Spann "Property Update"

Non conforming lenders(no doc/lo doc)

Non conforming lenders
 Until 10 years ago, the only sources of these were solicitors and the Anglican and Catholic churches. There’s now a lot of new finance providers- eg, Freeman Fox Finance, GE, Peppers, Bluestone.
 Upsides:
.Easy to get (with 25% deposit)
.Suits business owners and self employed
.Suits people with credit problems or no provability.
 Downsides:
.Usually higher interest rates
.They’re quick and difficult to deal with if you default, Banks are “sooks” to deal with in comparisoj.\\n.
 Ideal for:
. Self employed people with less than two years figures who can’t (or won’t) provide figures
. people who have reached a limit with traditional finance sources but KNOW they can service more
.Sort term finances until longer term finances can be arranged
.People who intend to pay debt out of capital
.People with sources of income not recognised by the bank.
 Conditions:
. Usually 25% deposit for lower interest rates
. Interest rates are 0.5% to 3% higher than standard variable.
. No mortgage insurance
. Commercial lending terms (you MUST be aware of what you are signing)
. A statutory declaration is usually required to the effect that you understand all the terms (this bypasses consumer protection legislation),and that you can afford topay.
. A $2M maximum usually applies- perhapsless
 Freeman Fox loans (Spann’s company):
. 20% deposit
. Max $500K per property.
. 7.57%
. (LOC similar numbers but 7.7%)
 
Buy, sell and Rwnovate (last bit of the notes)

Buy, Sell and Renovate
Peter’s strategy for cashflow when he is not allowed to trade in options (as he owns a brokerage firm, which does not trade options- he is not allowed to trade with any other firm)
 This is a higher risk strategy
 Freeman Fox acquires a “consolidated” block of apartments- usually in the range of $1.5M to 3M. This is above the range of the ordinary investor, but below the range of a professional investor.
 They use options or low deposits, and long settlements
 They convert to unrestricted company title (there are much fewer impediments to this than strata title-but banks are more reluctant)
 Renovations are quoted and a builder is contracted
 Sale price to buyers includes renovation costs and aprofit margins
 Buyers benefit because they are buying an older unit at cost & reno price- valuation price will probably be much higher
 Units are sold at or below bank valuation
 Renovation funds are transferred to the Body Corporate, who perform the renovation
 Body Corporate now does strata title
 Profits are in the range 10% to 20%- so if 10% deposits are used, profits can be 100% to 200%
 The main risk, apart from normal property risks, is that if the apartments do not sell, we have to settle

The Freeman Fox prospectus is based on funding properties based on the above model. I was not able to attend this portion of the seminar.
 
OK, that's my summary of 2 1/2 hours of a wealth of information.

I did not get the last session on the new Freeman Fox prospectus- although I did get the prospectus.

So I'd like to ask a favour.

If there's anybody who has actually read this far,and who attended the seminar, could they please send me a PM of their impressions of the prospectus?

I'm much too late to put something in, but would be intersted to know if
1.The seminar was useful/helpful/ (if you went)
2.The summary of the evening was useful/helpful/common knowledge
3.Ignored it

I could not find the poll option. But perhaps better to keep it confidential!
 
Question:

"2. There’s a three way trade off between high growth, high yield, and high risk. Pick any two, and ignore the third. "

I flicked through peters book in borders one night ages ago, and recall a similar analogy he used with a sign in a shop: Pick two of the following - Quality, Price, Speed.

SO:
1. You could pick quality and price, but have to wait a long time
2. You could pick Quality and SPeed, but pay through the nose
3. You could pick Price and speed, but get crap quality.


Not sure how or what your example spanns out (hehehe i amuse myself)


What your notes should probably say is:

"2. There’s a three way trade off between high growth, high yield, and LOW risk. Pick any two, and ignore the third. "
 
Hi JumJones,

Good to see that people do read old posts. It's a great part of the value of this forum- information is available for a long time after.

I think you're right. Sorry.

High growth is good. High yield is good. Low risk is good. But you probably could not achieve all three.

Thanks for the response!
 
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