100% Finance

[WebBoard]

From: Mike .


100% Finance for IP
From: Stephen
Date: 5/29/00
Time: 9:17:11 PM

Can anyone suggest a good finance source , where you can get 100% finance based on the evaluation of an IP and on the fact that it can generate positive cash flow from day 1 . Many finance companies still insist on your own personal income and not that of the property on its own, or its potential.

Henry Kaye supposedly arranges finance at 100% . Where ? I have not seen many comments on finance in this forum. The best I have been able to source is approx 90% and that is still with equity from other properties and based also on my wife's income. Next they will be asking for the dog's income.

Regards All

 

[WebBoard]

Les

Reply: 1
From: Mike .


Re: 100% Finance for IP
From: Les
Date: 5/29/00
Time: 10:53:57 PM

G'day Stephen,

>> "Can anyone suggest a good finance source , where you can get 100% finance based on the evaluation of an IP and on the fact that it can generate positive cash flow from day 1."

Les> Sorry, I can't help with that one - all of the 100% (or 106% to cover costs) that I've heard of are made up from other Equity. But I'm still learning, and others may have an answer that will help me too.


>> "Henry Kaye supposedly arranges finance at 100% . Where ?"

Les> Can't give you a name, but his introductory seminar mentioned buying "off the plan" and getting finance for "purchase price or 90% of valuation, whichever is HIGHER" - so in a booming market, the lift in value over 1 year pays the deposit, effectively giving a 100% loan.

>> "I have not seen many comments on finance in this forum . The best I have been able to source is approx 90% and that is still with equity from other properties and based also on my wife's income."

Les> Snap!! But if a property is positive geared from day one, then your/wife's income etc. is really immaterial - so just do it, anyway. The "average" financial institutions all seem to want as much safety as they can get.

I hope others come to the party on this question, Stephen - I'd love to hear a few alternative answers.

And do check out www.freeol.com.au - by "fiddling" the amount you wish to borrow, you will find that different institutions accept differing DSR's (some will lend at OVER 40% DSR - a few!!). Others peak at 30% - so by choosing the right ones it will save time looking.

>> "Next they will be asking for the dog's income."

Yeah! And that's really RUFF !! ;^)

Regards, Les

 

[WebBoard]

Andrew G

Reply: 1.1
From: Mike .


Where can I get one of those dogs?
From: Andrew G
Date: 5/30/00
Time: 5:01:51 PM

I'd like a dog like that.

Andrew

 

[WebBoard]

Geoff1

Reply: 1.1.1
From: Mike .


Re: Where can I get one of those dogs?-Niche market
From: Geoff1
Date: 5/30/00
Time: 11:23:20 PM

Andrew, Dogs can make you money. Just think, in the capital cities they are tearing down houses (and backyards) to build units/townhouses. Where do the pet lovers go? They cant go into the units so they are a captive market . I have a house with a kennel (built by a pet lover) and i call it my dog house. It returned 8.5%+ from day 1...now 10%+ and it is never vacant.

Look for a niche and fill it. geoff

ps You can get a "pet reference" so you know there is no problem with the pet. (A dog can be a... landlords best friend)

 

[WebBoard]

Len

Reply: 1.1.1.1
From: Mike .


Re: 100% Finance for IP
From: Len
Date: 5/30/00
Time: 1:51:52 PM

I can provide information on Vendors Finance as I'm currently involved in the purchase of one.

If you purchased a new property with a 100% mortgage with vendors finance it would probably be split something like 80-90% bank and 10-20% vendors finance, though you'll probably have to pay for all the legal fees etc yourself. (or credit card the fees and this interest will also be claimable on your tax return) It is a way of getting into a property "but" there could still be a large outlay in costs.

If you go in this manner you'll need to investigate the property's figures a lot more closely and the area that it is located in. Cause the Vendors finance is usually I/O for 2 years and at a higher interest rate and it has to be paid out within that time period. So you'll need the property to appreciate enough to cover a 90% mortgage of which you then refinance from your original (bank) financer.

Just one way to do the deed...

Len

 

[WebBoard]

geoff1

Reply: 1.1.1.1.1
From: Mike .


Re: 100% Finance for IP
From: geoff1
Date: 5/30/00
Time: 9:34:39 AM

Hi Stephen,

Have you tried the mortgage brokers Wizard Mortgage Choice etc. They have a number of the smaller institutions on their books credit unions etc.

When I bought my first property (many) years ago I took a unsecured personal loan for a car and changed my mind and bought a rental property instead.

You could get a cash advance on a credit card if you can get the limit up sufficiently.

You can ask the vendor to carry the deposit or even the whole loan (vendor finance).

