Hi
My name is Charmaine, and my husband and I are very excited about getting into property investment. I have read Steve McNights book from 0 to 260+ in 7 years, and have downloaded the number crunching template. I have practised on many scenarios, but must be doing something wrong as I cannot get a pass on the 2 x interest formula. With The Finance cost being the yearly interst rate and at 8.5%, there is no way I can make the estimated growth and the annual rent be twice the yearly interest on say a $250, 000 property, which is the average in our area. What am I missing.what is the secret to Positive Gearing, is it only being luck enough to find a cheap property, so the rental is greater than the repayment, or is it a time thing, where by you have to negatively gear first, and than with increased growth over time you eventually positive gear.
With only 12 months into our home loan and having Paid $25K, the property value has also increased by $30K how can we purchase investment properties, so we can get started. The banks keep telling us we don't have enough equity yet due to only recognising 80% of market value as securtiy.
King Regards
CharmaineAs a general rule, the Banks will only allow you to access 80% of your properties' value.
You can go higher with some lenders, but then you are up for Loan Mortgage Insurance and higher interest payments and even higher interest rates in some cases. This will all affect the cashflow on the investment.
In my opinion, it is dangerous to borrow more than 80% of your HOUSE equity ever; hence the reason why Banks are reluctant to do it and will make you take out LMI when you do. They do this to protect THEM, not you.
Steve's book is quite a few years old now (I've read it), and it would be fair to say that the property market around the country is very different now.
It is extremely difficult to find an "off the shelf" positively geared property these days as per Steve's formula.
You pretty much have to create the positive cashflow; either through depreciation, tax deductions, adding value, rent increases and/or all of the above.
hi
https://www.propertyinvesting.com/forums/property-investing/help-needed/4323327
Dont let banks stop you, go to a seminar and learn and then apply what you learnt
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