All Topics / Help Needed! / How do I use LOC effectively

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  • Profile photo of fjficmfjficm
    Member
    @fjficm
    Join Date: 2003
    Post Count: 88

    I have 350 K in portfolio account and I plan to purchase properties outright especially if motivated sellers.

    Can I write the cheque for 100K (for 100 K property) and not bother with the 10% deposit etc and own the property on the day including all other costs

    OR

    will the only option be to settle in 30 days, get builing and pest and legal/conveyancing etc done.

    OR

    can i choose to settle quicker if i know i can all the inspactions and legal done quicker

    This is important i’m sure for all out there who does the same thing especially if the property is right and seller is very motivated and I would like to help this process in my favour

    Any advice on what you guys do would be great

    Profile photo of MonopolyMonopoly
    Member
    @monopoly
    Join Date: 2004
    Post Count: 1,612

    To answer you questions:

    No
    Yes
    No

    I am not sure about the law in your state, but here in Victoria, settlements are 30 days minimum. Even if you go ahead and organise the pest and building (and whatever else) inspections, most conveyancers or solicitors will require a minimum of 30 days settlement, just so they can do their paperwork!!!

    Good luck, glad to see a keen buyer, but don’t worry I am sure the property and its owner won’t run off on you.

    Jo

    Profile photo of AceyduceyAceyducey
    Participant
    @aceyducey
    Join Date: 2003
    Post Count: 651

    fjficm,

    There are ways to negotiate a fast settlement in most states.

    Why buy outright however – why not buy at, say, 60% LVR. Most properties will still be nicely positively geared, there’s no mortgage insurance & you’ll increase the size of your portfolio significantly.

    Remember – if you only put 40% of the money down, 100% of the rent & 100% of the capital growth are still yours.

    Cheers,

    Aceyducey

    Profile photo of Mobile MortgageMobile Mortgage
    Member
    @mobile-mortgage
    Join Date: 2003
    Post Count: 913

    Hi fjficm,
    I agree with the points made by Aceyducey,
    Why not use the funds available in the LOC as a deposit on a 80/20 or 60/40 lend etc,

    By implementing this method you could increase the amount of properties in your portfolio,
    Regards
    Steven
    Mortgage Broker

    [email protected]
    http://www.mobilemortgagemarket.com.au
    Ph:1800 820 500
    Victoria

    PLEASE note comments made should NOT be taken as specific taxation, financial, legal or investment advice. Please seek professional, specific advice.

    Profile photo of DDDD
    Member
    @dd
    Join Date: 2004
    Post Count: 508

    To get the best price, never go cash as you might miss 20K worth of repairs you then get stuck with. Arrange a fast building/pest inspect on all and if someone is keen to sell, go for other clauses like access to property for repairs once contract is unconditional, prior to settlement.

    We had a LOC initially and did what you want to do. Bought 3 properties outright but once we had the titles we used them all within 6 months to fund 8 other properties at 80% 20% ratio or 80%LVR.

    Main thing is, do it your way so you are happy and keep on buying.

    DD[buz2]

    Profile photo of redwingredwing
    Participant
    @redwing
    Join Date: 2003
    Post Count: 2,733

    WoW DD

    Congratulations on your achievements and welcome to the forum..

    REDWING

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

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