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I see XBX's point, though. It's a good boundary condition to illustrate when it is not appropriate to use a cash-bond. Steve, this raises another interesting question - would you ever recommend using a cashbond for a low-growth property if that property was cashflow positive? (I was...

1. This is a chicken-and-egg problem. Essentially the bank needs to be convinced (or it put in writing etc) that the LOC in fact will be used to purchase a cashbond, and the ability to service the LOC will be created by the purchasing of that cashbond. Steve tells us that you can in fact...

Segue The problem with the word "segue" is that it looks nothing like its pronounciation: seg-way. Hear it often enough on TV and radio... Steve: Yep, I understand what you're saying now :). A bit like the old business adage of "you have to spend money to make money"... You have to...

Steve: I was quite surprised by your answer to this question. Perhaps I misinterpreted it. I would have thought that for a property portfolio to be "pulling its weight" then all of the properties within it must be pulling their weight. A Cash Bond should be just as useful to apply to a...

Bill L: I was simply using your figures on the cost of holding that Carnegie property. You said $11.5K pa so that's what I used. Yes, it could be $13.5K or $20K - only the purchaser can decide what is reasonable. An important point, however, is that in your original example you allowed...

Certainly some fund managers have better accomplishments than others but no-one can guarantee that they are going to be able to make money in a particular market since that is controlled by forces that the fund manager can't control. And we're also told that past performance is no guarantee...

Bill: Heres my take on your example: 1. It is illogical to buy an annuity returning $35K per annum over 5 years when all you need from it is $11,500pa to service the property. 2. So, let's get more realistic about the cashbond we'd need in that example. Assuming an interest rate of 6%...

(Sorry, not a guru) But when I played with some numbers on cashbonds it became apparent quite quickly that a lot of your capital is also getting eroded in something like a vicious cycle simply to pay the interest bill on the loan which created the cashbond in the first place. Using rough...