Rick Otton - buy houses no bank loan

on the move

on the move

Many times these people come up with all the fancy ideas/hot air, but most are just that, ideas/hot air. They are not practical and not without taking big risks.
Otton is flogging this thing of buying houses with no bank loan. I just can't sit there and watch the few hours video of he going on and on. My understanding is he will approach a desperate seller, then offer to take over the repayments of the loan. There still a lot of nitty gritty with the title, ownership etc. Does anyone know what exactly is he on about, and if it actually doable ?
 
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I'm just going from memory here, but I believe Rick Otten is known to do wraps. That is, he purchases a property and then onsells it for a higher price with an installment contract. From memory he makes around 2-3% each month on top of the interest rate he is charged. I think he also does rent-to-owns too, which is a similar product.

I believe he used to be the president of the Australian Vendor Finance organisation.
 
Hi Skater, I understand vendor finance when you have the loan for a property and onsell the property at a higher price and interest to those who are unable to obtain a loan. But not sure this buy house with no bank loan is something different.
(Vendor financing may generate a bit of extra cashflow per month, don't see how it can create long term wealth except to subsidize the -ve holding of other properties.)
 
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Hi "Move" & Skater

When we first started with Vendor Finance (VF) in 2003 we too knew nothing about it and started very simply, i.e. we bought a number of properties and sold them with an instalment contract. Of course, it doesn't take long to run out of money to buy more properties to do this with ;-) It was then that the incredible variety of VF started to open up to us, as we had to become more creative.

Without getting to technical, I can think of three ways to control (buy) a property with VF without the need for a traditional home loan, so it is very possible. One of these three is regarded as a sale by all State governments (they pay the FHOG when using it)and the other two involve "controlling" the property with various paperwork.

It's interesting to note that there are approx 700 members of the Vendor Finance Association of Australia.

It's also been fascinating helping numerous VF'er get their Australian Credit Licences. This has involved quite a bit of communication with ASIC. One of the most interesting conversations was a couple of weeks ago when one of the ASIC team explained how "blown out" they were by the number of VF'ers in the country. Something they just never expected.

There are numerous VF educators in the Australian market. If you don't like the style of one, keep looking until you find one you click with.

Karen and I now live completely off our VF business. Some we know managed to drop their jobs a look quicker than us and a lot ended up going back to their jobs because they left too early.

Of course you'd be crazy to listen to the marketing sizzle to much. As with all endeavours, it's hard work and takes a lot of Action.

MERRY XMAS :)

Cheers, Paul
 
As with many business idealogies


Where one cant see the opportunity due to closed mindset, another will do very well with it.

Its happened to me a number of times, where Im thinking naaah not for me, that will NEVER work, and lo and behold someone with a different view makes a retirement living from it ..................

ta
rolf
 
Strange you should mention that Rolf. When I was a doing some mortgage broking back in 1998, one of my partners went to see Robert Kyosaki and John Burley on thier tour that ended up re-introducing vendor finance back into the Australian residential real estate market.

Unfortunately I didn't go but he bought the resulting tape set. I remember listening diligently to the whole tape set and thereafter confidentially telling my partners that this idea would never work in Australia :) And 5 years later I jumped in boots and all. Something about, "when the student is ready ......" I think ;-)

Cheers, Paul
 
on the move said:
Many times these people come up with all the fancy ideas/hot air, but most are just that, ideas/hot air. They are not practical and not without taking big risks.
Otton is flogging this thing of buying houses with no bank loan. I just can't sit there and watch the few hours video of he going on and on. My understanding is he will approach a desperate seller, then offer to take over the repayments of the loan. There still a lot of nitty gritty with the title, ownership etc. Does anyone know what exactly is he on about, and if it actually doable ?
Click to expand...

There is still a loan, just not one he has to actually try to qualify for.

I don't think it's allowed here; I believe the Banks would have to qualify any transferee?
 
The words are "no bank loan", but there is still a loan, and unless your loaded with cash, there is still a bank at the end of the chain.
As a VF, it's likely your debt is with the bank.

Unless you buy with VF and then onsell also with VF, which is probably the concept here.
Eg. you buy repayments of $1000 mth, and onsell for $1100 mth.
Though sooner or later you are up for stamp duty and any CG tax.

If the objective is to resell, then screwing for a deal and finding motivated sellers is the only way to make it work.
"take over the repayments of the loan" is the same as buying for the price of the loan.
 
Yes, taxes always find a way of catching up with you, no matter how you structure the purchase ;-)

VF is very flexible and we know some of our fellow VF'ers structure their VF transactions for the long term, i.e. they structure their transactions to encourage their buyers to stay with them for the long term, i.e. 20 to 30 years. They like the regular cash flow and, by looking at how banks structure their lending, they know what this cash flow will add up to over the long term.

Just FYI, buying a property with an Instalment Contract and selling it with an Instalment Contract is a viable concept in all States, except Victoria.

Cheers, Paul
 
Hi Phil

Rent To Own's (RTO) are also an large part of the Australian vendor finance market.

I have no interest in the site, other than advertising there but:
http://www.renttoownhome.com.au
and other VF sites will give you an idea of the size of the Australian RTO market

Some VF'ers prefer RTO's because they're not regulated by the new National Credit Code (NCC), others prefer Instalment Contracts because they are regulated by the NCC and State governments treat them as real sales and pay the FHOG to eligible Instalment Contract buyers.

Cheers, Paul
 
I like BV's question. I was wondering. Whenever things are not clear I always follow the legal trail to ultimate responsibility/rules/juristiction. Hmm just beling my Audit/Risk training methinks!
BTW - great educative post from some of my favourite forum ppl.
 
There are specialist lawyers for just about everything you can think of, e.g. family law, commerical law, criminal law, etc. There are also specialist Vendor Finance Lawyers and a list of just some of them is at:
http://www.vendorfinancelawyer.com.au/vendor_finance_specialists.htm
I'd suggest you consult one of these specialists for your vendor finance documentation. As usual, there are State based differences, so I'd also suggest you use a specialist that's licensed to practice in the State the property is located in.

Other information resources concerning vendor finance in Australia are at:
http://www.vendorfinancelawyer.com.au
http://www.vendorfinance.asn.au
http://www.jvpropertypartners.com.au/index.php?option=com_content&view=article&id=50&Itemid=75 (interest declared - it's our site)
http://www.propertyinvesting.com/strategies/wraps
http://www.propertyinvesting.com/strategies/lease-options

Cheers, Paul
 
Based on that site it's an option. Should'nt be all that complicated.
For $X fee, you get an option to buy X property at X property for $XX.
In the meantime you rent said property.
 
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