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From: Anonymous
Has anyone tried this? I got this idea from another forum.
You buy a property using cash from your line of Credit. You then do some minor renovations, then apply to the bank for a loan to free up your cash for the next property. When you get the valuation done you claim you did a lot to improve the value of the place you and aim for a higher value than the purchase price. The it may be possible to reduce the amount of net cash outlay, or if you are really good, to get 100% finance.
Eg you buy a house for $100,000, tidy it up etc, valuer comes in and values it at $120,000. You then approach the bank and get a 90% loan based on the valuation. (They should be able to do this because you already own it). 90% loan = $108,000 so you have enough money for some of your costs too!
I assume this would work well when you stack the contract as well. Eg $120,000 on the contract with $20,000 rebate at settlement. There would be no requirement to tell the bank about this as you will already own it when you apply for the loan. This would help with the valuation as well-as the valuer would see that you paid $120,000 for it. You could then claim you did some renovations as well and then maybe get it valued at $130,000!
As you did more of these it would get harder to qualify for 90% LVR loans, but it would still get you further than otherwise.
Has anyone done this? Can anyone see any problems with it? One problem may be convincing the valuer that it had gone up in value by so much.
I think the guy on the other forum said he made $16,000 this way by just mowing the lawn!
Passive
Has anyone tried this? I got this idea from another forum.
You buy a property using cash from your line of Credit. You then do some minor renovations, then apply to the bank for a loan to free up your cash for the next property. When you get the valuation done you claim you did a lot to improve the value of the place you and aim for a higher value than the purchase price. The it may be possible to reduce the amount of net cash outlay, or if you are really good, to get 100% finance.
Eg you buy a house for $100,000, tidy it up etc, valuer comes in and values it at $120,000. You then approach the bank and get a 90% loan based on the valuation. (They should be able to do this because you already own it). 90% loan = $108,000 so you have enough money for some of your costs too!
I assume this would work well when you stack the contract as well. Eg $120,000 on the contract with $20,000 rebate at settlement. There would be no requirement to tell the bank about this as you will already own it when you apply for the loan. This would help with the valuation as well-as the valuer would see that you paid $120,000 for it. You could then claim you did some renovations as well and then maybe get it valued at $130,000!
As you did more of these it would get harder to qualify for 90% LVR loans, but it would still get you further than otherwise.
Has anyone done this? Can anyone see any problems with it? One problem may be convincing the valuer that it had gone up in value by so much.
I think the guy on the other forum said he made $16,000 this way by just mowing the lawn!
Passive
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