Hi Folks [?]
I’ve some questions about calculations of annual net cashflows…1/- everyone’s situation will be different, but the assumption in 0-130 seems to be that the loan amount always EXCLUDES the initial deposit. For those like me who need to draw on equity (via a line of credit)for the initial deposit, doesn’t that mean that I should also include the interest component of the drawn down equity into the “annual cashflows out” total, thereby increasing my annual expenses and decreasing any positive cashflow that may have remained? 2/- In the early days, did Dave’s & Steve’s cashflow for deposits come only from their already taxed net incomes or did they draw down on equity? Wouldn’t deposits from net incomes take a lot longer to save, resulting in delays in purchasing property?1. Absolutely you will need to count the interest on ALL borrowings.
2. Steve and Dave did a lot of Wraps, and so got deposits from their buyers, which helped to fund further purchases.
Cheers
MelThanks Melbear
I’ve got a much better idea of what it’s going to take now.
Cheers.[
]yep Melbear is right – your CoCR will be higher with low or no deposit, but your overall cashflow will be less due to the higher interest payments (than if you were just borrowing 80%).
Steve and Dave were able to quickly step up into new deals because they had a clear exit strategy for each property. In many cases, wraps.
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