Hello to anybody that can help.
I have a dream of replacing my full time job with renovating and selling properties for profit. However I'm struggling to understand how the financing works.
I have feedback to suggest unless I have regular income, a bank will not approve me for finance.
How do people overcom this hurdle?
I have access to enough cash to service a couple of small projects, and my portfolio of 5 long term hold properties is neutrally geared.
Any help is greatly appreciated.
Thanks
Doogs1357
I now personally i have an income from my IP's more than enough to support my developments and the Bank will lend on that alone.
Mortgage Broking and Fin Planning income supports my day to day expenses but my rental & wrap income is what i use to support any borrowings.
Richard Taylor | Australia's leading private lender
Thanks for the response Richard.
Is your income through rent received, or from renovating and selling?
If it is from the rent being recieved, how long did it take you to to build up a portfolio of properites generating enough positively geared income to service the dept on your investments?
Income is from both.
Cash flow from rents and profit and lump sum from development.
I have been buying property here in SE Qld since 1995 and got to a position where i could live off my income in 10 years.
As to the timeframe to service debt well that was circa 5 years.Admitedly didnt have that much debt compared to todays numbers and have seen excellent capital growth in all of my properties.
Richard Taylor | Australia's leading private lender
Maybe Doogs needs to do a few and see how you go. Then build it up, get your financials showing good profits and then quit your job. Another possibility may be to do it with a partner – preferably someone on a high income who could help qualify for finance while you do all the work
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
Hi, good advice from Terryw. Your 5 IPs suggest that you know enough about property investing to do well in the area you wish to proceed.Doing it while working enables you to get funding. Obviously, you won't have time for much else! But that's what it's about, the passion to do it with all your soul. Weekends, holidays etc spent on renovating & building is not at all a bad idea. Can even be fun.
KY
Thanks for all the advice.
So if I'm making an annual reportable income from the profit from these projects will the bank take this income into account when assessing me for a loan?
I'm thinking of doing a few project while still employed to prove to the financiers that I am capable of providing a regular income through this.
Has anyone done this before?
Hi doogs
Im doing the exact same thing as you but am doing it with another couple. We have just had an offer accepted and they will put their names down as the ones buying it for the 1st one. I will go in and do the work and we split the profit in half.
For the next one we use the money we made as a deposit and the profit we make from the 2nd property will go into a company and i will get a wage from it, so it will look like im self employed and getting a wage so when we want to buy our own investments then we can put that and my wifes salary down.
Hope this helps
i'm doing buying, renovating and selling too.
However as i've only started working after a good couple of years out of uni. It's not that easy to supplement it without a job – so i maintain my full time job as an it engineer. It helps with getting finance as well as backup income in case a sales does not go through.
It's not easy – especially since the boom periods when i was probably still in high school.
doogs1357 wrote:So if I'm making an annual reportable income from the profit from these projects will the bank take this income into account when assessing me for a loan?
I think you need a track record of 2years to be recognized for Traditional fundingToWhomItMayInterest wrote:doogs1357 wrote:So if I'm making an annual reportable income from the profit from these projects will the bank take this income into account when assessing me for a loan?
I think you need a track record of 2years to be recognized for Traditional fundingyes
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
Hi doogs, I am doing the same thing, and agree with the comments above, I think it would be smart to remain employed until you have a few under your belt, you will be unpleasantly surprised at the amount of lessons you learn from your first (or first couple of renovations) some of these lessons require extra funds that you may not have accounted for, once again a big help if you are employed and need to draw on more funds.
In terms of fitting in it around working full time, obviously weekends and holidays will need to be spent on renovating, but the most important thing I find, is to gather all quotes and have a schedule set out for work done with tradies all lined up to go one after the other (always leave a buffer), make sure you fully brief them of what work needs to be done and get them to write it on the quote, This really helps with time and also gives you the freedom to even have someone else meet the tradies at the house. I adopted this method with my last renovation, and managed to have it fully completed inside and out in 5 weeks, two of which I spent laying on the beach in Bali, with my mobile phone by my side
Good luck
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