Low deposits

Viewing 5 posts - 1 through 5 (of 5 total)

waz11
Member
@waz11
Join Date: 2004
Post Count: 35
May 3, 2004 - 1:55 am
Hey all,
This may seem like a stupid question, however I was wondering what the benefits of offering low deposits for properties would be.
In my understanding, if i have a set amount of capital/equity to purchase investment properties, and the banks are going to lend 100% for the loans, then wouldnt it be beneficial to spread the equity/savings as thin as possible and purchase as many properties as i can, and keep obtaining 100% loans from the bank for each property?
if i am wrong please let me know.. or if there are any other comments please feel free to share.
Waz11
RussH
Member
@russh
Join Date: 2004
Post Count: 342
May 3, 2004 - 5:30 am
Waz11,
In my opinion you are on the right track.I,m no expert but I look at it this way.The less you put down on a property the more return you get on your initial outlay.The less you put down on each proerty the more you can purchase with your cash/equity.Once you get started it will all fall into place.I only invest in +cf property and I look for a gross return of around 20-25%.
Russ.
theloanarranger
Member
@theloanarranger
Join Date: 2004
Post Count: 47
May 3, 2004 - 6:55 am
Waz11, small deposits mean you can spread your cash over more properties, etc. However, do your sums on the 100% lends – establishment costs, (generally) higher rates, restrictions as to location, etc on these types of loans can well and truely offset the advantages of putting in little of your own $$$$. Good luck.
theloanarranger
Misty1
Member
@misty1
Join Date: 2004
Post Count: 348
May 3, 2004 - 11:20 am
well,as a beginner,i thought it was best to put in as much as possible 1st! So,mine have always been min20% deposit.(stupid me).Is it hard to now re-finance to access that 20% avail to purchase more i.p’s???
DanTheMan
Member
@dantheman
Join Date: 2003
Post Count: 100
May 3, 2004 - 1:28 pm
Hey Waz11,
Maybe i read it wrong, but didn’t you just answer your question? You said what is the benifit of low deposit, then went on and said wouldn’t you be better getting 100% loans to get as many properties as possible???
Anyway, you are right. As long as they are positive cash flow, get as many as you can (though some with a lower risk tolerance may argue).
Just another point, if a bank will lend you 100%, you can be fairly certain the are going to hit you with a massive (proberbly 3%) lenders mortgage insurance.
Dan.
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