I’m asking my bank relationship manager the same question to see if the answers conform:
OK, I understand the benefits of +ve cashflow properties as the key to what Steve has done. But I’m not quite there in understanding the speed at which he does it. Is it the case that the bank will take into account the growth in net income (and possibly equity), to continually increase your borrowing capacity to fund more purchases? It seems to me even with capital in hand, the bottleneck is one’s borrowing power in that short time frame, yet people have done it full-time seemingly without a salaried income ie Steve?
Hi Scarecrow 7, from my understaning (having been to course, listened to tapes and awaiting the new book) steve now borrows in bulk i.e. $1mill to fund purchases. I.e. has reputation for good cashflow producing purchases and borrows against this. Don’t forget the power of leverage also as he suggests P&I loans so he’d now have a pretty good pool of collateral to call upon. But yes starting off you definitely need an income, I use my husband or the collateral of a money partner.
NessHi Scarecrow7,
I think Steve’s ability of obtaining ‘unlimited’ finance comes from his knowledge of the banking industry, legal structures and the real estate market. Know what each bank is looking for and only present them with deals which fit within their criterion. Being able to think outside of the square and get creative will also go a long way.
Cheers, Leigh.
“If you can count your money, you don’t have a billion dollars”
J. Paul GettyO.K.
Firstly – a Mortgage Broker is the way to go, its simply leverage, let them do the dirty work and find the finance
Also the use of trust/company structures helps in getting loans – as once one structure is maxed out, you simply replicate the situation. Check out ‘Wealth Guardian’
But, what happens in reality once you have a proven track record (130 +ve cashflow dwellings) banks call you when they don’t meet there quota.
Cheers
Pete
…Beware of the dreamtakers…
If you are buying only positive cash flow property your borrowing capacity won’t be over. and according to me every one needs income in the begening to keep on geting loan and after a while once your positive cash flow is enough then one can stop working and still can borrow againts sum of postive cash flow.
Cheers
AmitThanks very much for your replies thus far…I think my understanding is on track…and I shall check out Wealth Guardian.
…still waiting for my bank manager to reply [
]Don’t forget Steve was putting in at least 20% deposts, the properties were cheap (mostly), he was selling a few for good capital gains, paying off the loans (reinvesting 1/3 of the +ve income). And he was getting a good deposit for each property that he wrapped as well as the +ve income.
And as a mortgage broker, I can tell you that replicating structures is not a way to get unlimited finance if the banks will require personal guarrantees.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
dont you mean ‘dreamstealers’.?…………lol
O.K.Firstly – a Mortgage Broker is the way to go, its simply leverage, let them do the dirty work and find the finance
Also the use of trust/company structures helps in getting loans – as once one structure is maxed out, you simply replicate the situation. Check out ‘Wealth Guardian’
But, what happens in reality once you have a proven track record (130 +ve cashflow dwellings) banks call you when they don’t meet there quota.
Cheers
Pete
…Beware of the dreamtakers…
]
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