Hi,
Just wondering if im buying an investment property is it possible to use someone elses equity? And if so is it possible to use multiple equities to get the buy? If that makes any sense.Cheers,
Rod
“financial freedom is freedom”-“my freedom is freedom to do what my heart desires when it desires”
Yes.
The best way is for them to get a LOC and loan you the deposits and you get 80% loans for the remainder in your own name.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
An alternative to a LOC is to just get a split loan or investment loan for the amount of the deposit and closing costs you may need to purchase the new property. The remaining funds can be secured against the property you are buying.
Robert Bou-Hamdan
Mortgage AdviserOriginally posted by Terryw:Yes.
The best way is for them to get a LOC and loan you the deposits and you get 80% loans for the remainder in your own name.
Terryw
Yes I can get an investment property using solely other peoples equity? Or do i have to put in also? (This must sound so stupid, but i just like to clear things up so im clear on what im doing.)
What does LOC stand for? Line of Credit ok answered my own question.
An alternative to a LOC is to just get a split loan or investment loan for the amount of the deposit and closing costs you may need to purchase the new property. The remaining funds can be secured against the property you are buying.So… say i have found a property thats selling for say 100,000 i can secure the deposit and closing costs with someone elses equity? And then use that for a loan on the rest?
So i would essentially use their equity to secure the purchase and then their equity again to secure the loan for the remainder of the properties value? Which i will then use the rent to make repayments and have more equity(100,000 as per the example) to begin looking into a second property? (without someone elses equity this time?)Gosh if i can find some tenants for this one place i found for $150-200 rent a week i might be in business.
Wondering if i could get some advice on what to look for when i inspect the property? And what sort of information i would need to extract from the agent? This might help me convince the person who will provide me with the equity, although i feel weird about asking my family, i was hoping to find someone else, are there any people out there that would do this sort of thing? Oh and as if i havent already asked enough questions, How much equity would i need from someone for say a property worth 100,000? Would it just be the closing costs and deposit in equity or more?
Thankyou,
Rod
“financial freedom is freedom”-“my freedom is freedom to do what my heart desires when it desires”
Say your mum had a $500,000 LOC. She could lend you $20,000 for the deposit on a $100,000 property, and maybe another $4000 for costs.
You could then get your own loan of $80,000 for the remainder.
Hopefully in a short period, the property would increase in value to say $130,000 and you could then increase your loan to 80% of this or 104,000. This would be $24,000 extra which you could use to repay good old mum
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry, I don’t understand your fixation on using a Line Of Credit. It is not needed.
Rod, you might find it difficult finding someone who will pay for your property and leave you with an unencumbered property while their house has a mortgage over it and they can lose their house if you do not pay.
To simplify it, you are not using their equity. They are using their equity and just lend you the money. You make the arrangements between yourselves to repay the debt.
The usual way to do this is to only borrow 20% of the property value you want to buy plus any costs you may need to cover. The remaining 80%, you would apply for yourself and secure it against the house you are buying. This would mean that your second property would have to wait unless you could do the same thing again.
Make an appointment with a mortgage adviser and they will go through all this with you in detail. Don’t get hung up in the Line Of Credit thing. They are rarely needed.
Robert Bou-Hamdan
Mortgage AdviserI strongly agree with Robert, there is on one in this world would give you the money to invest. They might as well invest themself and make profit themself.
Rod,
you do realise that every $’s worth of equity (whether its someone elses or not) will equal precisely the same amount of $’s of debt/mortgage don’t you?
equity has to be paid for if you use it, it’s not some sort of manna from heaven.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneOriginally posted by brahms:Rod,
you do realise that every $’s worth of equity (whether its someone elses or not) will equal precisely the same amount of $’s of debt/mortgage don’t you?
equity has to be paid for if you use it, it’s not some sort of manna from heaven.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneSo…does this mean that equity is an amount thats already paid for? So if someone has to pay off a home for say 100,000 and theyve paid 70,000, then they only have 70,000 in equity to play with?
And guys im also curious to know how steve mcknight has so many properties and yet he makes money from them, he hasnt paid them all off has he? He just makes the minimum repayments (using the tenants rent) which pays just the interest, is that correct? And how did he manage to get involved in more properties? He couldnt have paid them off one at a time? Yet they didnt take the properties off him. I must know this if im to duplicate what he has done.
But he used his and his business partners own money to get into property.
My hurdle with that is that i have debt, so im not even considered for a loan, spose im looking for a way around that, by using someone elses money, so thats why i thought equity would be an avenue to follow. Because i dont want to wait another year and a half to get started. So is there a way of sorting something out and still make money from day one? Because like Steve, i think thats what its all about!
“financial freedom is freedom”-“my freedom is freedom to do what my heart desires when it desires”
i think Terry and Rob have covered this.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneOriginally posted by brahms:equity has to be paid for if you use it, it’s not some sort of manna from heaven.
The only exception to this is where family gives you the money as gift and do not want to be repaid. Unfortunately, not many people are so fortunate.
Rod,
Not everyone can make money from day one. Some people do not have the credit history, income, knowledge, etc… to do this. It takes time to get it right and there are a lot of factors to consider.
I hope no-one thinks that they can read a single book and believe they have all the answers and knowledge they need. There are many professionals out there who can help you achieve your goals and it does not require you to pay thousands of dollars for the secret answer at some seminar or for some magic course.
I do extensive research and look at a lot of different ideas from different people. I have found Steve’s material to be off the better quality and very practical, useful and sound information. I think Steve would be the first person to tell you that you need to do a lot more than just use his materials.
This forum is also an invaluable tool regardless how much knowledge any single individual may have. If you have a question about something to do with property or investing, try a search and you will find that in almost every case, a lot of results will come back and you will find the information you need. Spend a few weeks reading a lot of the posts on this site and you will learn a lot!
Robert Bou-Hamdan
Mortgage AdviserRob,
yes i do like LOCs. This was mainly because I used to put all clients to ANZ who do not charge any extra. (but I am getting sick and tired of ANZ lately). Using a term loan instead of a LOC would work fine.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
There is not many lenders who do what ANZ do. You cannot put every client into ANZ.
What if it is a $100,000 Low Doc loan at 80% LVR? Where would you get the LOC and at what rate (no intro)?
Robert Bou-Hamdan
Mortgage AdviserMacquarie MMS – it can be used like a LOC, but is just a term loan.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
MMS is a standard loan so your client would be declined for applying for this as a low doc loan application. As a full doc, the rate is 6.80% which is higher than the loan I have in mind anyway. The equivalent Macquarie low doc loan would be 7.55% for the first year and 6.80% by the fourth year which is still higher. If your client wanted a LOC, it would be even more.
Robert Bou-Hamdan
Mortgage Adviserthis is of no use to Rod of course, but i think the MMS is available as a self cert, it just changes name to a MSE (Express) – reducing rate, free redraw, low doc, bells with pretty whistles etc.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneBrahms, the rate also goes up as outlined above and reduces back to the MMS rate in the fourth year.
Robert Bou-Hamdan
Mortgage AdviserCorrect, but it is a very commercially acceptable rate and structure, and, it is a low doc after all….
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker BrisbaneBut it is 7.55% instead of 6.76% and NOT a LOC as was being advised to be taken by many on here. The LOC would cost more.
If I told my clients the rate I got them was “commercially acceptable” when I could have got them one 0.79% cheaper from day one, I would not have any clients left and would lose in court when sued by them.
Each to their own I guess.
Robert Bou-Hamdan
Mortgage Adviseragain Rob, you are correct.
cheers
brahms
Purveyor of Fine Finances
aka Mortgage Broker Brisbane
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