That's a good explanation of what a wrap is. But, just to help Ray a little more, "Why" would anyone want to buy a property in this way? To buy a property at a higher price, and pay a higher interest rate?
My understanding is that it is because there are MANY people out there who are not in the position to buy a property. They might be new in Australia- but perhaps with a good income. They may be newly divorced. They might not have a deposit.
I know of two people who actively promote wraps, under a slightly different model.
One model (as I understand) provides lower cost property property to "battlers"- people who are renting, but who may be able to buy a property for about the same cost as they are paying for rent now. They just may have trouble with the deposit. The First Home Owners Grant may help with that- as long as there is someone who can hold the title and support them in the short term.
The other model I'm aware of is aimed at the higher income people. Many of these typically have a substantial deposit, and even a good credit history- but not for a long time. There are many reasons banks refuse people loans. I was refused a loan 8 years ago for a PPOR because, as an IT contractor, I could not show a five year contract. This was in a time when IT contracting meant something (and when I owned a house in the UK, which could not be used as security).
Under this model, people are happy to pay a higher price, and a higher rate of interest, just to get a foot in the door. They will typically try to discharge their loan, and refinance elsewhere, quickly. After maybe two years, they will have a credit history, and the banks will be happy to take them on.
My understanding is that wraps are a finance business- but a potentially lucrative one.
And at least some wrappers are not only wrapping- but using the proceeds of their wraps to provide the income for buying high growth properties (as well as for enjoying life).