Michael, you and I obviously both have an understanding of “Other People’s Money”, finance and property in general. Perhaps however, you just need to come back a couple of levels and look at things from a novice investors point of view where the existing equity is limited and traditional lending criteria applies.
Our contradictions appear to result from our differing interpretations of what Bashiba is asking. Is it a technical math question about CoCR or is it a question on using CoCR as a tool for valuing property?
My suggestion is that CoCR should not be used as a tool for valuing a property in this way.
I guess we should just agree to differ.
Regards
JeffHi all,
wow, oneday I’ll grow up and know what all of you are talking about. I feel kinda stoopid now, thinking that CoCR had to do with the $$ put into the next house you bought! Anything at all used to purchase that IP that comes from my property/savings/loan/etc would go into the CoCR. Then it would tell me if I was using my “INPUT” for the best return. As in, it is a comparison tool to see if I can get more money else where.
I guess I need to go back and read the book again! Maybe call Steve direct and have a yarn…..
Cheers
C@34
Calvin,
You’ve described the use of CoCR perfectly
“as a comparison tool to see if I can get more money elsewhere”
What Michael is saying is that if the money is borrowed, no matter where it comes from, then it should not be used as CASH in the CoCR formula – while this is technically correct I feel it can be dangerous as I have already pointed out in my examples.
You’ve summed it up nicely –
Cheers
JeffJeff – I provide feedback which I hope assists so-called “novice investors” with expanding their outlook from an investment perspective.
If the more experienced investors on this forum communicate or provide feedback at a “novice level”, those who are prepared to learn, research and “think outside the box” are missing out on valuable information.
In terms of my feedback on this occasion, I have provided a simple definition of infinite COCR – as per the question, and explained that “draw down” is an incorrect terminology in regard to utilizing equity [not an “equity loan”] to leverage further investment – nothing more.
— Michael
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