You could get a deposit bond for the interim go for a long settlement and get the property revalued.

You could put on a condition to allow access to carry out repairs and improvements during the settlement period then revalue the improved building before settlement.

You could arrange with a partner to invest the deposit and you pay them back at an attractive rate (say 15%-20%) I imagine you would be rushed. This would be peanuts over a year and would be tax deductible. After the year and refurb you get a revaluation ...the property has been improved by 20-30% and bingo you have your money to pay out the investor and enough left to do it all again. If you do this document it separately for your partner in a businesslike manner. Dont put the partner on the contract eithor!

I have done most of these and there are a lot more if you think creatively.

There are no problems only opportunities.

I agree though with the initial question. does any organisation actually lend on the valuation not the contract price? I've bought property 30% below the market and they still lend based on the contract price. It has never been a problem because of my surplus equity.

What have you found forum?

Geoff

 

[WebBoard]

Adam

Reply: 1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP/Geoff
From: Adam
Date: 5/30/00
Time: 8:34:49 PM

Hello geoff I just want to say my ambition is to achieve what you have done, I have read a few of your previous posts, and if I remember correctly you are now self sufficient. I am 26 and own 3 houses (done it all on my own), I am pretty proud of this fact being that it is pretty hard work, I do stress alot (I am still highly geared 75%) but I think that a least while I am young I can handle the stress.

Some people here I think do make real estate investment easier than it sounds, this maybe true for 1 property, however the more you get the more worrisome it becomes (even though I know it will be worth it in the end) My ambition is to earn 60000 a year clear from my rents (after expenses). Currently my rents pull in 30000 before expenses so Im nearly half way there (apart from my huge bank loan).

Anyway onto your question about banks lending on the valuation. I went through Bankwest for my last IP which cost me 260000 (brings 400 week rent in Adelaide) now I borrowed 100% of the money on the strength of my previous 2 IPs, and rolled the whole lot into 1 loan (400000). The problem was that because it was over 80% a loan that high incured a 6000 dollar mortgage insurance fee that I could not afford.

The next part is absolute brilliance and one of the dodgiest things I have ever seen done. It just so happens the council owns a tiny bit of land in front of my property, the valuer wrote down on the valuation that if I was to ever purchase this piece of land my house would be revalued a 310000 dollars.

Now get this the bank accepted the 310000 valuation over the purchase price of 260000 this brought my ratio down to about 74%, and hey presto no mortgage insurance. Bear in mind there is no gaurantee that the council will ever sell me that piece of land. Ive always wanted to tell that story to people who understand the significance of it, it must have been my lucky day.

 

[WebBoard]

Geoff1

Reply: 1.1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP/Geoff
From: Geoff1 - You are to be congratulated
Date: 5/30/00
Time: 10:56:23 PM

Hi Adam,

Its so good to be talking to someone who is doing something rather than just talking about it.

I get excited by people taking action and learning from their experiences.

What people heard before they were successful and then when they read it again, later, takes new meaning. Its blooded with experience,... with reality.

Isnt it amazing how easy it is to move out of the crowd with IP ( Investment Property). A lot of people have one IP.

A number of people have 2.

A few have 3.

A very few have 4.

ANYONE can have 5 to 10.

It actually gets easier the more you have. The challenges are just different. That first one is the hardest. Isnt the first one of anything in life the hardest. (Gee as an aside I just thought of my first female encounter!! Say no more! That WAS hard.)

You know...Its difficult to stay at work with a boss you have just argued with, when you earn 5 times his salary in rental income.

Adam, Congrats you are on the road to a successful investor. Let everyone on this forum learn from your experience. Share your ups and your downs and we will all benefit from a person who is on their way up.

Regards geoff PS Thank god someone is taking action! ( I was getting disillusioned.)

 

[WebBoard]

Jane P

Reply: 1.1.1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP
From: Jane
Date: 6/4/00
Time: 10:10:51 AM

Geoff I'm very happy that I've found like minded IP investors in Aus - I've only used this board for the first time today but have known of Jan Somers for some time. As such, I was interested to read your snippets of info on your creative property transactions. I'd love to hear more. I'm looking at similar ie lease/purchase, vendor finance, etc. I'd love to chat more. I'm in Sydney, properties are in Melbourne, and have lived in most states so have a good knowledge of markets and areas in Australia.

