Vendor Finance?

[Dot]

Have been asked by real estate agent if we would consider Vendor Finance for a period of 2 or 3 yrs? Has anyone had any experience/ knowledge of this? pros & cons.

[freetraveller123]

If you sell your property on vendor finance you have no guarantee that the purchaser can get alternate finance after the 2 - 3 years so I'd be very wary.

[BruceS]

I sold my farmlet to a chap who had no money.
No deposit at all and Interest quarterly at 3% above bank loan rates. (adjusted quarterly if need be)
I did mine for 3 years with the right for either party to cancel after that time with 3 months notice or continue with those terms until either ends it.
No subdivision or selling off of portion without my agreement etc
If they winge about the rate tell them to go get the money from the bank.

1st mortgage only ! (signed & sealed before possession. (Use your solicitor/lawyer & the buyer pays costs. Buyer pays mortgage discharge when it happens as well)

No 1st mortgage........ no loan.

Default & it becomes yours again.......... no contest & no disputing.
If you can afford to do it I'd go for it. If you need the cash then forget it.
Some banks will loan against it but it can become a bit complicated.

[Dot]

hi Nev and thanks, I understand that if they can't get finance the property after the stated time, the property reverts back to the vendor like a default with a bank, we would still hold the title till all paid but I don't think we shall be going down that road after all.
Thanks Bruce, then we have good ol C/Link snapping at our heels, much better to have the $$$ in the super fund I think.

[TassyJim]

If you do have to repossess, the property might be in a very run down state.
You have no control over what 'improvements' the new owner decides to make, especially when repossession looks likely.

We wouldn't even let a prospective purchaser rent for a few months while he waited for money to become available.

Jim

[Dot]

That was an interesting point Jim about the "improvements" that may be made. That had not even crossed my mind. I am NOT going to be nice to people any more, kicked too much lately.

[Busman]

Depends on how much you want to get out, you can get $1M VF on Fancyleaf if your missus has a nice set, or if you can convince me you might actually have the nuts to make a go of it. Feminists down please, it was a joke !!!

I don't care what you do to the place with "improvements", I am already so far in front.

Thats what VF is about, higher interest rate reflecting the increased risk

Our daughter may take the business on, under these terms, she relishes the opportunity to walk into a business turning over 2M for nothing, only way she will get this sort of start, only way we know tenant is going to work their whatsis off.

Can work, just select the tenant carefully and ONLY first mortgage !!
William

[Dot]

Hi William, that is an interesting view as well, thanks. But I shall pass on your titp about Fancyleaf

[dream4red]

Dot,
You remember the bit about capitol gains tax? You only have 2 years to sell it outright before that nasty taxation dept demand a huge amount of money from you when you finally get that sale.
With your luck with the human race at the moment, I don't think I would trust anyone with that sort of risky business. You really need it to be sold nice and neat. Keep your head, stay calm and don't rush into anything.

Perhaps a long chat with your friendly solicitor may help with some intelligent guidance/expertise.
Remember to trust nobody in business until you have done your thorough research.
xxxxx

[Dot]

Absolutely spot on Deborah. These days I trust no one, not even myself NO VF for us so thank you everyone.