30 properties before 25, finance???

Hi all,

This has been a great thread. The only query I have and would like to understand relating to Nathan’s post is, when you go and draw back on the equity and take your original capital back, mathematically the property is no longer a positive Cashflow property, ie income = 15,000 (300×50 weeks) and just finance cost is 15,120 (240,000 x 0.9= 216,000 x 7% 15,120).

Even though you have your capital back and it is effectively no money down, how do you now fund the negative Cashflow position?

Thanks and really look forward to the response.

Thanks – Eamon

Hi James

No that is not the case.

I recently purchased an investment property in France which is one of the most stable countries in Europe and has the highest number of tourists for any Country in the world. Did this with 100% finance.

I will be launching my new website shortly so will be able to reveal all.

Cheers

Yours in Finance

Hi Michael,

When usually you really need to cross collateralise your property? Is it the case when you paid off your PPOR mortgage, and need money to invest ?

I did a simple excel calculation yesterday and used the NAB Borrowing Power Calculator. If we don’t do any renovation or take risk to buy an undervalued property (what we think is undervalued), every one IP worth 320,000, with rental income $320 p/w (80% income taken into the account), will only add borrowing power by $ 130,000. Means that there will be limit on how many properties you can buy, if you don’t significantly add value or market boom happened again ( which is unlikely for the next 3-5 years). I just want to know there is any aspect that I missed.

I read Nathan Birch’s blog and the explanation how to own 20 – 30 properties on $50,000 income. But it seems, it will only work if the Lady Luck and Mr.Market are always with us (which I know that there is a way to become rich, but there is no easy, simple and straighforward way).

I don't think luck had anything to do with Nathan's success. The market has also been down while he has been buying. It must be knowledge and skill then!

Its a choice you have to make. To do it or find excuses not to do it.

There is no reason to go to regional areas  – in fact I would suggest you don't and if you did this wouldn't work as there would be little capital growth. You could do all in that example while working full time.

Something to think about when investing in property is to think business like. When a business/company; spends/earns money it is treated different to a personal income from the ATO

personal        income – pay tax – spend (bills etc.) – money left
business/company        income – spend (bills etc.) – money left – pay tax
 
Get creative, think of different ways to add value renovate, subdivide, add a granny flat, buy a duplex and strata or turn a bigger house into a duplex. There are plenty of options to create equity/value/income.

Think of how you can use money/loans to create more money/income remember that money used to make money is claimable from the ATO in someway. Instead of using equity and cross collateralizing your property, maybe use a line of credit, it will cost a bit more but taxable if using for investments.

Take this comment in general and consult your account and other professionals before doing anything. Everyone has different ways of doing things so do what best suits you.

Hi Richard,

can you please also send me the article.

[email protected]

thank you

Taylor Chang

Thank you Richard.

I am wondering what structure are you guys buying the property in to buy 40 properties? Trust or Company ?
especially when someone like Richard and Nathan have 40 properties, wouldn't it get harder to borrow from the bank for the deal ?

will it harder to get the loan if buying in trust or company than personal name ?

I heard people using multiple trust to purchase the properties, and banks doesn't required you to show if you are the guarantor for other trust. hence you can get the loan easier if somone run mulitple trust.  ie. If you are the guarantor for Trust A, and you also are the guarantor for Trust B. You are buying the property in Trust A and go to the bank showing them you are the guarantor for Trust A. do you also have to tell the lender/bank you are the guarantor for Trust B  ?

I just couldn't understand how people can get the finance continuously without hit the finance brick wall.

if it doesn't work, why people buy property in multiple trust ?

can someone please kindly explain ? i can't think of other reasons than asset protection to buy property in multiple trust