Hi, I am seeking your advices.
If you’ve read the Rich Dad books, you know one of the most important aspects of real estate investing is leverage. My parents own a home, no mortgage, no capital for a down payment. They own 100% equity of the house, I think this is REALLY BAD. The point is by not having a mortgage on the house, they are effectively tying up a lot of money and denying themselves leverage. The house is sitting there and doing NOTHING! Can anyone recommend me a good book about buying or selling the franchise?
I am thinking to use the house as a security to apply for a business loan and use the money to purchase a franchise. What do you suggest? I have no experience in buying or running a franchise. Any advice would be greatly appreciated.
PS, I gotta talk to my parents REALY HARD! Any trick that I can use to convenience my parents? Hehe, thanks!
Dont misunderstand the word trick, my intention is to help, not to get!Passive income:
http://www.unitoday.net/healthyjack/mystory_en.cfmI would think:
The equity in the house is your parent’s. As such it is important they are educated on what that means (like you said it is resource they could be applying to improve their lives). Also if it is a business you want to buy your parents would become a business partner and should be paid a share of the income.You will need to research your chosen franchise carefully to work out how much of your own time will be required to run it. If you are buying a job you may find it unrewarding. If you buy a business you will be hiring a manager to run it for you and you will need enough profit left over for your parents to pay off the loan AND for both you and your parents to receive income.
Remember that in mortgaging their house, your parents are being put in a risky position in that if the business fails they could lose their house. At the moment they own the house and don’t have to worry about being kicked out. make sure you get professional advice and guidance when making such big decisions.
Surrey.
PS: I don’t know of any books about franchises, but do a search on amazon and I’m sure you’ll turn something up.
Jack,
You want to use your parents home and lifetime savings to start up a franchise that you have no background or experience in?
They might be smarter than you think.
Simon Macks
Finance Broker
[email protected]
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.
Your parents own their own house- good for them- there’s a lot of older people who do not own their own homes. I bet they worked hard to get to that situation.
I know you want advice, Jack- but here’s some advice for your parents- Mr and Mrs Hu: “Get yourselves a good lawyer!”
kay henry
I am with Kay here. I hope your parents find a good lawyer or just say NO to your proposals.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksOh dear. Sometimes it’s best not to leverage the capital of your family members. Especially if you want to know what good TRICKS you can use on tricking them to putting their home on the line to lend you money to purchase a business.
Put it this way, if you went to a bank or financial lender, do you think they would offer you a loan to buy a business/franchise?
I doubt it. Why? Because you are a high risk.
But then you could try and convince them by telling them what a wonderful franchise opportunity it is, that you just can’t miss out on it, and that you have absolutely no experience running a franchise or a business.
How do you like your chances of getting capital now???
Business capital is often more difficult to obtain than property finance because lenders want some form of collateral in case the deal goes south.
Property finance has this by way of repossesion of the property if the mortgage repayments are not met.
However if a lender gives someone $50k to start a business, and the business goes bust after 6 months, what collateral does the lender have as security?
See the risk?
It wouldn’t be fair on your parents to risk their own home (possibly everything they have strived for) on a gamble that you want to take.
I’ve read all of the Rich Dad books. While they can be a great source of inspiration they fall way short of educating you on how to successfully own and operate a business.
So here’s my advice:
1. Don’t even think about touching your parents property. It’s not sitting there doing “NOTHING”, it’s there providing them with a place to live. If anything, let them be aware that you are learning about your financial education, and offer to share your material/books. If they want to do their own investing then great. You can’t make someone learn about investing if they don’t want to.
2. You must give something to get something. If you ever want to create a deal for you to win, you need to make the potential deal profitable to all parties.
3. Operating a business is very difficult. Go and work in a business and get experience on how to operate a business properly and successfully. It’s damn hard work! Also get educated in modern business practices.
4.. Always be clear and transparent with those you deal with. Don’t trick people. Don’t hide things. Don’t be dodgy. Be honest and fair and people will work with you. Be dishonest and karma will bite you in the back side!
Learn, Love, Strive. Make a difference!
Unless your parents are on the same path of wealth creation as you, then I think you may be at the risk of a path of family destruction? Your parents have probably worked long and hard (I’m assuming) to get to the point of paying off their ‘home.’ A home at this (or any) stage of life is very emotional and most probably a life long dream. Maybe look at a way to ‘fast track’
how your parents achieved their goal?
Cheers,
Gatsby.“Sometimes the hardest thing to do in life is often the best thing to do.”
Thanks for all your suggestions.
I think a better way to use the equity is to refinance it for another real estate property.
My parents are newbie to real estate investment so I would recommend to start with small deals, what do you guys think?
Please give me some advices.PS, I do think it’s a total waste that they own 100 equity of the house, on top of that, they own 2 houses with 100% equity.
Passive income:
http://www.unitoday.net/healthyjack/mystory_en.cfmThe important thing about your comment is that THEY OWN THEM!!!
It is their business and they are allowed to do what they want.
Leave them alone.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksHow is it possible Jack Hu that your parents are both “newbie” to RE and yet own 2 properties outright over and above their PPOR???
You’re tripping yourself up as usual, aren’t you Jack Hu? As always, your posts seem to be thinly disguised advertising for your latest scheme.Hi JackHu,
Since you read “Rich Dad” and knew you should start small, then you should also know it’s not money making money. You need to somehow create and come up with capital. Then your results will by themselves convince your parents or whoever to finance or lend you money.
Just opinions from novice.
From FUNYou parents have 3 fully paid properties……….Sounds like they could give you and us some tips.
Learn from your parents get ajob and start saving is my tip.
hrm
My short term plan for MY PARENTS house is this:
My dad has retired when he was 45, he is now 52, and he wants to invest in the real estate too but he doesn’t know how. He can retire early because of his former job.
One of my friends is 27 years old and he has invested in 13 houses and he works as a real estate agent. Unlike most real estate agents, he invests in the real estate market too. My plan is to encourage my dad to listen or read some real estate material first and use the equity of house and refinance it and start with small real estate deals. Of course we can ask my uncle and my real estate agent friend for some help. The franchise is the long term plan, and it seems refinance the equity for small real estate deal makes more sense in the short run. What do you guys think?
Passive income:
http://www.unitoday.net/healthyjack/mystory_en.cfmOriginally posted by Abby:How is it possible Jack Hu that your parents are both “newbie” to RE and yet own 2 properties outright over and above their PPOR???
You’re tripping yourself up as usual, aren’t you Jack Hu? As always, your posts seem to be thinly disguised advertising for your latest scheme.Who has the time to give you a decent answer when you are trying to question someone’s integrity without even trying to know the situation first
Passive income:
http://www.unitoday.net/healthyjack/mystory_en.cfmHi,
I have also read all of Robert Kioysaki’s books and yes he says that money in your family home is lazy money. However, he aslo says if you have a lot of money and don’t really know what to do with it or how to invest it properly you are far better of putting it in the bank WHILE YOU EDUCATE YOURSELF HOW TO USE IT BEFORE YOU invest IT” So if you really want to help your parents I suggest that YOU educate yourself and show them with your own PROVEN TRACK RECORD that you know what you are doing. Then you can help them gain financial literacy IF THEY WANT TO. If you want to be a success you should learn how to be a success by and in your own capacity before you try and use your family’s money. Also, Kioysaki quite clearly states how you need to develop a good track record of all your financial affairs, including basic stuff in order to be able to show banks or other lenders that you have good money management skills.
Best of luck making it on and by yourself
jb
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