Vendor Finance Info Needed

[john]

Hi Everyone
I have a prospective purchaser for a property I am selling. They have asked for some help by way of Vendor Finance. As the current market is slow and banks still bloody minded, I can see why VF may be raising its head a bit more often. My only problem is that I have never done a VF deal before. Is there anyone who can offer any advice or point me toward some information or resource that could assist . ie. a book, website, e-book etc. Thanks for any help.

PS I did a search on the forum with little luck.

 

[Shiv]

Hi john I personally Dont know anything about vendor finance, Lofty posted this link on a thread i started about manageming a negatively geared portfolio
hope it helps

http://www.vendorfinanceinstitute.com.au/

 

[john]

Thanks Shiv
Had a look but I think that site is more about accreditation for professional Vendor Financers. I just need the nuts and bolts of how to do it for this one sale only.

 

[Lofty]

Hi John

We've been running our vendor finance business since 2003 so I may be able to help. Regarding the sale of your place, do you know if the potential buyers need:
1. Deposit Finance, e.g. where they get, say, an 80% loan and you finance a proportion of the remainder, or
2. Do they need you to finance quite a bit more of the purchase price? If this is the case, you could use some legal paperwork, called an Instalment Contract.

Once we have a rough idea of the level of financing they want you to supply, your options will be clearer.

Cheers, Paul

 

[john]

G'day Lofty

Really appreciate your input Paul. Purchasers are getting back to me soon. If its OK with you, I could PM you with their proposal and seek your advice and services and whether or not I need an Installment Contract etc. Cheers

 

[Lofty]

Hi John

Yes that's fine. Just in case I miss the PM, when the time comes, "text" me your email address.

Cheers, Paul

 

[Ace in the Hole]

Not much help here, but, does John actually want to sell the property?
Wouldn't vendor financing only provide him with some cashflow, but not the same result as if he wanted to sell the property and use the funds elswhere?

 

[john]

Hi Ace

Yep you're right. I would rather a clean sale if possible, however, if I needed to vendor finance part of it (I was thinking say around 20%) to get a sale in a quiet market, then would consider it. Would not be too happy with a 20-30 year repayment plan for the VF part, as I probably won't be around then

 

[Evachange]

Hi Ace

Would not be too happy with a 20-30 year repayment plan for the VF part, as I probably won't be around then

Give it 5 years and the buyer could refinance and then payout the VF portion.

So you may not have to carry the debt for 30 years.

Just a thought.

 

[Lofty]

Or set the loan term at 5 years but amortise it over 20 to 30 years, to keep the regular loan repayments down to an acceptable level. Followed by a balloon payment of the remainder of the principal after 5 years.

That is, there is huge flexibility in how you write the loan, so that it "works" for both parties.

Cheers, Paul