Cheers Jane

 

[WebBoard]

Mick

Reply: 1.1.1.1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP
From: Mick
Date: 6/5/00
Time: 3:18:15 PM

Jane, I'm currently doing the hard nosed stuff about Melbourne to invest again. Never much info available on Melbourne in the forum so I'd love to hear anything you've got to share on the town. I have properties in Nth Carlton, Brunswick and several in rural Vict. cities. How have you assessed the market in the coming year? Where have you been looking? Any particular areas you've identified as having potential? Hope to hear from you or anyone else with wisdom to share regarding this fine city.

Mick.

 

[WebBoard]

Jane P

Reply: 1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP
From: Jane P
Date: 6/5/00
Time: 8:57:21 PM

Hi Mick I haven't purchased anything recently in Melbourne but are considering something in the next 3 months - I need to decide which method I'm using first. My two properties are located in north-east suburbs - McLeod and Montmorency near Eltham. I have a great lease on the Mcleod property - 6 yrs plus option of 3 with 100% rental guaranteed (from Defence) so 100% occupancy. The other - Montmorency I'm not charging enough rent for at the moment as I haven't been focused on it - also 100% occupancy.

I've had excellent tenants but need to increase rent now. Agents are great. I'm due for another valuation, but generally each property has gained in value at 10% annually. Currently I'm looking at leveraging against them again and purchasing further properties. Other areas in Melbourne I haven't been actively monitoring. My properties are both 3br BV close to amenities, schools, shops, trains, etc. Hope this has provided some insight for you. Please let me know what you think.

Cheers Jane

 

[WebBoard]

Paul

Reply: 1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP
From: paul
Date: 5/30/00
Time: 8:10:07 PM

The only time I've had luck with a loan on valuation and not contract was a house built on an island off the Qld coast. I estimated the building cost to be 240k and went for a 80/20 blend. The bank flew over their contracted valuer {at their cost} and stated we couldn't build it under 300k and gave us 240k. None the less the house was built.

Intially I was chasing 180k, the completed project came in at 210k. So we furnished it bought a four wheel drive courtesy of the bank and stocked the fridge. However on a more alternate way of completely 100% finance on I/P is in the way you view your money as the bridge between the bank's contribution.

I like the system that works well for me and thats an on line credit facility on your existing home and using this for the 20% balance if the bank refuses to go the full yard. In this way the bank is fully contributing the whole purchase cost. I've done this method now on six I/P and a few other deals using equity in properties to help with the complete purchase.

One of my better deals ended with me purchasing a property with 40k more than I required I went out and did the deal again. All of this has happened in the last 3 years. Left my job as manager with a corporate hardware co. because I was going broke one year a go. Now a full time I/P buyer and believe me as I say to all my previous staff when I see them "there's life after death. Hope this can get the brain juices going property is the way to go.

Regards Paul

 

[WebBoard]

Jane P

Reply: 1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Hey Paul - 100% Finance
From: Jane P
Date: 6/11/00
Time: 8:01:02 AM

Hi Paul I refer to your post of 30/5 and am interested to kow how you've structured your 6 properties to now earn all your income from them (as I note with enthusiasm that you're no longer worker in the corporate giant - my goal too). I'd be happy to discuss further with you further on email at [email protected]

Cheers Jane P

 

[WebBoard]

Geoff1

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP-re lease /purchase option
From: Geoff1
Date: 6/4/00
Time: 10:32:49 PM

Hi have any success in getting a lease /purchase contract together? We have lots of cheap well located properties in Brisbane. Regards Geoff

 

[WebBoard]

Frode

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP-re lease /purchase option
From: Frode
Date: 6/6/00
Time: 3:01:48 PM

Hi Geoff,

Have you put together L/O deals successfully here in oz? If so, would you care to share your experiences with us?

Lease/Options sound really fascinating, I just wasn't sure how successful they would be here. (I know that it's a big thing in the USA)

Cheers, Frode [email protected]

 

[WebBoard]

Darren

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP-re lease /purchase option
From: Darren
Date: 6/7/00
Time: 8:47:04 PM

I'm currently in Melbourne and are about to do a lease/purchase contract on a property I own - perfectly legal but I have to get a solicitor to draw up a contract, which I will have next week. However, this contract will only be relevent to Victorian residential property. No problems, can be done. Regards

 

[WebBoard]

Geoff1

Reply: 1.1.1.1.1.1.1.1.1.1.1.1.1.1.1.1
From: Mike .


Re: 100% Finance for IP-re lease /purchase option-Quest for Andrew G
From: Geoff1
Date: 6/7/00
Time: 7:06:54 PM

Hi Frode, I havent but there is no reason why it cant be done. You just need the legal contracts. Thats the tricky part. I believe Andrew G from this forum has done it. How about it Andrew? I emailed you re your future courses on the subject, did you receive it? I think we could guarantee a good roll up.

Geoff