Select to expand quoteHarrow said..
Yeah, you need to kick them out if they don't pay, but what does a bank do if you don't pay? Same thing. Ethical? Well, they can't get a loan any other way, and you are giving them a chance that they have a choice to take if they want. If they default, subtract costs and return any equity left over to them. Seems fair. Risk, yes, but diversify with several properties. I've lost a lot more on shares at times than the lower end of the property market is going to fall. Why won't the bank touch them? Usually income that can't be proven, or just too undisciplined to save a deposit. Secret is to screen for the right client.
How do you return the equity to them? Wouldn't you have to refinance it to get at this?
Either way, I think its a good thing for the buyer. If they can't get a loan any other way, this could make the difference they need.
I had a workmate that made a business out of buying houses from people in trouble, needing a quick sale, and re marketing them to buyers. He seemed to do a better job than a lot of real estate agents.
He was just connecting sellers with buyers and having quick access to finance made the thing work well.
It's basically a high risk, leveraged investment that's making assumptions on capital growth and exposing the investor to default-risk from low-credit-worthy "customers". He'll sing from the rafters if the downside risks don't eventuate but you have to realise that the profits are being earned because the investor is taking a gamble on the very large downside risk not eventuating. A boom-or-bust type of investment.
Good luck to him. Everyone has their own tolerance for level of risk.
Back to the Ops question:
A few years back I was walking through a Melbourne hobby shop with a work mate. Just making idle chit chat he mentioned how he had a blah blah blah (cant remember what it is ) model train at home that his grandfather gave him as a kid. It was still in its original plastic wrapping but he has lost the control box for it. He said you probably cant get a control box for it anymore and that it is worthless junk.
Well a shop assistant overheard the convo and told him that you can still get the box, and if he does and the train is still in its original plastic, then the train would be worth about 30K.
- eBay has made a few Aussies millionaires, but it would be a 'job' rather then an 'investment'
- A few months ago buying some USD would've made a good investment
- Gold as someone mentioned before.. It may be down at the moment, but it is still trending upwards.
- I've heard Silver is good too, but I don't know anything about that personally.
- Dare I say it, anything in the Adult Industry is making fine profits (shares in the Adult Shop maybe)
- I know somebody that rents a unit in Bali for 5k/yr (including maid) and sub-rents that back out, not sure what
she makes though.
There are a few options out there. All depends on what your risk level is.
Here's the scenario
A few grand will get you the following:
1966 wavey 20cent coin
2000 Muel $1 Dollar coin
1923 Half penny.
Sit on them for 5 years.
If you cant find a buyer come see me in 5 years.
Select to expand quoteFormulaNova said..Harrow said..
Yeah, you need to kick them out if they don't pay, but what does a bank do if you don't pay? Same thing. Ethical? Well, they can't get a loan any other way, and you are giving them a chance that they have a choice to take if they want. If they default, subtract costs and return any equity left over to them. Seems fair. Risk, yes, but diversify with several properties. I've lost a lot more on shares at times than the lower end of the property market is going to fall. Why won't the bank touch them? Usually income that can't be proven, or just too undisciplined to save a deposit. Secret is to screen for the right client.
How do you return the equity to them? Wouldn't you have to refinance it to get at this?
Either way, I think its a good thing for the buyer. If they can't get a loan any other way, this could make the difference they need.
I had a workmate that made a business out of buying houses from people in trouble, needing a quick sale, and re marketing them to buyers. He seemed to do a better job than a lot of real estate agents.
He was just connecting sellers with buyers and having quick access to finance made the thing work well.
after the term of the loan, you give them the house. but if they default 15 years in, they get nothing. You boot them and get someone else.
like I said, I couldn't do it to someone. wouldn't work during high interest rate times either
Select to expand quoteRudebeef said..
Well thanks for the replies. Not exactly what I was expecting, I think only the Lego idea is within my price range.
Lets say 2-3k, hanging onto whatever it may be for 3-5 years and looking to do better than 4.5% with a term deposit so will have to settle for higher risk.
Certainly not in for the big money, was more thinking of a sit and wait sorta forced savings for later.
Like Mark_Australia said. "Rent out shares". Write options. You can even rent out shares you don't own. It's fantastic.
Basically an option is as its name suggests. You purchase an option to buy or sell a share at a future date. You can buy options or write options.
A few grand is a nice amount for playing with options.
Disclaimer: I don't trade options.
Select to expand quoteevlPanda said..
Rudebeef said..
Well thanks for the replies. Not exactly what I was expecting, I think only the Lego idea is within my price range.
Lets say 2-3k, hanging onto whatever it may be for 3-5 years and looking to do better than 4.5% with a term deposit so will have to settle for higher risk.
Certainly not in for the big money, was more thinking of a sit and wait sorta forced savings for later.
Like Mark_Australia said. "Rent out shares". Write options. You can even rent out shares you don't own. It's fantastic.
Basically an option is as its name suggests. You purchase an option to buy or sell a share at a future date. You can buy options or write options.
A few grand is a nice amount for playing with options.
Disclaimer: I don't trade options.
Be careful writing options for shares you don't own (naked call options). The potential loses can be greater than your initial investment. Be prepared to find cash for margin calls if the market moves the opposite way to what you predicted. If you can't afford margin calls then you should probably not be trading this particular side of the market.
Having said that, writing options for shares you do own (script covered call options) can provide downside protection and increase the return on the shares and the 'downside' is know (sort of) at the start.
Think of options as a leveraged investment, if you pick the market direction correctly you can make much more than if you invested the same money direct in shares. 
Likewise, if you pick it wrong, the market may spank you like a Naish X3. 
Do your homework before trading options and understand what the affect of both a rising or falling market will have on your position. Know the possible outcomes!!!
Options can be used to profit from a falling, or, for that matter, stagnant market (depending on the strategy you take).
Options are general traded on parcels of shares in multiples of 1000 shares, so this sets the 'floor' that you can enter the market at.
Suggested reading: "Understanding options trading in Australia" by Christopher Tate
Disclaimer: I read the above book >10 years ago and made some good returns on reasonably conservative (for options) strategies, haven't traded options for years (I gave the share portfolio to the ex wife in exchange for going kiting whenever I want. ie divorce)
Select to expand quoteevlPanda said..
Like Mark_Australia said. "Rent out shares". Write options. You can even rent out shares you don't own. It's fantastic.
Basically an option is as its name suggests. You purchase an option to buy or sell a share at a future date. You can buy options or write options.
A few grand is a nice amount for playing with options.
Disclaimer: I don't trade options.
Writing options, and some of you guys said a vendor finance arrangement was risky, LOL. evlPanda, I can only imagine your tongue is almost sticking right through your cheek, yes?
Select to expand quotejusavina said..
So after to pages, when we are talking about investment, "odd" means "dodgy"?
Not sure if you are referring to options or not?
Options are not "dodgy", they just have different risk profiles than more traditional investments.
Just asking. I have no idea what it's all about but the vendor lease thing (legal or not) sounds really dodgy for me 
Just my 2c...
Select to expand quotemyusernam said..
after the term of the loan, you give them the house. but if they default 15 years in, they get nothing. You boot them and get someone else.
like I said, I couldn't do it to someone. wouldn't work during high interest rate times either
Why do they get nothing? If they have paid off half the house, you can give them that back. No law says that you have to keep it all. Sell the house, pay off your own loan, subtract the selling fees, and give them back the balance.
