$2m in 22 months - Rob's story ..

[Above Average]

Rob,

I enjoyed reading the article & your ideas. Will you have a regular contribution the newspaper? If so, I look forward to the next edition.

Above Average

 

[Roadrunner]

What a surprise to see you in last Monday's Herald Sun Rob. I almost choked on my coffee when I saw your picture. Thanks for sharing

 

[Rob Williams]

What a surprise to see you in last Monday's Herald Sun Rob. I almost choked on my coffee when I saw your picture. Thanks for sharing

I almost choked on mine, too, when I saw the photo. Didn't look much like me at all. The pic was taken with a wide angle lens, about 2 inches from my face. Talk about distorted!
Thanks for the feedback

 

[msplants]

Hi Rob,

I've just finished reading your story on how you acquired all your properties in such a short time. It's great and hopefully we can do something like that eventually.

The one part I don't follow is how you got the money/down payment for IP2?

Cheers,

Ms P

 

[Alex P Keaton]

Bayview

Great effort, Rob.

Just so we can keep this all in perspective; what was your PAYE income level while all this was going on?

The reason I ask is because for someone on $50k per year to do what you have done is astounding, while for someone on double that or more is way easier.

Bayview - it can be done. It's IPs so you can use rent as income. We have always been low income earners and never had a loan refused yet. Our latest loan is for $520k with expected rental income of $650p/w and CG of $150k.

I would love to here your story too Sue Anyone doing it on less han $60 K pa, I would love to hear from


I love looking back over this old thread, its very motivating

 

[skater]

Anyone doing it on less han $60 K pa,

Well......not anymore, but where we are today is a fair cry from where we were when we first started.

When we bought our first IP, we had about $40k left to pay off our PPOR which was worth around $120k. The first IP cost $90500 and we were self employed with a COMBINED income of less than $25k. We approached our bank and they laughed us out the door. Then after some hard negotiating, I got approval from another bank. The first one then reluctantly came to the party, which was good, because I liked their terms better.

Anyway, our income was so low, that we had to find a house that wouldn't cost us anything to keep. The house needed a reno, so we painted & took three truck loads of crap to the tip, then put in a driveway. The rent came in at $185pw.

We have had that house now for 11 years (I think). We have done next to nothing to it since then. The value has increased to $280k and the rent is $280pw.

 

[jaimeandrenee]

Very inspiring story Rob just finished re reading your api article 2 rock on .

Jaime.

 

[Rob Williams]

Very inspiring story Rob just finished re reading your api article 2 rock on .

Jaime.

You mean the API from July 2008? Surely that's lining bird cages by now?
There's a lot more detail in the February Your Investment Property magazine story includes more detail about some of my strategies and risk mitigation.
I can send you a pdf if you PM me your email address and you're interested in reading it.
Thanks for your comments

 

[Comper100]

Awesome read Rob...Just joined on here and was recommended by another member to check your work out. Marvelous achievements.

Nice to see how its done in Adelaide....

Room for one more I hope

 

[Rob Williams]

Nice to see how its done in Adelaide....

Room for one more I hope

Stevadl and I will make room for you

 

[travelbug]

Thanks for sending me the articles Rob.
Very inspiring. The photos aren't that bad. You do look very serious in the first one though.

Looking at your charts I finally got around to making one up and looking at my figures and projections. I do like fiddling with numbers (I should be finishing my school reports though)

Cheers,
Lynne

 

[mjv]

Dear Rob,

Well done, the real story is your self belief and thank you for kind thoughts the other day.

Take good care

Michael

 

[Samantha]

Goodluck for 2010

Thanks for sharing and congratulations!

A couple of questions I have out of this are:

What are the problems associated with cross collaterisation?
What is the concept of capitalising interest and how does it work?
What are the problems associated with going with one lender? I am refinancing and taking loans to ANZ under their Breakfree package which allows for multiple loans. Further to that I will be looking for my next IP but from what I am reading in your story this may not be so good?

 

[Rob Williams]

Hi Samantha.
Yes, 2010 will be a big one!
X-Coll is just a tool like any other in our bag of tricks. When it works for you, use it. When it doesn't, then don't.
For me the main disadvantage has been x-coll some of my properties with one lender. When I reached the limit of exposure that lender wished to have with me, it became complicated and time consuming to refinance one or more properties to another lender. However, my situation was further complicated by some fixed rate loans I didn't wish to break at that time.
Not cross collateralising gives you maximum maneuverability. However, there are times when you may have a few properties with one lender and have a small amount of equity in each property. By x-colling, you may be able to get that lender to finance another deal. It may mean the difference between getting another property and missing out on a deal.

