When Steve mentions 20% COCR for Commercial… this is because of the extra deposit needed usually to secure commercial property. I would say that the 35% (Inc Closings) you need to pull out of your property to complete the transaction… should still be considered as a deposit as you still need it to raise the funds.
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**TRY NOT TO USE YOUR PPOR AS SECURITY**
I would also try to just get the 35% (INC Closings) deposit required to secure the loan out of your house rather than X collateralising (Bank takes all if all turns to muck).
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So this is how I see it.
Deposit:$112,000 (35% of 320K)
Income: $33,400
then work out your outgoings (Insurance, rates and maintenance not covered in the Commercial lease contract) and then you will come up with your true COCR.
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Perhaps you could see if the Vendor will leave 30% in the deal if you can get to the $340K and that would then make it much more attractive for you and for the Vendor.

Just food for thought and hope you succeed in your endeavours!
Cheers
Kiwi[biggrin]

Hi there,
While there has been a steady approx 70% of the population owning or paying off property….

Of this percentage of home owners only around 6.5% are investors:
1-prop =5%
2-props = 1.5%
3 or more props = 0.5%
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There has been a steady decline in population paying off a property since 1974 and as far as I know there is now only 26% of the population paying off homes … compared to 38% back in 1974.
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In my opinion this means that in the forseable future that there will not be a miraculous influx of buyers (5.7Million renters) to take up the slack and buy….as properties continue increasing in value and people just perferring to just rent as they cannot sustain the sacrifices these days needed to persist with the common drudgery of home ownership.- Thisis good as there will be a sustainable renting population to market to.
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The property cycle has now turned (To a bear Market) according to a presentation of statistical information supplied by the CEO of residex Mr John Edwards at the 2004 property investors conference held in Sydney in March.
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As for the +CF property scenario…. it all depends on what you really truly want… income and use of those funds today? or capital gains…. if it is capital gains … then positive cashflow and rat race freedom …will be more challenging to achieve (especially as a short term goal) as you are trying to have your pie and eat it to… not that this is not possible…. merely very challenging and very few do it successfully in a short term.
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I personally use non standard cashflowing strategies to achieve my goals with income at the forefront of my sights… so as I can use the income to my best advantage (reinvest) to then get a percentage of positive, Neutral and negative CF props to build my long term goals of capital gain and permanent financial independance…(my own personal insurance policy).

Food for thought and my opinions only.
Cheers,
Kiwi[biggrin]

Hi all,

It is really another tool … just like a formula one technician has all the right tools for the job…. they know in very intimate detail how each system and sub system and how it operates (Air System, Fuel System, Electrical system, Braking system, Transmission System, cooling system, Lubrications system and so on…) and interacts together and use a very precise process of elimination to determine the correct tools and procedure required to solve and rectify the fault.

My point is …. the same is applied to an exit strategy when selling a property… If you completely understand each part and the systems involved with selling properties…you can solve people problems by applying the best Fitting solution to fit the persons situation … even if your exit strategy changes a little from the one that was intended to be used in the first place…… food for thought! – Good practice too for flexibility
Cheers
Kiwi
[cap]

Hey There Bec….

It seems like there may be very good reasons for your reponse. May we ask you to share the experience that you may have had to give you this view?
I am sure we would really value your shared experience and give us some real food for thought.
Cheers,
Kiwi
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I agree with Terry….To a point.. Alarm bells a ringing here….
I think you have just signed up to give the bank the right to pull both properties from under your castle if you default on either contract….. Most common trick in the bankers book of dastardly deeds I am afraid!!!
Hope you have not gone through the whole process yet or if you have … it may cost you some coinage to get out from under this arrangement by refinancing out and holding each property under it’s own security.
Anyway my best suggestion is to seek some legal and tax advice from the appropriate proffessionals to get a better picture on your situation and be more informed as to your options and stratagy planning.

