Forum Replies Created
- Qlds007 wrote:Accessing credit for any purpose days have been and gone.
Some lenders will even want to draw the cheques payable to the end user. So if you say you are buying a car or investing in managed funds they will want to hold the funds for you and pay it out.
A part time job will do you now good at all as clearly you wont be able to justify the loan on this basis.
A 60% lodoc is not aimed at people who are not working so dont get caught thinking it is.
I can use my line of credit now for any purpose I like.If I organise reval's and line of credits before I decide to stop working then surelly this will continue.I don't need to tell all the different banks I use that I am not working.
And if I decide to work say,full time for 3 months then surely i can simply get then revaled again and up my line of credit's again.Am I missing something here?
Terryw wrote:It is getting hard to access equity as the lenders will want to know what you are using the cash for – and if you say living expenses they are unlikely to live.Getting a full time permanent job (until you get the loan) may work.
Excuse my ignorance but why would the banks care what i use the money for if my LVR is looking good?
I never get asked what I use my LIC 's for now which is capitalising interest all over the place.
Do you think all these current restrictions will ease off to an extend anyway in the future (even if it was years away?)
Qlds007 wrote:I live of rental income and have done for a few years now but certainly wouldnt suggest that adopting a LOE strategy is a good idea in the current climate where financing a nodoc deal is almost a dead duck and even lodoc refinance is a very limited market.What about if I had a part time/full time job for 3 months plus so it didn't have to be a lowdoc when I arrange the line of credit on all the properties? Or is this a bit sneeky for the banks?
WJ Hooker wrote:shanematt,
You have been reading too many old books – forget the property doubles every 7 -10 years rubbish, that is history not the future.O yes and I have enough rentals to live off, but still work, could also live off equity – but why go backwards??
I know it seems very unlikely now but I have studied (not formally) the history of past recessions and news headlines at the time of those recessions and I can't see much difference this time around.In fact some of the past recessions seemed even worse when you look at the amount of banks and businesses that went bust and level of unemployment.
Thats why I can't see why property ( in good locations e.g eastern suburbs of sydney) won't do its usual thing (on average).
I have looked at the posative cash flow system and think its a good option but still can't justify the numbers if you are looking for big,big chunks of wealth.Of couse my system relies on property doing what it has throughout Australia's history and that is definately not a given,but I am willing to take that chance at this stage.But I'm always open to change.
Qlds007 wrote:ShaneHow would you draw down a $100K a year when a lender wont finance living off equity ?
I get my properties revalued every 6 months or so and increase my line of credit.I have been doing this,even in the supposed stagnet market of Sydney.I have just been doing some cheap reno's.
I think buying in highly sought after suburbs has helped my cause as they have massive poulation and no extra land to build on.Not that I'd live there myself.
Even if I work part time for 3 months or more I can get a higher LVR on my LOC than 60% (non worker or retired person).
Still can't see how this would not work if you have a big enough portfolio (I am assuming a minimum 1.5 to 2 mil minimum).
I do realise there is risk such as property not going up for 50 yrs but I see it as a calculated risk like everything.
mattnz wrote:Hi Shanematt,I would recommend that you try to live off positive cashflow from rentals, rather than relying on equity increases to fund your living expenses.
There are many people that get this wrong and in the current environment could really come unstuck ending up owing more than they have in assets.
Cheers,
MattThe more I study property investment the more I realise that there are many ways to make money in property.
In defense of 'living off equity'- if I have 2.5 mil worth of property and it does its usual thing (doubling every 7-10 yrs) ,then surely drawing down 100k a year is not going to come close to catching up on the value of the properties. All the properties are in historically high growth suburbs of sydney,such as eastern suburbs and northern beaches,Even taking into account extra interest payments.
No question.The older house.You can manufacture equity through reno's.The extra $7k is small change compared to what you reap from the better position and reno potential
Firstly surround yourself with people that specialize in investing in property that are much smarter that yourself and currently hold many investment properties themselves. Anyone other than that is just a theorist. These people are as follows
-tax agent that specializes in investment property (not a bit of everything)
-mortgage broker " " "
-conveyancer " "
-buyers agent if used " " "You will miss out on money if you go to just anyone thats a nice person.
There are many ways to make money in property.Why have you chosen to buy a postive cash flow property?
There is a book or two that clearly points out the difference in wealth comparing the two.Its a quick read and is called 'wealth for life' by Ed Chan and Tony Melvern.
I personally think buying properties in long term high capital growth suburbs that may be a little negatively geared are far more profitable than properties in less performing suburbs with any posative cash flow.
I actually just bought a unit in one of the most expensive suburbs in sydney (Bronte) and its vertually going to cost me nothing from the start due to current low interest rates.I assume interest rates will go up one day but rent will definately be going up every year for a while too.
The solid capital growth will earn me heaps more money than a taxed cash flow if the market does what it historically has done.I just get them revalued and use a line of credit for whatever for purpose I want-no tax and buy more properties
