How is it earthly possible to finance a property each month? I have put some figures to show it is nearly impossible unless you have loads of $$ saved up for numerous deposits. Don’t get me wrong, I don’t have a problem with the Wrap Concept which I think is great!
Whilst Steve’s timing in the market was great with $40 – $80K properties – let’s assume in today’s market we buy 1 property every month for $100K each to Wrap.
Assumptions for my Example:
> you have savings of $50,000
> you earn $60,000 in your day job
> you buy 1 property to Wrap each month valued at $100,000
>you then sell the property to a Wrapee for $130,000 (30% gain)(Using Steve’s layout)
(WRAPPER) (WRAPEE)PURCHASE $100,000 SELL $130,000
your deposit(20%) $20,000 their deposit 13,000
Costs (6%) 6,000 Costs 500
-Wrapee’s Deposit (13,000)NET CASH NEEDED $13,000 CASH NEEDED $13,500
Now, my savings have gone from $50K to $37K ($50K-$13K).
In the 2nd month ($37K-$13K)= $24K & in the 3rd month ($24K-$13K)= $11K.
Over these 3 months if I could save 50% of my day job income, that would be $7,500 over the 3 months AND if I could achieve a +ve cashflow of $50 p/wk, there’s a further $645 over the 3 months. Therefore $19,145 ($11K + $7.5K + 645). This would allow me to buy 1 more property, then I am almost CASH BROKE!
]Using this typical example, I will be almost CASH BROKE after only 4 properties.
These 4 properties will generate a =ve cash flow of $50 p/week – that’s only $860 p/mth (hardly enough for another deposit!!)[xx(]James
([email protected])Striker
Email MeI gathered from Steve’s book that they used many strategies to gain their mulitple properties. He said they made some big short term capital gains on some properties and sold to refinance even more lucrative opportunites.
He also explains that he used some no cash down strategies and talks about long settlement periods and other creative ways of making those dollars stretch.
I guess it’s all about making the most of opportunities and being aware of how to maximise each situation.
I’m just beginner, but I that’s the impression I got from Steve’s book, and others that I’ve read.
cheers,
Darren.To put a different spin on the issue James…..who said YOU have to buy all the property.[?] You just have to be the one in control of the asset. This could mean many things but as an example you may use an investor and they “buy” the property which you then wrap and split the profits from. You may just offer them a % on their money which you use as a deposit. [
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Many ways to skin a cat……Enjoy
AD [:0)]
(Andrew)It is good to have an end to journey toward, but it is the journey that matters in the end.
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