Forum Replies Created
Only a small percentage of lawyers make good money. Most of them earn below $70,000 a year. Using that income with suitable gearing will definately improve anyones situation. Some diversity across different asset classes will also reduce any risk.
I think Matt is on a great thing. Good stuff!
Robert Bou-Hamdan
Mortgage AdviserHi Cameron,
What is the minimum loan amount for that rate and are there any ongoing or annual fees?
Robert Bou-Hamdan
Mortgage AdviserHi Derek,
You may be able to clear something up.
Terry has outlined a scenario (which he says The Investor’s Club advocates) that involves purchasing numerous properties and borrowing on the equity (if any) to fund lifestyle, supplement income and pay interest on loans or capitalise interest.
I don’t believe he was referring to using equity to fund further purchases and still being able to service all loans from income and rent.
Is it one of The Investor’s Clubs strategies to continue buying property regardless of whether you can afford it or not and keep eating into your existing equity to avoid selling property?
Do they not believe that it is the quality of the investment, NOT the quantity of investments held?
I look forward to your response.
Robert Bou-Hamdan
Mortgage AdviserHi Matt R.
Are you associated with Nat R in any way?
She is also up your way.
Robert Bou-Hamdan
Mortgage AdviserYou could improve your cashflow position for one thing. I think it is a form 2036 you have to lodge with the ATO…
http://www.ato.gov.au/corporate/content.asp?doc=/content/43572.htm&pc=001/001/007&mnu=5356&mfp=001&st=nn&cy=1Confirm this with an accountant.
Robert Bou-Hamdan
Mortgage AdviserSIS, I do not dispute using equity for investments when serviceability is evident. My issue is with using it for lifestyle, income and to make repayments on other loans. If anyone has to do this, they could not service the loans so they should not be borrowing more. The biggest problem is with capitalising interest which is just ridiculous.
Whoever uses these strategies, in my opinion, should sack their advisers.
Robert Bou-Hamdan
Mortgage AdviserIt is a cost of doing busines so it is.
Did you know that property fees are not enforceable in some States as the person selling a property or dealing with it must be licensed. I have seen this happen in Queensland.
Robert Bou-Hamdan
Mortgage AdviserI think I have bipolar sometimes or maybe it is that I am a Gemini with a split personality. Who will ever know???
Robert Bou-Hamdan
Mortgage AdviserI wish people would make the distinction clearer between using equity for further investment property purchases and using equity to fund a lifestyle or income. One is good and one is just plain stupidity unless it is to get you out of trouble short-term.
Also, if you need to borrow money to repay interest, in my opinion, you should stop buying anything!!!
SIS, there is nothing straight forward about Terry’s strategy and I do not doubt that Peter Spann does NOT use this strategy himself. If I was trying to sell properties to suckers, I would advocate this strategy as well.
SIS, how about the mortgage insurance cost when refinancing above 80%??? Is that a ‘lifestyle’ cost?
I guess you also missed the discussion regarding the pointless use of a LOC.
If anyone actually had a property portfolion consistently returning 10% per annum, they would not need to borrow money from equity to pay back interest unless their interest rate was over 10% or they did not have a job and they spent the majority of rental income which would both be just plain stupid!
It is frustrating to see people buying more properties but going backwards and not even knowing it. I would rather have one property with 80% equity than 4 properties with 20% equity. A couple of tenants move out and it is tought times ahead. It is not about quantity – it is about quality!
Robert Bou-Hamdan
Mortgage AdviserGreat! I hope it all works out for you both.
Robert Bou-Hamdan
Mortgage AdviserSitting down and thinking about things more, I think that Rivkin’s disorder may be why he did what he did in life. Is it not a trait of those suffering this illness to be excessive or flamboyant in the way they go about their life? Are they not forever seeking a thrill or excitement?
Robert Bou-Hamdan
Mortgage AdviserPlease don’t confuse using equity for the next purchase with using equity to fund a lifestyle or subsidise income. I have no problem with using it for the next purchase if you can service all debts comfortably.
