

The L/O is just like (as you say) a car. A lease with an option to buy. In the example above instead of selling the property on and wrapping a mtg you lease it to them with an option to buy at $130K with part of the rent credited to the purchase if the option is exercised. Just like a car there is a residual at the end of the lease.

This terminology is used in the US that is where I got it from. There is a difference between them. A L/O doesn't sound as sexy as wraps and my guess is that is why it is missused buy many people here in Australia.

That ad sounds like it alright. Give it a call an see what they have to say. Call not as a fellow investor but as a guy who wants to buy a house. Actually if your bank won't give you anymore money and you want another house in Melb then this is a good way to get one with no problems.

Andrew.

PS I am writing a course that teaches how to lease/option in Australia. I hope to have it out in a month. If you want to be kept up to date email me at [email protected]

 

[WebBoard]

Darren

Reply: 1.1.1.1.1.1.1.1.1
From: Mike .


Re: John Burley Seminar - Andrew G
From: Darren
Date: 5/20/00
Time: 1:06:51 PM

What sort of profit margin do you make on your l/o deals, say on your example a property worth $130,000. Is it the same as the profit of $65.00 per week on a wrap. Regards

 

[WebBoard]

Andrew G

Reply: 1.1.1.1.1.1.1.1.1.1
From: Mike .


How Long is a Piece of String
From: Andrew G
Date: 5/20/00
Time: 3:27:35 PM

To answer the first question is difficult as each deal is different. As much as possible is the only answer I can give really. I want all my deals to be win/win. I want to make a profit but I don't want to rob the poor tenant blind. I want them tell all their friends how great a deal they are on and send them on to me for their own place.

For the example given I would ask for above market rental. Say a yield of 8% was common for the area I'd try for 10% but would consider 9% with a bigger deposit. This however would change the whole deal in terms of credit given.

If I could get 10% then I would clear $115pw. @ 9% I'd get $90 pw and @ 8% the same $65 pw. Do one of these each month and you will be looking OK after a year.

It is more of a question of what the market will pay and how cheaply I bought than a profit objective. Having said that I wouldn't bother with anything less than $10K unless I could knock it on the head in a few hours.

Andrew.