Hi Dawiid and others,

When I Googled “Rentrepreneur” it defaulted to Entrepreneur.  However it did give the option to “search for Rentrepreneur instead” – and that provided just a few topics in reply.   Seems that title may have been recently coined, so it might mean different things to different people.

However, Google did lead me to one post that gave a meaning that makes sense to me.  It led to Ian Ugarte’s site where he talks of renting a property from a landlord long-term, with permission to “sublet” (my word, not Ian’s) and to renovate the place to suit the market and provide multiple incomes.

Is that the meaning that IKingy was referring to?  I have no idea – as a newly coined word, there could be several different meanings.

One option I recall was where an investor bought properties as investments but rented the home they live in.  They are doing things “out of the ordinary” by renting, and being an investor too.  Are they rentrepreneurs?

Hmmm….   I don’t know for sure – all thoughts welcome,

Benny

Hi Wan,

Keep in mind Richard’s earlier comment:-

I think you are confused as there is very little difference between lenders when it comes to servicing post Royal Commission.

I noted that English may not be your first language, and that the wording above uses an old word “post” which means “since” or “after”, so reread Richard’s words like this:-

I think you are confused as there is very little difference between lenders when it comes to servicing since the Royal Commission (had some banks change their lending rules).

I added a bit more at the end that should help with understanding the meaning of the original comment.   That Royal Commission had some lenders chastised for their earlier lending practises, and many lenders then needed to change the way they did business.   This lead to “very little difference between lenders” today.

Hope that helps somewhat,

Benny

I think this story is a deception and all the examples described in this book are the authors fantasy!

Wow – way to make an entrance, JulianJohn !!    But for now the floor is yours so, let’s hear it – do you have a way to “make it” that we all need to know about? Some way that is not “deception”?

Why not share – that’s what we are all here for….

Benny

Hi PSR,

I recall one or two examples in the “big picture” topic – here’s the link to one of them:-

https://www.propertyinvesting.com/topic/5014274-how-do-people-buy-multiple-properties/#post-5014274

As Richard Taylor says in there, along with the theory espoused, the structuring of your borrowings is also very important, so go looking for words around that too.  Using a Mortgage Broker who knows their stuff is also a smart move (one from on here would be a good start).

And another

https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/page/2/#post-5012680  This one leads to two other links – do check them both out.  Do note that Steve would be saying to plan to purchase the outcome you want (i.e. don’t just buy anything and hope for a positive outcome – instead buy SOMETHING that will lead to the outcome you want).   Of course there is so much more to it all – but those links may just fire up some extra thoughts….

Benny

PS Do note the dates on these topics.  Some go back several years, so lending laws and Interest rates will be quite different to today (and some “numbers” won’t seem to make much sense in today’s environment).

These days with low interest rates I think buying a main residence first is ideal ….

Terryw’s comment above makes a lot of sense – I was one who had earlier thought (10+ years back) buying IP’s first was better from a financial point of view.  This was mainly because any Interest paid on an investment is a Tax deduction, while on your own home, it was not.   There were one or two other benefits too, but Interest Rates were the elephant in the room.   Of course, with Interest Rates now stupid-low, the whole scenario has changed.

As an example, check out this post:-

https://www.propertyinvesting.com/topic/5048770-will-moving-some-investment-loans-from-io-to-pi-reduce-serviceability/#post-5048778

In there I commented

 “Interest Rates are so low today, the principal repayments now make up a WAY BIGGER portion of a mortgage repayment than they used to. e.g. 20 years ago, a $200k loan taken over 30 years is repaid at 3.3% pa (so, Principal repayments averaged out to $6,666 per annum, while Interest back then might have been at 9% – so Interest was $18,000 per annum). i.e. Interest is nearly 75% of the total mortgage payments, and principal repayment only 25%.”

Today, with a likely Interest Rate around 3%, and (likely) a far larger mortgage, the ratio of Interest to Principal payments has totally reversed.  Though Interest Rates on IP’s are deductible, Principal repayments aren’t.  Hence the PPOR swings back into favour.

The points Terryw made today do indeed change the whole situation.  These low IR’s have been a game-changer for sure.   But there are still other advantages with IP’s that might tip the scale in your case – it depends on a host of other factors.   As always, “run the numbers” to see which is best for you today.

Benny

• This reply was modified 3 years, 7 months ago by  Benny.

Hi Justin,

It would really depend on whose “portfolio package” it is, and just what it entails.   A bunch of years back, I took a portfolio package with one of the big 4, and found out afterward (my dd was shameful !!) that it was charging me a higher rate than Standard Variable so I unwound a lot of it.  It had other benefits, but the over-high Interest Rate initially left a bad taste in my mouth for many years.

Check first before signing up !!!   Don’t be dazzled by all the “key phrases” they say that make things sound Mickey Mouse – do your DD on them.

Benny

PS  Edited later>>>>   And I recall that cross-collateralisation was also their “default” position (it is better for the bank, but not so good for you).  We had to re-affirm that we wanted NO cross-colls at all.   They listened, but if we hadn’t insisted, it might have been different, so watch out.

• This reply was modified 3 years, 8 months ago by  Benny. Reason: Additional comment re cross-coll !!

Hi Justin,

There’s a lot to learn, eh?  Good that you are asking before doing.  The earlier topic you started – https://www.propertyinvesting.com/topic/5070041-structures-for-larger-positively-geared-portfolio/ – only touched on the subject of “how” to structure things, and Steve’s new offering in that space is still a wee way off.

BUT, if you read (and reread 4 more times) Chapter 9 of the updated “0 – 130 properties” book, Steve provides quite a LOT of detail re his structuring.  I recommend that book to you as a starter.  After that, run his thoughts by your favourite accountant/lawyer to have them answer any questions that your situation might invoke.

Benny

Hi Justin,

Great question, and it looks like you have had a couple of great answers too.   When things just “don’t sound right” I always like to ponder WHY someone might say something like this to you.

So, as we know that the answers from Steve and Terry are correct, WHY would someone else who sounds successful (100+ properties?) advise YOU to buy in your own name?  I wonder if they are need of a quick commission or two to make payments on some of those holdings of theirs?   Perhaps they are $10k short right now, and they don’t want to wait while you go away and set up a Trust before buying through them(?)

Hey, I don’t know really – but it can be fun to ponder…..  ;)

Benny

Hi Hoppy,

After reading the other replies and thinking further about your excellent situation, I’m wondering if it might be beneficial to pay out one or two of the seven IPs.  I’m thinking there of keeping flexible ahead of possible troubled times.  e.g. Have you heard about “bail in laws” that I’ve been hearing about for about a year now – where banks may simply “take” your money if they run into trouble.    Will things get to that?  I don’t know, but then I hadn’t considered ever seeing Interest Rates at all-time lows either….

So, maybe there is some merit in choosing one or two of those IP’s that you would plan to keep over the long term (perhaps the location is likely to see better Capital Growth than others, or perhaps their return is higher than others) and use their Offset money to pay them off completely.  That means you can then retain them despite any adverse future financial situations that might arise.  It also provides diversity of your financial position too.  The Banks could not “bail in the cash from those Offsets” if it’s been used to pay off the house and the IP is now YOURS.

Interesting points from Steve too – you get into debt to get out of it, but also an alternative thought that it is better to have cash and not need it.  i.e. you have CHOICE – do you pay some off and keep the cash in the Offsets of all the others?   If so, which ones, and how many of them do you pay off?   Like two bob each way eh?   Can’t be bad, and your situation leaves you open to making your really good position even more secure.

Benny