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Paul Zalitis, the Aussie Wrapper, explains how Vendor Financing really works

Updated: Jan 20

✦ It's about creating positive cash flow for yourself while helping honest Australian families finally achieve their dream of getting a home.

There are many families out there who have tried to request for a traditional bank loan in order to purchase the house of their dreams. They have been rejected by the bank for a variety of reasons, and find themselves completely stuck. Without the help of a loan, whatever money they have now (and will still continue to earn in their jobs), will never be enough to get a house. They're trapped with permanently renting, and those who wish to start a family find their plans stalled.

And this is where Vendor Finance steps in.

What exactly is Vendor Finance?

This is a more common scenario than you may imagine.

It is basically a system that allows buyers to purchase a home when they are unable to qualify for the run-of-the-mill home loan. The Wrapper (Vendor) organises the finances and loans the money to the Wrappee (Purchaser) to buy their home. The upside is it helps the Wrapper to boost their cash flow and grow their investment portfolio, and the Wrappee is finally able to actually own a house and start a family.

During this process, the property title remains with the Wrapper (Vendor) until the Wrappee (Purchaser) pays the final instalment or refinances the property. Most Wrappees aim and are able to refinance in less than 5 years. Once everything is fully paid, the property title is then transferred to the Wrappee.

For Paul Zalitis, the Aussie Wrapper, this is a win-win situation. He has helped many families find hope in purchasing their homes, and he has gone on to pass on his knowledge, expertise and experience to others who wish to be involved in Vendor Financing and become a Wrapper.

Many may not be aware, but Vendor Finance existed in Australia a hundred years ago. Tony Cordato, a Vendor Finance Lawyer, explains:

"A hundred years ago, land and houses were sold with Vendor Finance. They called it Terms Finance, and you pay by easy terms. Why do you think sellers did that a hundred years ago? Well, because if you offered terms, instead of asking for the full price to be paid in cash, there are many more purchasers you could attract to purchase the property. And because the banks were not interested in lending money to purchase residential property, unless the vendors offered Vendor Finance, there'd be very few people turn up to the auction of the property." (Listen to Mr. Cordato's full explanation here.)

Today, families still experience difficulties with getting loans from banks, and without Vendor Finance, many would not have any opportunity to own their own homes.

Why do Vendor Finance?

The variety of potential Wrappees (Purchasers) out there is vast. This includes those who have a slightly lower income and sole traders. The pool of Wrappees therefore increases and Wrappers (Vendors) have a much higher chance of finding a Wrappee to purchase the property sooner. You can sell a property a lot more quickly this way.

Wrappers can create regular positive cash flow, they can even sell for a higher price and still have Wrappees happy to accept the conditions because of the options of payment terms that suit the needs of the Wrappee.

There are tons of properties out there in the market waiting to be sold, but as a Wrapper (Vendor) who can offer opportunities (otherwise known as 'hope'!) to a variety of Wrappees (Purchasers), you are differentiating your property from others and making it a lot more attractive than the traditional bank loan system.

For Vendor Financing to work smoothly and benefit both parties, Wrappees need to satisfy these basic requirements:

  1. Have a minimum of 2% of the purchase price for the deposit.

  2. Make sure they can afford the amount borrowed based on their income i.e. they are in a good position to take on a loan (even though it's not with a bank)

Wrappers have the responsibility to check for any bad credit history of potential Wrappees and do their part to make sure they find a quality Wrappee.

Most properties for Vendor Financing are in a regional area or in a big city. Note that this system is not carried out in Victoria or South Australia.


Whenever money is involved, it pays to be well-informed, research carefully and seek advice from experts. No matter how wonderful an investment system is, if both sides do not pay careful attention, nobody stands to benefit. For Paul, going from zero to hero for him involved a lot of self reflection and accountability on his part to make sure he put in his efforts to create his success system in Vendor Finance.

Wrappers (Vendors)

Wrappers need to educate themselves on Vendor Finance rules, requisites and risks. Read and research as much as you can. Attend workshops, seminars, and listen to what others who have done it before have to say about it. Take notes, and take more notes. It can feel like a lot to take on, but like any job, you can learn and you get better with practice. That's why it is useful to get yourself a Vendor Finance coach, or speak to someone who has experience doing this and can understand the typical pitfalls of those new to Vendor Financing.

Learn more about Vendor Financing here:

Paul Zalitis has been doing Vendor Financing for more than two decades, and has been coaching highly successful investors around Australia about Positive Cashflow Property Investing. Because it has worked so well for him, he is eager to share it with others who are interested in Vendor Financing and who want to really take the bull by the horns and make a difference to their cash flow while helping Australians finally secure their own homes.

Wrappees (Purchasers)

Wrappees should also do their part and seek legal advice if they are not clear. They need to be very honest about their financial ability, and calculate the future costs of the Vendor Finance agreement. Unreliable payment habits can lead to a loss of their deposit and even the opportunity to buy the property. It is possible to refinance within 2 to 5 years if Wrappees ensure they can afford the repayments while saving for a deposit. They should also be able to maintain a good credit rating.

Many Wrappees are simply salt of the earth people who have just been unfortunate in that they do not fall into the category of people that banks prefer to loan money to.

Vendor Finance Terms

There are different items you may find on a basic Vendor Finance agreement. Here are some basic ones, but each agreement you come across may look different because it depends on the negotiations between the Wrapper (Vendor) and the Wrappee (Purchaser).

  • How much is the loan?

  • For how long?

  • What are the instalment amounts?

  • When is the first instalment expected?

  • Are there any lump sum repayments, and if so, how much and when?

  • Are there any interest free period?

  • What is the interest rate on the loan amount?

To understand more about how Vendor Financing works, download the Aussie Wrapper's free eBook “Positive Cash Flow Property Investing Secrets”. This eBook will give you insights, techniques and case studies to Vendor Financing and how you can start gaining positive cashflow.

As Paul likes to say, "Knowledge isn’t Power until it is Applied". Empower yourself with knowledge, whether you are the Wrapper or the Wrappee, and take more than a leaf out of Paul's informative eBook. Reach out to Paul if you feel this is an opportunity for you, and who knows whose dreams you could make come true?

Contact Paul Zalitis "Aussie Wrapper":

Paul Zalitis

The Aussie Wrapper

Follow Aussie Wrapper YouTube channel :


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