Where can u get the 20% deposit?

Hi,
If you've run out of equity/cash and you still want to buy property (the repayments are not a problem) the question arises: "Where can u get the 20% needed by the banks so that they will cough up the other 80%"? :confused:

In pondering this I guess there are Solicitors funds where you will pay an extra 3 or 4 % on top of the Bank rates. But since I'm thinking for a short term like 12-18 months even if that is $200K over a year then that is cheap, if the money can be made at the end of the project. It would cost say $20K vs 12K (from a bank) so the difference would be 8K, but that would allow u to get in to the work.

But how do solicitors guard their investment? Do they require a name on the contract of the new property?
Or in these times do you think it better to try and engage the vendor(s) as a partner so that initial purchase price can be delayed for a period whilst construction/reno occurs? ie do a deal with the vendor for "vendor finance".

Are there better/safer ways to get the money? Any threads where this has been discussed already that people know of?

Thx so much,
JB
 
Solicitors usually lodge a mortgage on the title, just like a lender will, so you wont be able to go down that route.
Vendor finance usually would lodge a caveat on title after the main lender has lodged their mortgage, so this is possible, but in realityhard to find and negotiate a vendor finance deal. they usually offer vendor finance because their price is unrealistic.
there would probably be more threads on this issue in 'innovative techniques'.
 
There's always a creative way to raise a deposit

How about combining first home owners grant + a talk to brokers regarding loans that require less than 20% deposit. Can also get funds from money lenders that do personal loans at high rates of interest. There are also private loans that could be used for a deposit.

Finally there’s developer finance from groups like Meriton Apartments who provide a product with easy entry financing. This way you build a track record.

If serviceability is not an issue, there's always a creative way to raise a deposit.
 
Buy a cheaper property, eg, regional, that has 9% yields... buy under value, renovate it and get it revalued and draw out the equity for your next deposit.

Might be the 20% you need. :)
 
Hi JV

We had a purchaser buy a Vendor Financed property from us, in Deception Bay, Brisbane for $250,000. He did a cosmetic reno and 2.5 years later he sold it for $312,000. Not stellar but it was obviously good enough for him because he's just about to do it again (not in Deception Bay).

Seems he's manged to overcome our "unrealistic" pricing (mentioned above) ;-)

Cheers, Paul
 
Buy a cheaper property, eg, regional, that has 9% yields... buy under value, renovate it and get it revalued and draw out the equity for your next deposit.

Easily done it would appear. Which reminds me of something:



(Cut to a sign saying 'How to do it'. Music. Pull out to reveal a 'Blue Peter' type set. Sitting casually on the edge of a dais an three presenters in sweaters - Noel, Jackie and Alan - plus a large bloodhound.)

Alan: Hello.

Noel: Hello.

Alan: Well, last week we showed you how to become a gynaecologist. And this week on 'How to do it' we're going to show you how to play the flute, how to split an atom, how to construct a box girder bridge, how to irrigate the Sahara Desert and make vast new areas of land cultivatable, but first, here's Jackie to tell you all how to rid the world of all known diseases.

Jackie: Hello, Alan.

Alan: Hello, Jackie.

Jackie: Well, first of all become a doctor and discover a marvellous cure for something, and then, when the medical profession really starts to take notice of you, you can jolly well tell them what to do and make sure they get everything right so there'll never be any diseases ever again.

Alan: Thanks, Jackie. Great idea. How to play the flute. (picking up a flute) Well here we are. You blow there and you move your fingers up and down here.

Noel: Great, great, Alan. Well, next week we'Ll be showing you how black and white people can live together in peace and harmony, and Alan will be over in Moscow showing us how to reconcile the Russians and the Chinese. So, until next week, cheerio.

Alan: Bye.

Jackie: Bye.

(Children's music.)
 
Hi JV

We had a purchaser buy a Vendor Financed property from us, in Deception Bay, Brisbane for $250,000. He did a cosmetic reno and 2.5 years later he sold it for $312,000. Not stellar but it was obviously good enough for him because he's just about to do it again (not in Deception Bay).

