Malpass
The strategy has been mentioned many times in the past. A search of "wrap", "Otton", "McKnight" or similar wil give you a lot of reading.
It is not a real estate strategy really- it is a finance strategy uswing reqal estate.
The idea is something like (not in particular order):
. Find a property
. Finance the property
. Buy it through bank finance
. "Sell" the property to the tenant (though you might have done this before financing). Sell it on terms. But you still hold the main finance for the property.
Hypothetical:
. Find property for $250K
. Property has an occupant who hates renting, and would like to buy. Tenant may have a problem buying- perhaps for income problems, or perhaps because of other problems (eg, non documented income; new arrival in Australia)
. The owner allows tenant to buy the property. The tenant enters into an agreement to buy the property on terms. The owner has the mortgage- but charges the tenant a higher rate (perhaps 2% higher than bank rates?) for the tenant to buy the property.
. The terms may well include a higher price than what the property is currently worth (many tenants will be quite happy with that, as if does mean that thay can buy where they could not have before).
. The owner earns the difference between the bank rate (s)he pays and what the tenant pays.
That difference provides the cashflow to the owner.
And the higher price provides a profitable exit strategy to the wrapper if the tenant discharges early.
I chose not to go into wraps, because:
1. It is a finance strategy, not a real estate one. I could have missed out on some great real estate price rises if I had followed that strategy.
2. There was a perception that the strategy was not ethical. I had satisfied myself that it was quite ethical, but others, especially media, had different perceptions.