Would love some advice from all of you knowledgeable people out there. Was wondering if many of you have hit the financial obstacle when looking for IP’s. I know that once you get to a certain amount of IP’s (in our case 4) that the banks start to pull back especially when you don’t put much of your own money into the deal. They look at how you can service the loan and also want to increase the LVR. I am fairly new to all this and have been looking at positive cashflow properties in WA (although obviously not hard enough as I am finding them hard to come by). Love this forum and would like to hear how some of you have overcome this brick wall or am I not looking for finance in the correct areas.
Thanks
KellieanneBanks don’t like it if you’re too rent reliant and they usually take into account 80% of rental income for servicing.
You should get your IP’s and PPOR revalued every year and lock in that increased equity with a LOC.
With prices so high at the moment, it seems now would be a great time to do it.
It’s like buying shares when they are low and selling when they are high.The best product i’ve seen is a cashbond that Steve Navra promotes as a way to get around the serviceability issue.
Have a look at the Jan Somers forum and do a search for Steve Navra or cashbond for more info.
It’s basically an annuity that you purchase to provide guaranteed tax free income for a certain period of time. The banks accept this as an income stream so that you can then go out and buy another IP which should grow at least 5% pa if you buy well.EXAMPLE:
Property value $222,222.
Assuming capital growth at 5% pa, the property will be worth $283,617 by the time the cashbond runs out. (5 years)
80% of $283,617 = $226,893 – existing loan of [$150,000 + $27,777] = $49,116
New Cashbond of $49,116 = $10,707 pa for the next 5 years.
Expenses = cost of the two cashbond loans [$27,777 + $49,116] = $4614 pa
New passive income $10,707 – $4614 = $6093 pa for the next five years.Not a bad form of indexing!!
PLEASE NOTE:
This structure works exceptionally well, but relies on the assets achieving CAPITAL GROWTH.Gee quentin that was quick Thanks so much for the reply. Food for thought and very well spelt out in plain english.[
]Thanks Again
Kellieannne
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