All Topics / General Property / Deposits and Growth
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.
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 MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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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