All Topics / General Property / Deposits and Growth

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  • Profile photo of JohnyboyJohnyboy
    Member
    @johnyboy
    Join Date: 2003
    Post Count: 1

    Hi everyone,
    I am pretty new to all of this and the forum. I was wondering what your opinions are on a few points. The example is not to far from my situation.

    The example
    Firstly lets say Fred Bloggs has a goal to buy 7 Cash flow positive properties in one year, he can manage to save about $1500 per month. Lets say he has borrowing power of about $280,000 and no capital assets. He has savings of say $10,000.

    Now the goal is 7 properties, lets say the average property is $90,000. Could this realistically be achieved using only wrap strategies as well as actually buying properties in Fred’s own name or in his company/trust? How would Fred proceed so that he could keep buying at a fairly regular rate (7 in one year = about 1 property every 1.5 months)
    – The main issue is the deposits and closing costs. For a property worth $90 000 at an 80% loan. Total cash needed is approximately $22 500 (made up of 20% deposit, and 5% closing costs). If Fred was to achieve his goal of 7 properties he would need to save about $15000 per month. That is an extra $13500 per month!!!

    – Steve achieved 1 new cash flow property every eight and a half days. Steve and his partner probably had substantial cash flow though their business which is great (however I do not presume to know this for a fact). In Fred’s example, the cash flow is probably considerably less. However, I thought that the goal is realistic when considering Steve and David’s achievement. I have included only 2 strategies Wraps and actually buying the properties. Is it possible with only these strategies?

    I know that anything is possible? but do you think that this is realistic?

    Thanks all for any replies you may have.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Without much deposit it would be hard for you (I mean Fred) to buy one. Fred would have to use a 95% loan, so would need 5% deposit and 5% for costs – about $9000 on a $90,000 property.

    It could help greatly if Fred was good at buying under market value and the values were growing rapidly.

    Maybe Fred could also
    -borrow the deposits,
    -get the vendors to finance his deposit,
    -get the vendors to pay his closing costs as part of the deal
    -renovate to add value
    -get some loans as a wrappee and then rent out or lease option (won’t be positive geared tho)
    -save like mad.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of melbearmelbear
    Member
    @melbear
    Join Date: 2003
    Post Count: 2,429

    Steve and Dave managed to fund their (I think 4th) later purchases by wrapping them, and receiving and using the wrappee’s deposit to fund further purchases.

    If you get $10K deposit, you, sorry Fred could probably achieve his goal.

    Cheers
    Mel

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