I am currently researching property investing. I have asked my accountant about it and he has said that I should wait a couple of years as my husband and I have just moved house (have no equity) and are in our 4th year of running a business. I feel that there should be some way of trying to get finance to start my portfolio. Some feedback on this would be much appreciated.
sfwhitehead
Hi shirl1978
there are such things as no money down deals, (i’ve never done one), use “search” on this site and i’m sure you will find something. There are lots of American writers who promote these types of deals, one idea is you can ask the seller to keep some of his money in the deal (ie 20%) so you only borrow 80% from the back. Or else you can borrow from family (Yes i’ve done this one), but you need to know the market very well and know what you are doing.
Finally don’t let your accountant put you off. I spoke with an accountant 7 years ago when i first started investing, he suggested i not buy property but invest in education bonds (or whatever they are). I didn’t take his advice, today i’m the owner of 30 properties in Oz and Nz. A few months ago when i was going through some old bills (yes ones i had paid) i found his bill, this reminds me i need to frame it, it puts a smile on my face everytime i think of it.
regards westanI live in New Zealand and for a fee find cash positive deals there, email me at [email protected] to join our database
shirl,
I’m going to make a slightly less bullish reply than westan’s because, whilst I am sure we all have the greatest deal of respect for westan (I know I do), for every westan, there might be someone else who has lost it all (see the foreclosure thread). It’s likely the westan doppleganger types might not be on this forum, or if they are, they are very quiet about their losses- we never seem to hear about losses on here- maybe we need to.
If you have no equity available, then I think you need to work out if your business is running profitably. If you have profit and equity from your business, then go for it! Many of us have used equity to build a portfolio- some from IP’s some from PPOR’s, and some from businesses. Not that many sit around these days and save up cash to use as a deposit.
I know accountants- some of them- can be conservative. But they may also have our best interests at heart- and know our financial position- most importantly. No money down deals, or borrowing 105%, or using LMI… these strategies can be good in a flat or rising market… but in a declining market (which is what I believe we are currently in- flat at best, declining at worst), then I think you should do some serious financial analysis, talk to a broker, or a thousand brokers, change accountants- do whatever you need to… but be realistic about your own financial situation. If you have NO MONEY, you become vulnerable to those who find people in that kind of situation, and that’s how they make their money.
Sometimes we don’t like what our accountant says, or our bank manager, and sometimes, we really don’t like our financial situation either, but it’s good to have a sense of reality about what’s possible.
Best of luck
kay henry
Hi shirl1978,
I’m not one of those types that has to forge ahead at all costs, I’m a bit more conservative so tend to agree with your accountant.
If you still wish to go ahead, there are a few things you should consider:
Number crunching 1) What if the interest rates go up say 2%? 2) What if your profits drop? 3) What happens if you get a combination of 1 &2?
Also, as Kay says, we’re at best in a flat market at the moment. What happens if you stretch yourselves & find you’re in -ve equity?
I’m sorry if this all sounds very negative but I’ve been in a similar situation i.e. self employed & mortgage payer at the same time.
Save yourselves a bit of heartache (& money), spend some time doing a serious chunk of saving & review you finances every now & then. When you can go ahead comfortably, the stress levels will be dramatically lower!!Regards
Patrick
The dumbest question is the one you don’t ask.
Hi Shirl,
Based on your accountant’s comments it would appear that you are not yet ready to start the journey. There is little point in building your financial future if your foundations are not fully established – for me my focus would be on increasing your equity without detracting from the day to day business operations.
As a ‘devils advocate’ type thought – is your accountant being too conservative?
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Firstly Patrick. Call me, you need a confidence injection and a big smile drawn on your face dude.
Secondly Hi Shirl, good on you for being proactive and seeking several second opinions. My god you will get them here. All those cautious dont do it types will never get the great rewards of actually putting one foot in front of the other.
No problem is too big, no obstacle is one that is too high to get over(or around) and nothing will stop you unless you let it.
The problem with no equity means higher interest rates for a period or finding cash for the deposit. AND THATS ALL!!!.
So with most lodoc loans these days you have to pay a slightly higher rate for a period then it reverts back to the normal rate. Rams is 2 years and others are one year but the best I have found is the Suncorp one which reverts to normal rates after only 6 months. So there is your first problem solved. Go get a lodoc with Suncorp and the higher interest is minimal.
Secondly I cannot magically make a deposit appear thats up to you. So go get em girl and take no prisoners. Lodocs are easy for self employed. I am and have 19 props in 3 years plus my home.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Shirl,
I’m in the cautious crowd, considering your situation & the current market.
Unless your business is a huge cash cow with a great deal of stability I’d recommend you be cautious about entering the property market.
You don’t want to overextend.
Cheers,
Aceyducey
Lodoc loans are for those who cannot prove their income but have a 20% deposit or equity available to them.
I don’t kow that they are the answer for this scenario.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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