Many people are put off by the thought of positive cash flow property house wrapping because it seems a little bit too technical compared to the idea of purchasing an investment property or even a number of investment properties in order to see a profit coming in each month so I have decided to take you through a short journey on how easy it can be to create a good income through house wrapping without the headaches.
The first thing that you need to do is find the right property in the first place. This is actually no more difficult or different than it would be if you were purchasing an investment property. And just like investment property purchasing, you must go through and actually acquire the property in your own name before you can go ahead and start on the wrapping process. This means that it is up to you to organise the finance on the property and everything needs to be settled in your name or your investment entity's name before going further.
One thing that you must bear in mind when purchasing your property is that, once you have entered into an agreement to house wrap the property, you can no longer enter into an agreement with your lender to refinance the loan on that property.
While all of the details are being finalised with your own financier to acquire the property, it is a good time to advertise the property and the deal that you are offering. This can be as simple as putting an advert in your local paper but if you are going to be entering into house wrapping as a major form of investment (and I truly hope you do) it is a great idea to set up your own website from which to advertise your properties available - this will increase your exposure immensely. You can also consider advertising the property through sites such as Craigslist.
Once you have found someone in which to enter upon a house wrap agreement, there are a number of legalities that you need to sign off on - while this is different to the agreements and checks that you need to make when you have bought and are now renting out an investment home, the agreements are no more difficult. What is essential though (and this goes for all forms of property investment) is that you seek expert advice and never go ahead with anything until you absolutely know what you are getting yourself into. Many people have been burnt by ignorance.
The next step in the process is really just to keep yourself up to date with the payments that are being made on the property and other administrative tasks. You will need to prepare periodic loan statements which are required under the Consumer Credit Code for instance. I would always insist that the payments from the new buyer are made directly by direct debit from their bank account to your loan account.
The final step happens when the contract ends and this is when the final payment is made by the new purchaser to you on the property or the new property owner decides to refinance or sell the property. In the case where the new buyer fails to make the obligatory payments on the property, the contract is cancelled and you take back possession of the property.
To Your Success
The Aussie Wrapper