I have found that buyers agents are too expensive. You have to pay 2% on the purchase price and if you buy a $400,000 property that is $8,000. That is a lot of cash to fork out.
Plus your negotiation ability and flexibility is limited as you have to go through the buyers agent. For this reason I do not use CashFlow Capital

Instead I recommend using http://CashFlowInvestor.com.au It is a property finder service, but not a buyers agent. So you pay a monthly fee and that’s it. No hidden fees. If you buy $1,000,000 worth of property you pay the same standard fee as if you bought a $100,000 property. It works out to be WAY cheaper than Cashflow Capital and cuts out the middle man of the buyers agent.

CashFlow Investor also limits its members to only 100 members, so competition is extremely limited. CashFlow Capital has loads and loads of members so competition for each property is ridiculous. More competition means higher prices and lower rental return.

So if you use their 10% deposit to pay off your loan you will be left with
$238,000 debt
At 7.7% that is $18,326/yr in interest

If they assume a $306,000 loan at 8.7% that is $26,622/year

If you did interest only on both loans you could earn around $8,000/year

Looking at 30 yr loan

Your repayments – $441/week

Their repayments – $552/week

You could be making $111/week or more if you used the 10% to pay off your loan

Why not look at reducing your interest rate. I know you can get bank west interest rate loans in the early 6%. You would then be paying less on your interest, and charging them the same, thus making more money.

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just A Click Away

I missed the show. Was it any good?

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just A Click Away

I would love to know more. Can you please explain more in this post.

We want to know things like

– What materials do you offer?
– How much cheaper are you than bunnings?
– Do you deliver Australia wide?

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just A Click Away

Hey,

Me and my wife earn a combined income of $40,000/year. We have set up a trust and a company and are currently in final negotiations of buying our first property.

I can’t give you legal financial advise, but here is my personal opinion.

You have to look at your investment strategy and whether trusts fit into that. Basically you buy properties in trusts to protect yourself from your own negligence. I buy older properties and thus will always miss one thing or another when it comes to maintenance.
I have set up a company, who acts as the trustee for my trusts. Each individual property I purchase in an individual trust. This offers maximum asset protection. The company costs $212/year to own and doesn’t lodge a tax return (it is a non trading company), the trusts cost $0/year and I do my own tax returns.

Trusts make lending more difficult, as banks prefer you to buy it in your own name (it makes it easier for them to get their money back if the investment goes bad), but it makes you liable.

Buying in a trust is good as if you do something stupid (like run over someone while drink driving) your properties are protected as you don’t “own” them. You own the company that controls them, so if someone sues you they take ownership of the company. You then set up a new company, boot the old company out of the trustee position and reappoint your new company (as far as I am aware). Always see a qualified account though, don’t take my comment as ‘law’.

I would never purchase property not in a trust because you are making yourself (and all your assets) personally liable to any law suit against you.

@ Pete – I assume you would have to refinance the loan in order to change the personal guarantee of the director

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just A Click Away
Hope this helped

You just have to be careful with gearing your properties to the hilt. The main risk you then face is rising interest rates. It is hard to be positively cashflowed at 95% (possible but hard). How many interest rate rises can you handle before going negative? This would be something to look at.

Also, banks are still pretty tight with their lending. They don’t offer Lender’s Insurance in some places (like rural towns under a certain population). So make sure you find that out.

But if the numbers work out then I am all for it. The more properties you buy the more growth you will experience.

If you do buy at 95% LVR I recommend you aim to get your properties to 80% LVR. This protects you in the future from unforseen circumstances, but still lets you use lots of leverage to get a great ROI.

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just A Click Away

Yeh I completely agree with Terry. It would be easy to draw out a 20% deposit if you currently have 90% equity and then get a new loan for the new property with a new bank. So if you default they won’t sell your house.

Are you looking to buy positive cashflow property or growth property?

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just a Click Away

I plan to buy 3 positive CF properties this year with $0 in equity and earning a combined wage of $40,000/yr (me and my wife)

If you want to buy 5 more properties by Dec 2010 then you should check out http://CashFlowInvestor.com.au they are a property finding service and are way cheaper than property brokers.

Wow this is a huge thread, it is almost not even worth posting.

I am about to buy a property with $0 down (a vendor finance deal), and subdivide it and sell the land. Then live off the proceeds from the land a keep the property. Technically this is not living off equity, but it is a good way to draw out cash to live off while still building your investment portfolio.

Ryan

Your figures don’t make sense to me.

How much are you selling the house for? How much financing are you carrying back? What percentage are you charging? How quickly does the loan need to be paid off?

If I can get these figures then I can help you

Ryan McLean
CashFlowInvestor.com