Robert Bou-Hamdan
Mortgage AdviserThere are always desperate purchasers out there!!!
Robert Bou-Hamdan
Mortgage AdviserDon’t forget… the ING 5.4% is taxable and the 6.99% interest expense saving is not. It is a huge turn around!!!
Tell her to read this thread. If she doesn’t change her mind, I am happy to have words with her!!!!
Robert Bou-Hamdan
Mortgage AdviserDon’t worry christ…
It seems to be a cry for attention. I think fjficm just needs a cuddle!!!
Robert Bou-Hamdan
Mortgage AdviserIt is a common marketing ploy to create a sense of urgency to make you act on a purchase. Why not buy Steve’s pack seeing you are in Steve’s forum? From what I heard, it is a lot cheaper.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by DD:Be careful of free advice from anyone as it usually means someone else is paying them to market products and services to you.
DD
Buyers Agent (Dip Financial Services(FP)
Don’t sweat the small stuff,and it’s all small stuff!!Or it may be that legislation prevents them from charging for their services when it applies to consumer lending. I guess you are not familiar with rules applying to mortgage brokers / advisers.
Robert Bou-Hamdan
Mortgage AdviserRates are a local council matter. Air your complaint when you vote and the problem may be rectified. I have properties in NSW and the rates are a lot cheaper than yours. Maybe it has something to do with the size of your property or a remoteness issue. Maybe it is the drought. Call the Council and ask them.
Robert Bou-Hamdan
Mortgage AdviserBuy one with a car space if it is important. Depending where your unit is, a car space may me more expensive than you think and I doubt the property price will be devalued by this amount.
Robert Bou-Hamdan
Mortgage AdviserSorry DD, but I had to deal with the following comment seperately as it is the second most ridiculous thing I have heard in this forum…
Originally posted by DD:Why should a ‘reverse mortgage’ ever be only available to feeble old farts on their last legs. If managed properly these loans coupled with a well thought out and researched plan could work like a dream.
DD
Buyers Agent (Dip Financial Services(FP)
Equating Terry’s advice to a reverse mortgage is so off the mark. It seems you have no concept of how a reverse mortgage actually works.
People who borrow against their equity to fund their lifestyle or supplement income usually borrow to the maximum LVR. Let us assume that is 80% LVR. Have you ever sat down and thought about what would happen if your property stopped growing at a faster pace than the applicable interest rate? I am sure your family would appreciate being left with nothing!
Even if the properties manage to maintain a positive equity position, what happens when you need to sell a few investment properties to reduce your interest expenses? Have you thought about Capital Gains Tax? You do realise that the capitalising interest is not deductible and that interest on funds used to supplement lifestyle or income are also not deductible don’t you? Your CGT bill would be more than your available equity in many cases especially if you were doing this for 7, 14 or 21 years as Terry suggests.
There is nothing about capitalising interest or drawing on equity to fund lifestyle or supplement income that makes sense unless you do it ONLY when you are in some trouble and rectify the problem as soon as you are in a better position. I am talking short-term. If you cannot afford the debt, do not borrow!!!
Now, regarding your “feeble old farts on their last legs” comment, I am amazed to hear this come out of the mouth of someone who has studied Financial Planning or a “Buyer’s Agent”. Were you not taught that these “feeble old farts” may live another 20 – 40 years and receive a huge chunk of money when they retire? Did you know that 35% of the population will be “feeble old farts” in the not too distant future and will be your main customer base?
Even a buyer’s agent must realise that “feeble old farts” buy a lot of property when they receive their super to fund their retirement from rental income or to provide an estate to their family when they pass.
Please provide us with an example of how to manage Terry’s scenario properly to fund a lifestyle or supplement income as I am too stupid to see any situation where it would be a benefit. Also, please let me know who would need such a scenario if they held a “well thought out and researched plan”?
I will be waiting for your response.
Robert Bou-Hamdan
Mortgage Adviser
