Forum Replies Created
Hi Bomber
I am in a fairly similar situation to yourself, and what we are doing now, is drawing out the available equity to invest in ‘alternative’ investment strategies that provide a better return than the bank interest you’re paying on this debt.
This inturn increases my cashflow, and if you have a flexible lender who will count this investment income towards servicibility, you can then go shopping again for property, and so the circle goes round.
I know this is not for everyone, but I feel it is necessary for me to do to keep the wheels turning.
The only other option I see is to find +cashflow properties(not many in Brisbane under 10km anymore) or to work more hours in your job and increase your earnings(Not a wealth Creator!).
Regards
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’
[email protected]The somersoft forum (www.somersoft.com) has a section called Meeting Point. They have groups that meet in most major cities monthly, and they have guest speakers.
Try this link to the Richdad website for groups round the world who hold cashflow games. I have found them great for meeting new likeminded people:
http://www.richdad.com/club/findclub.asp?search=1&countrycd=AU&statecd=ZZ
Hope this helps. Other than that I have met some very smart people just going to different seminars.
Regards
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’
[email protected]Hi George
Why not try some local Property Investing groups in your area to network and find others with similar interests?
Also, why not try doing a search for Cashflow(the game) groups in your area too.
Regards
Brendon
Acute Mortgage Reductions
[email protected]HI
What about using the funds from the redraw on the IP to invest in something that gives you a return greater that the interest rate on the borrowed funds.
There are investments out there that are pretty secure and return 12-15% p.a.
Then use the surplus cashflow to pay down your PPOR quicker.
Just a thought!
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi Matthew
Thank-you for confirming this info. Much appreciated.
I will certainly be passing on this info to any new clients who wish to take out Lo Doc loans.
I would imagine though that to investigate every LO Doc application would take up huge amounts of ATO manpower and resources, so would I be correct in assuming that the investigations will be random?
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi Mel
Perhaps I should of clarified that this was information passed onto me from Brisbane Solicitor. According to him, it has started already.
If your income declared on your stat dec far exceeds your figures on your tax returns, either you’ve committed mortgage fraud by lying on the stat dec, or you are not declaring all your income and should be paying more tax.
I would imagine if the ATO wanted to see the bank application forms then the banks would be forced to hand them over.
Can any solicitors confirm this?
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi Boardy
Sounds like you’re on the right track with doing a few buy/sells for cash to reduce your PPOR debt, try adding to that sound mortgage reduction principles (A few books out there on the subject).
You don’t necessarily have to change too much about your spending habits, just the order of flow into and out of your mortgage account.
As for investing further, all depends on what particular strategies you’re interested in and how fast you want to get there?
A very important tool to have is a flexible mortgage on your PPOR with no fees, IO for long terms, full redraw facility to access equity, or a LOC. A loan with all these features will help you access equity and invest quicker and prevent costly refinances every time you want to buy a new IP. Try to avoid cross-collateralisation too.
Also get a good understanding of how valuations work and how you can get a maximised val for yourself.
I know it sounds basic but these basic stepping stones are the key to duplication of IP’s.
Good Luck!
Brendon
Mustang
All comes back to cashflow and servicibility. Sure you can refinance or ask your current lender for a line increase, in order to access the equity, but can you service any more loans?
If you can find +cashflow properties then sure you can do it.
I would first concentrate on getting rid of your bad debts first before looking at taking out anymore property loans, as that will ease your cashflow, and if you get rid of the c/cards your servicibility will increase too.
Good luck
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi
Then there is also a NO DOC loan(at lower LVR’s). Essentially you do not have to prove your income so to speak and sign a stat dec declaring that you can afford the loan.
The problems will arise where borrowers have ‘fluffed up’ their earnings to get the loan but on their tax returns they are showing minimal earnings.
Brendon
Hi Mustang
Just a word of caution regarding the Lo doc Loans. Heard thru the grapevine that the ATO is looking very closely into applicants on Lo Doc Loans and verifying the info against your tax returns. Could be a few people come unstuck this year.
Have a chat to one of the brokers/originators on this forum about trying to get Full doc status. What if you rented out your place to increase your serviciblity to get onto a Full Doc loan at a lower rate and consolidate your bad debts at the same time? As long as you can get onto permanent part-time?
You gotta get rid of those bad debts as they will swallow you up in no time.
With regard to the valuation, I wouldn’t count on the banks valuing it anywhere near the agents appraisal so factor that into your calculations.