Seems he's manged to overcome our "unrealistic" pricing (mentioned above) ;-)

Cheers, Paul

Now that's something I think I could handle.....Can u perhaps share some ideas as to how to start that relationship? Like how did u guys ever find each other in the first place? Was there an ad saying "Selling with Vendor finance" that u placed? Was it on the Internet or local paper? BTW, do u think the reno got the increase or was it just natural growth of the market in 2 years that bumped up the price?
Cheers,
JB
 
"Simply" refi ur existing portfolio to 90 % and buy at 90%

ta
rolf

That's a good idea Rolf. thx, but it seems that I have now exhausted that route also. Simply used up all my equity in buying houses. But there must be another way to keep buying as, for example, the big guys simply do not have equity for hundreds of millions when they build massive skyscrapers, yet they get funded. However they do the deal, is what i want to do on a smaller scale. U know the old saying..."there's gotta be a way". I mean 3 years ago the banks were falling over themselves at 100%. I borrowed 110% from St George in 2001 at the time or just after the dot com bust. So times are different, but we know that the housing market is perfect at the moment for buying into. Rents are forever going up in the big cities, population is booming according to B Salt, even the boat people are coming in their droves! :D
But, the Banks have tightened their belts. So it's either raise the 20% each time somewhere or do the deals some other way.
Anyways, appreciate all the ideas...Pls keep 'em coming!
JB
 
Hi JB

There's nothing too sophisticated about our marketing. It usually consists of a sign out the front, an ad like you mentioned in the classifieds, in the local free paper and a listing at www.renttoownhome.com.au

It was a combination of both really. He didn't go berserk on the reno at all but it sure made a big difference visually. I guess he reckons he can do it over and over now, without having to go through traditional lenders.

Cheers, Paul
 
Save the 10% part of the deposit in cash, go to a Casino and bet it all on Black with a 2 to 1 odd. Hahaha :p

In all seriousness, I’m a newbie and can only suggest saving it in cash be a good way to get your 20% deposit. Im guessing if repayments aren’t an issue you have sufficient cash flow to do this. I’m not as creative as the res of the SS crew.:D

Cheers :D

Mick
 
Hi JB

There's nothing too sophisticated about our marketing. It usually consists of a sign out the front, an ad like you mentioned in the classifieds, in the local free paper and a listing at www.renttoownhome.com.au
Cheers, Paul

Hey Paul,
That is helpful! So about the site you list, renttoownhome, I have trawled through it, but am wondering if u have ever noticed a deal like this on that site:

Put down the option in $$, then get busy doing development proposal with council, once approved do any works needed e.g. laying of pipes, electricity, painting - exercise option and then sell developed project.
Cheers,
JB
 
Hey Paul,
That is helpful! So about the site you list, renttoownhome, I have trawled through it, but am wondering if u have ever noticed a deal like this on that site:

Put down the option in $$, then get busy doing development proposal with council, once approved do any works needed e.g. laying of pipes, electricity, painting - exercise option and then sell developed project.
Cheers,
JB

What im trying to do. Sounds easy. but its not. I think its quite tough since you gotta be on the ball and all over the field. But certainly doable
 
Hi JB

I haven't seen that type of transaction on renttoownhome so far.

I'm currently working with a friend whose trying to setup a joint venture with a developer for his 2,560 sqm of land in Booker Bay (near Ettalong) on the Central coast of NSW.

The land owner would get the DA for 12 villas and the develper will build the villas and they divide the profits as agreed. Definitely not a low money down deal though because if you were thinking of doing the developer side of the deal, you'd have to cover the cost of building the twelve villas.

Cheers, Paul
 
Its not just a matter of 20% deposit, there is stamp duty and all the usual legal fees that go with the purchase.


I wish I could figure out how people buy and then buy and buy again.


Ah well....
 
Hi Shopgirl

You mentioned paying the stamp duty and legals. Who says you have to pay it? It's just a tradition and people will argue black and blue that you can't get the vendor to pay the stamp duty and your legals but you can. We simply persist and show how one of the biggest law firms and real estate agents use this "costs inclusive" price in their transactions.

We figured, if they can then so can we. The result: we get our vendors to make out cheques to the OSR and our solicitors at settlement for both these costs. It is important to make sure the cheques are not made out to you, or the payment may be perceived as a rebate (bad).

It is also important to not try to hide this arrangement from your lender. We found that sometimes they notice the arrangement and reduce the amount they'll lend us and often they don't notice and lend on the full purchase price. But we've always done the right thing, i.e. supply paperwork to your lender that shows the "costs inclusive" arrangemnet.

Cheers, Paul
 
Its not just a matter of 20% deposit, there is stamp duty and all the usual legal fees that go with the purchase.


I wish I could figure out how people buy and then buy and buy again.


Ah well....

It would seem you just have to think like them and not like yourself in that regards. As you can see by loftys post. The way you and they think. Is miles apart.

I wish you luck.
 
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