Personally I do not like LOC’s as they will take your house if you default … where as an unsecured credit card will just bring the sherrif a knockin’

Did you know that the banks invented the LOC as they researched the market to find a most profitable cash cow for them?… how??? the statistics showed that over 85% of clients would not pay down their loans at all and would blow the equity on consumables ::: Holidays, Boats , Cars… you know the drill!! []
Then the banks also knew that most LOC clients would then move the loan over to a P & I loan … giving the bank more funds in fees and ongoing business….. So I guess the moral of the story is … if you are extremely diligent and disciplined go for the LOC… also remember the LOC is normally at around 0.5% higher than the basic P & I with the ability to draw down on the equity anyway…. but not so easily… still this type of arrangement will not be a show stopper when hunting down deals as usually you can get the funds released within 10 working days.
NB: These are my express opinions and are not to be construed as advice in any way …. always use your own due diligence and research before deciding.
Good luck!
Cheers
Kiwi
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I also suggest self education …. best investment you can make is in your own future !!!!

Best of luck….
Ps. If you would like a few good bools that I really enjoyed…not in any order of prefference:
Money Secrets of the rich – John Burley
Powerful Changes – John Burley
Rich dad Poor Dad – Robert Kiyosaki
Cashflow Quadrant – Robert Kiyosaki
0 – 130 Properties – Steve Mcknight
The Wrap Pack (Vendor Financing how to course)- Rick Otton
Believe and Achieve – Paul Hanna
Real Estate Riches – Dolf De-Roos (Kiyosaki Richdad endorsed)

Anything that will tantalise your taste and yearning for knowledge…. this gave me more confidence when dealing with my accountant and Legal teams I am building.
Best of luck!!

Cheers
Kiwi
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Hi Rachel,

I know you have a lot on your plate at the moment …. but there are other possible solutions to give you a lift….
You could: Wrap your house and instantly increase your income….. you could use a lease option which will do the smame thing and give you capital growth if the option is not excersized… you could find a private lender or two and go buy some positive cashflow properties….. but learn all you can about all the facets of the wealth path … and wyou will find diamonds amoung sand where others fail to see them….
Best of luck and I really hope you and your family get a break and all will be good for your futures!
Best Wishes
Kiwi
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Hi Lisa,

I think you had better ask our accoutnant for any references of people that they are doing the books for that are structured with positive cashflow properties…. If not …. I would seriously consider looking for a better advisor … they normally get cranky that you are rocking the boat … (normally because either they actually believe they are doing the right thing by you and have never been educated in the positive cashflow model) … or they know that they will potecntially be taking a pay cut from doing your books as they will not be able to wean you into thier commission based diversified funds etc.
Consider this …. if you take all the smoke and mirrors away… and look at it all logically. you have already paid tax once on the money you have invested in your property… and you continue to pour in post taxed funds into it week after week….. then you get your big tax rebate… at the end of the year … or if you are clever … every month (Via the correct forms with the ATO) So in essence let us say you had placed $5,000 into the property out of your own hard earnt cash…. that has been taxed at 47% already….. then you get taxed on the income that you make and nett it all up against your contribution…. would it be better if you were just getting an actual income off the property and then paying tax through that …. it does not effect your cashflow every month and it means that you do not need to worry about having to make your paycheck to cover the negative shortfall on your -cashflowed property……
Anyway… food for thought!
Cheers
Kiwi
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Hey There Benedict,
I think you need to get some advisor to give you good Tax and accounting advice …. based on your current situation and your future plans must be clear also.
Cheers
Try going to the Vendor Financing (Wraps) association website for some accountant contacts that may better understand your requirement
Cheers,
Kiwi
[:p]

Hi Geoff,

I have Ricks Pack and have found it to be awesome… it has all the legal docs also (Sales and installment contracts). I have also found that Rick is true to his word and you can actually get hold of him on his mobile number directly.
All the Best,
Kiwi []