The Company will be offering a unique service to property investors, homeowners, and tenants. CPW Investments was registered as a limited liability company LLC within the state of California, and will abide by all city and state business laws. Reynolds will share ownership with the parent company, Dynamic Capital of China. The initial phase will include setting up the business.
These topics are covered in this introduction: Why do buyers and sellers choose vendor finance? How has Vendor Finance been used for over a century for the sale and purchase of Real Estate in Australia?
Vendor Finance as an investment strategy Why do buyers and sellers choose vendor finance? Buyers The buyer who buys with Vendor Finance is taking the first step on the path to home ownership.
The buyer who chooses vendor finance is usually looking for a home to live in, but can also be a business looking to buy a shop, factory or office for their business, or is looking to buy as an investor.
Buyers choose the form of vendor finance that meets their needs. Sellers The seller who chooses vendor finance is usually looking to sell their property for a better price than they are able to sell the property using the standard cash sale.
Selling on terms therefore provides a better outcome than selling for cash because it makes the property more attractive to potential buyers. The sale is therefore dependent upon bank finance.
Significantly, the sale is not dependent upon bank finance.
In short, by using vendor finance, a seller receives two benefits; the first is that the seller sells the property more quickly than if offered at a cash price because the property is attractive to more buyers, and because the price does not need to be discounted for a quick sale, because terms are being offered.
Sellers choose the form of vendor finance that meets their needs. Why are Instalment Sales popular with sellers and buyers? For the seller, the reasons why Deposit Finance is popular are — the seller receives a fair sale price because they are providing vendor finance the seller can rely upon the lender which lends the first mortgage loan to qualify the buyer as being creditworthy to be able to afford to pay the Deposit Finance the seller can set the payments according to what the buyer can afford the seller no longer has the obligation to pay council and water rates, insurance premiums, maintenance and repairs, strata levies or land tax, by selling the property under standard Contract terms, because the title passes to the buyer when the property is sold the seller pays out their mortgage and no longer has a loan liability when the property is sold the seller has security for the payment of the Deposit Finance in the form of a Second Mortgage which can be registered, but often a Caveat is registered on the title instead, because a Caveat is simpler and cheaper to register.
For more information on Deposit Finance go to the Deposit Finance tab How has vendor finance been used for over a century for the sale and purchase of real estate in Australia?
Vendor Finance has been used for selling real estate in Australia for a very long time. In fact, for long periods of time banks were reluctant to lend for residential purchases, preferring instead to finance business and investments because they offered better profits.
Some blocks of land were sold to buyers who build homes upon the land; other blocks of land were sold to property speculators who purchased the land for re-sale at a profit.
Then as now, bank finance was not freely available to buyers on vacant blocks of land, because banks were not comfortable with recovering their money if they lent on vacant house blocks of land.
In the early s, many banks collapsed as the weight of property speculation and the great drought took their toll. Variations appeared to the vendor finance model.
For example, here is a plan of subdivision at Blacktown, near the railway station, dated Included was a precedent instalment payment clause, for vendor finance of real estate, which I reproduce — Instalments.
Inthe High Court of Australia considered the tax consequences of two forms of Vendor Finance, in the legal case of: The Federal Commissioner of Taxation -v- Thorogood which is reported in: James H Thorogood carried on the business of buying land, subdividing it into allotments and building houses on them, selling these as house and land packages.
These sales were documented by a Contract for Sale, which continued for several years, with Thorogood retaining the legal title to the property in his name until the Contract for Sale was completed by payment of the final instalment.
Today these are known as Instalment Contracts. These sales were also documented by a Contract for Sale which was completed in the normal time.
Legal title to the property was transferred immediately to the buyer. The documentation for the seller finance took the form of a second mortgage in favour of Thorogood which was registered, ranking after a first mortgage from the external financier.
Today these are known as Deposit Finance arrangements. In both cases, interest was payable on the amount payable and owing to Thorogood. The Federal Commissioner of Taxation assessed Thorogood to pay income tax on the whole price payable under the Contract for Sale in the year the Contract for Sale was entered into, even though in both cases, payment of part of the price was deferred until future years.
Thorogood objected to the tax assessment and contended that he should only pay tax on the parts of the price for which payment was deferred until in future years in the future years in which payment was actually received.
The High Court did not decide the dispute - it decided only that it was possible to take either view of the tax consequences of the transaction, depending upon the facts, and in particular, whether the taxpayer was in the business of providing vendor finance.
For our purposes, the important point is that the legality of both forms of vendor finance was accepted by the High Court of Australia. For information on the current tax position, go to the Tax Treatment of Vendor Finance in Australia tab s — early s The use of vendor finance continued to fluctuate according to social and economic conditions and the availability of bank and non-bank finance.
The supply of housing real estate became scare towardsunable to meet the demands or veterans from World War II wanting to settle down an raise a family, as well as the large numbers of migrants coming to Australia wanting to do the same.INTRODUCTION INDUSTRY BACKGROUND THE COMPANY MARKETING PLAN FINANCIAL STATEMENTS INTRODUCTION This document contains the business plan for International Business Tours, a California - based company that offers assistance to executives and entrepreneurs who seek to do business internationally.
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