Good Luck!
regards
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi
It’s different in each state.Here in QLD there is stamp duty on the option fee as far as I know but if you sell the option you wouldn’t incur stamp duty on the property(as far as i know).
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi Stingray
Just a matter of expanding your mindset and moving out of your comfort zone I guess.
The more knowledgable you become in property(sounds ike you’re already there) the more comfortable and confidant you will be with your selection of IP’s and thus not worry too much with how much you owe on them.
We must also clarify between tax-deductible and non tax deductible debt, if the majority of the debt is from an expensive PPOR then I would class that as ‘risky’. Especially if there are no mortgage reduction strategies being applied to your PPOR debt.
Saving hard and waiting for the next deposit is not exactly a wealth creator! At the same time, cashflow is king, so if the next IP you buy is going to strangle you, also too risky.
Gotta weigh it up, and have a plan to keep working on increasing your assets as well as your cashflow.
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Big Mikey
I like the way you think! Definately thinking outside the square!
Brendon
Acute Mortgage ReduCtions
‘Better Finance for More Homes Sooner’Hi Alwayslearning
So you’re looking for a DEBT and EQUITY partner? In what entity are these properties held and how do you plan to facilitate the transfer of the 50% share of these properties, as I would imagine there will be stamp duty issues?
And do you have a full due-diligence kit(including valuations) on these properties?
Regards
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi Blondie
Have a chat to one of the brokers on this forum who are experienced with non-conforming/no savings history lending, and who can do some sums for you.
As an example (if you were to be looking round the 200k mark) you could go for a 90% mortgage with 10% from a personal loan (plus FHOG). If the repayments are similar on both loans to what you’re paying in rent, why not do it?
At the same time, you have to be honest with yourself that you are disciplined enough to take on a mortgage, and i would recommend getting rid of all consumer debt first before looking this way.
We specialise in this form of lending if you want to chat, as I’m sure other brokers on this forum have access to this form of lending too. Keep educating yourself at the same time, and you will find that you will not need to ask these questions in the future.
Good Luck and hope this helps.
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’
[email protected]Hi Leigh
I remember listening to a talk from a guy from The Depreciator (do a search, don’t have no.) who are a nationwide QS firm.
I remember him saying that if their fee works out to be more than the depreciation benefits from the QS report, they will not charge you.
Why not give them a go. At least they will let you know if it’s worth getting one done.
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi Mel
I did the NII course last year with the exact same sentiments as you, in that if I only learnt one thing from the whole course that made me money it would be worth it. And it has certainly turned out that way.
I found the best reward I got from the course was meeting so many like-minded people who I still keep in contact with.
That’s not to say HK and NII were squeaky clean, but I don’t regret doing the course.
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi Dan
James has pretty much got it. Be specific though, find higher priced comparable properties of similar land size, no. of bedrooms and bathrooms etc and condition.
You won’t have much credibility if your comparables are far superior to your property so be specific. A map of your suburb highlighting the comparables will make the valuers job a lot easier too.
I would suggest getting a copy of a recent valuation, analyse it, and take note of the features the valuers are looking for in your property to determine it’s value.
If your property is in a high growth area, some statistics on capital growth and positive newspaper articles can only strengthen your case too.
Hope this helps
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi James
Make sure you don’t count too much on the pre-approval though (especially where LMI is involved).
Just had a case this week where the client had pre-approval and went unconditional on that basis, only to have the mortgage insurer knock back the application.
Make sure you still have a finance clause in the contract and in that finance period, get a formal letter of approval from your chosen lender.
Better to be safe than sorry.
Regards
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’Hi Dan
On the valuation subject, you need to take more charge of the valuation process.
Personally when I have a property of mine revalued, I compile a full due diligence kit on what I feel the property is worth to hand to the valuer.
You do need to chat to the valuer beforehand to see if he is receptive to your supporting data, otherwise you’re wasting your time.We are seeing at the moment that the major banks are sending more business the way of the more conservative valuers, so you need to find out which valuers are on your banks panel, and employ them yourself getting the valuation assigned to your bank(if they will allow it).
On your question of changing your STD Var to a LOC, you will have to speak to your own bank about that regarding their fees etc, but they will need to set up a new loan a/c. It is not as simple as converting it over.
Good luck!
Brendon
Acute Mortgage Reductions
‘Better Finance for More Homes Sooner’
[email protected]
