All Topics / Finance / How to Multi-Finance

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  • Profile photo of s2sss2ss
    Member
    @s2ss
    Join Date: 2004
    Post Count: 4

    Let’s just say a Target for me is to get 10 properties as a starting node. My biggest problem and challenge has been, to understand the principal behind obtaining finance for the properties. 2 properties using secured finance on their respective properties is easy. But once you start applying for loans after that, bank’s are going to say..how on earth are you going to pay it off if you already have two other outstanding loans? I have always found that steve’s methods are great but the biggest hurdle is overlapping the purchases with finance. Another problem is the need to have at least $10,000.00 for each acquisition, which i have calculated will take me probably 10 years to get just 10 properties on me and my wifes low pay.

    Another topic of discussion is the idea of buying a block of flats e.g. 5 flats on the one property and getting a loan to finance all of them at once…might make it easier to get finance. I have found some possible flats or unit blocks. It’s a dillemma to me how on earth i could possibly finance multiple properties, i am wanting to get steve’s fast track package in order to help me speed up my property investing urge.

    Another thing about finance is, whether or not to fix the interest rates, and if so for how long, and also what to do once interest rates go up…..i like the buy and hold method but i don’t know about wraps, it’s great but i prefer to have ownership of the properties. The issue here is, i hear about steve constantly ‘sandbagging’ his position to prevent any interest rate rise disasters, but how he goes about doing it is not detailed enough, i suppose we need to get the ‘wealth’ guarding package as well.

    look forward to any interesting replies.

    Profile photo of alfamickalfamick
    Participant
    @alfamick
    Join Date: 2004
    Post Count: 41

    s2ss,

    There’s no reason I can think of why a bank should lend you money on 5 untis as 1 purchase rather than 5 places over time.

    It is true that they will say “how on earth are you going to pay it off if you already have two other outstanding loans?” but they will also take the rental income into account – so as long as the rent stacks up well, you’re OK.

    Also, assuming you get capital gain somewhere along the way (either a rising market or you create it through renovating etc.) you should be able to borrow against the existing houses to cover deposit/costs to fund subsequent ones, so maybe no need to ever save a deposit after the first.

    I recommend you talk to a broker, and get them to recommend lenders who will be most favourable to your plans and situation.

    Cheers,
    Mick

    Profile photo of Michael WhyteMichael Whyte
    Member
    @michael-whyte
    Join Date: 2004
    Post Count: 269

    s2ss,

    Peter Spann covers this issue well in his book $10M in 10 years. He calls it the perpetual deposit and achieves it by buying well and adding value up front. Then you revalue and use the difference between the valuation and the purchase cost to draw down the next deposit. ie. your created equity up front becomes your deposit on the next IP.

    To do this you need to avoid cross-collaterizing, and Peter also explains how to go about doing this through the loan process so that the banks don’t get concerned with the number of properties you start building in your portfolio.

    Recommend you get and read his book, $20 well spent.

    Cheers,
    Michael.

    Profile photo of Alistair PerryAlistair Perry
    Participant
    @aperry
    Join Date: 2004
    Post Count: 891

    Hi s2ss,

    If you go over 4 units in a development, you might be forced to apply for commercial finance, which is more expensive.

    I quite liked Peter Spann’s book too. I found his “wealthy friend” a bit annoying though.

    Regards
    Alistair

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