Equity rich – income poor

We started this way too, however after 5 properties we hit a brick wall when it came to financing and the bank said no more.

We were able to grow our portfolio even further by increasing the cash flow on some of the properties using creative investing techniques such as lease options. This inceased our serviceablilty and allowed us to buy more without depending on an income.

Hope this helps : )

Xenia Ioannou-Mena
Property Manager &
Property Sales Consultant
E: [email protected]
M. 0412 437 582

Hi Markat,

Reading your post – you have assets valued at $800K and debt of $130K – is this correct? I will use these figures to demonstrate what you could do.

Having a large asset base and good equity position means that additional borrowings are relatively easy to secure. A good broker can assist here.

As Richard has indicated no-doc lenders will allow you to borrow additional sums of money based on your asset position. You will need an ABN and you can borrow 70% of the value of your assets less existing debt. You can go higher if you have had an ABN for at least two years.

You will, in all likelihood, need to refinance and assuming a 70% lend you could borrow $560K less existing debt of $130K will leave you $430K as additional borrowings.

This $430K can then become the cornerstone of additional borrowings in accordance with your investment goals, including additional property purchases to the ~value of $1.5m.

One option is to purchase additional property and continue the cycle ad infinitum.

Another option would be to earmark some of the funds for cashflow investments (possibly with margin loan added on) to purchase something like (example only – not advice) Navra Managed Funds which has averaged ~18%/annum over the last two years.

Assume you place $100K of your additional borrowings into something like Navra and the fund performs to its last two years average you stand to earn $18K – $7K interest nets you $11K.

The $11K can then be used to stump up additional NG properties and you can maintain you existing plan.

Another strategy is to use some of Peter Spann’s products which. from time to time, allow 100% secured borrowings to do a similar thing. This means that your $430K as above can then be entriely directed towards more property.

The surplus of income earned through this avenue can then be directed back to you as an income source or reinvestment as you see fit.

A further option would be to use some of the additional borrowings to finance JV developments where someone is requiring start up funds.

Now obviously there are risk issues attached to all of these and you would need to ensure that you have conducted due diligence to ensure that you are comfortable with such an approach.

Derek
[email protected]
http://www.mononpoly.tic.com.au
0409 882 958
Skype – derekjones2113

Thanks Terry – I was aware of the RAMS package but not the others. It seems the banking world is in a constant change of flux. Must be a nightmare for a broker.

Derek
[email protected]
http://www.mononpoly.tic.com.au
0409 882 958
Skype – derekjones2113

How does one find a sea view property, half an hour from a major city that is subdividable for $200k??????????

I must be seriously missing something!!

Hi Markat
I came across these guys recently.
They have one solution that may work for you.
Spent two days with one of the directors, and came away impressed with both their bona fides, as well as the system.

Essentially, they have a full asic approved pds in place, to raise funds for their developments, on which they pay between 12% & 15% monthly.
If you draw down on an LOC to buy into the fund, then it generates pos cashflow, which you can use for additional servicability, which allows you to keep adding property to the portfolio.
They are primarily property developers based in Brisbane.
May pay you to have a chat with them.

http://www.kaizengroup.com.au

Standard Disclaimer: I am not affliated, not do I receive commissions, or referral fees, or am I recommending their product or system.

Kevin..

hi all
here is something that is out side the box but is doable and is not to be seen as any form of investing its for information only.
what happens is you trade your equity into a project for a return of 22% the developer takes the complete loan from a bank or lender to there equity and your equity plus your interest for the duration of the loan.
then you put a second mortgage on the property for the value of your equity.
so if all goes graet you make 22% on equity that you have not paid for.
if the project goes west the lender comes in for there loan
which is the borrowers 70% of there property.
they get paid and come to you for the other 10%
you have 22% of the value in your bank and you get paid back for the equity loan plus interest again as thats part of the loan you set it that way in the documents.
yu have no responsablity to the lender as your are just giving equity and you get a letter of priority from the lender that this is the max of your exposure to them.
you check the project that the equity is going into to make sure your equity is covered and its money well worth using.
not for ppor but good for ip and you use the equity that is sat there to generate cash flow.
westpoint was a very different kettle of fish and I don’t think it helps to post each time taht different forms of finance come up westpoint ring a bell for me westpoint was designed to cheat and if the people had of been given or had the knowledge they would not have invested in these forms of finance.
equity lending in this form is relatively new to the market but can be very handy for a developer and for an investor as its no money down high return yes could be seen as high risk but do your own due diligencies. and its not for everyone but is very different.

here to help
If you want to get involved in some of the projects I’m involved in email to [email protected]
currently looking for up front money at 15% p/a pm me if you wish