To WRAP or Lease Option

[Carson]

To WRAP or Lease Option, having done enough home work to get me into hot water, I would like to ask for some advice.

If a Lease Option is a “synthetic” WRAP, how do individual make their decision on which tool to use?

Do individual use both tools, or tend to find the one that suit and specialise?

In general terms, is it the term of the transaction that is the biggest difference between the tools?

Cheers,


Mike

 

[michaelg]

Lease Options vs Wraps (Installment Contracts)

I'll list a series of questions, and write either LO or IC at the end to indicate which or both the question applies to...

Can my buyer use the FHOG as a deposit ? IC

Do I need to comply with the tenancy act ? LO (for short terms)

Do I need to comply with the consumer credit code ? IC (but in some cases possibly LO)

Can I use Landlord insurance? LO

Do I need special building, contents insurance? IC

Which is easier to manage? LO

Which requires more compliance? IC

Which one is appearing more often before the Justice department due to dodgey cases? LO

Which one is it easier to get finance for? LO

Which one requires less paperwork? LO

I'm not sure if that helps, but I thought it was the quickest way to answer a stack of questions.

Michael Gruber
President
Vendor Finance (WRAPS) Association
www.financewraps.asn.au

 

[Carson]

Fantastic, I know it was a big question and you have nicely identified key issues. I guess the only issue not address was do individuals tend to get good at one or the other strategy, or use the most appropriate strategy?

See coments within:

Originally posted by michaelg
Lease Options vs Wraps (Installment Contracts)

I'll list a series of questions, and write either LO or IC at the end to indicate which or both the question applies to...

Can my buyer use the FHOG as a deposit ? IC

[mc] For the right customer the FHOG is a big issue, and would obviously benefit IC.

Do I need to comply with the tenancy act? LO (for short terms)

[mc] I assume that act favours the tenant. Can the option be used to “manage” this?

Do I need to comply with the consumer credit code ? IC (but in some cases possibly LO)

Can I use Landlord insurance? LO

Do I need special building, contents insurance? IC

Which is easier to manage? LO

[mc] This is attractive if the FHOG is an issue.

Which requires more compliance? IC

Which one is appearing more often before the Justice department due to dodgey cases? LO

[mc] There will always be people that don’t go for the win / win and abuse the system.

Which one is it easier to get finance for? LO
[mc] This is attractive if the FHOG is an issue.


Which one requires less paperwork? LO
[mc] This is attractive if the FHOG is an issue.


I'm not sure if that helps, but I thought it was the quickest way to answer a stack of questions.
[mc] Sure does. Does LO have an “Association” as well?
Thanks
Mike


Michael Gruber
President
Vendor Finance (WRAPS) Association
www.financewraps.asn.au

 

[Delta Dart]

I guess the other issue which might play a factor in your decision is what your financial position is. With a Wrap you still need to qualify for finance to buy the underlying property and will hence have costs of deposit, legals, stamp duty, etc.. You can get started in L/O on a shoestring.

Hope this helps.

Delta Dart

 

[superman]

Michael,

Thank you very much for the list.

How does Licence to Occupy (of Positive Cashflow Solutions P/L) compares to LO and IC?

Thank you.

 

[michaelg]

Hi,

License to occupy is used more (so I've heard) in QLD, unfortunately I have no knowledge of the process, so I cannot comment on.

Anyone care to educate me?

Michael Gruber

 

[Terryw]

Delta

I think Carson is selling an option not buying one, so he will still need to get finance etc on the property.

Terryw