Capitalising interest simply refers to the process whereby you borrow more that the cost of the property and buy costs in order to fund the interest shortfall each month. Once again, it's a tool that enables yuo to buy a property you might otherwise not have been able to support from your PAYG income alone. This strategy pre supposes that the growth in the property will be greater than the capitalised interest, over time.

The main problem with staying woth one lender is that eventually they will reach a maximum exposure to you as an individual. In my case, I hit thta wall at around $1.2m in borrowings. Other banks may be less. Then you have no choice but to refinance one or more loans to another bank.

Not sure why my story leads you to think that buying another IP isn't a good idea. Regardless of economic conditions and interest rates etc, there are always good deals if you know where and how to look for them.

Hope this helps.

Rob

 

[Samantha]

Using one lender

I am not put off. I was referring to being put off on borrowing from one lender. I was assuming they would not have a cut off point as long as I have 80% LVR. Is this a fair assumption? Or should I check in with the bank?

 

[Rob Williams]

I am not put off. I was referring to being put off on borrowing from one lender. I was assuming they would not have a cut off point as long as I have 80% LVR. Is this a fair assumption? Or should I check in with the bank?

I doubt they will tell you where there exact cutoff point is.
Best thing I ever did was engage a broker to help me put together a strategy to move me forward.
A good broker, who takes a long term and strategic view is pure gold. If you want to really grow, then think about not dealing direct with the bank and get a broker on board.

 

[Samantha]

Broker

I had a broker and he was great. Then I met a guy who had just retired at 40 from a bank and he advised that brokers do not get offered the full suite of packages to give to customers and you get a better choice and deal, if you negotiate direct, so this is what I have discovered.

Refinancing has been a drama and labourious and I would have preferred to not have done it but I have learnt heaps about loans and how it works behind the scenes. I have gained great learning from the experience that I can add to my negotiating skills.

Is this what others have found or know?

 

[monalisa]

Very inspirational

 

[Fudge]

Thanks for sharing and congratulations!

A couple of questions I have out of this are:

What are the problems associated with cross collaterisation?
What is the concept of capitalising interest and how does it work?
What are the problems associated with going with one lender? I am refinancing and taking loans to ANZ under their Breakfree package which allows for multiple loans. Further to that I will be looking for my next IP but from what I am reading in your story this may not be so good?

Hey Samantha,

Yep, I have got about 5 loans tied up with ANZ breakfree. In order to maximize your breakfree discounts on your mortgage rates, the loans must be in private names (not companies). Not too sure which setup you have.

I thought ANZ was pretty good, and liked the options of breakfree. I have however, hit a wall with trying to refinance a loan that came off a fixed rate. As Rob suggested in his article, ANZ have 'turned the spotlight on and have me in their scope'. Looks like I have hit their limit. The loan defaults to a P&I loan, but I can't even replace it for a IO loan. (seems weird when the repayments would be less??) Very long story, and I am that sick of them, that when my other loans finish their 'locked in' rates in April, I will take all loans out and move somewhere else. (I have over $1.1M in loans with ANZ and this seems to suggest what Rob was talking about) Bad luck for them......I will pay some other bank the hefty mortgagess to keep my properties.....I am sure when I go up and tell them this in April, that they will try and keep me on board as a loyal customer.....Bit of bad luck though. (I have been a very good customer of theirs, and they suck out the rates every month on time, but no more....)

After numerous discussions with bank manager and site visits, they see my side of the story, but unfortunately, how it works out on the computer, it doesn't fit the criteria......doh.

They aparently have released a Portfolio service aimed at people who do property investment a bit more seriously than the odd 1 or 2 properties. I was looking at moving accross to this, because you get % discounts off the rates even if you have the properties in a company name. It also is supposedly very flexible, in which you can move payments around, as it is in the one account. Less fees as well I think.

I wont be staying with ANZ now though, so will look to see what else is on the market.

Cheers,

F

 

[HomeBuyAU]

Very inspiring Rob and I hope to do something similar. I should reach my goal of 2 properties this year (once I find the property) but next year will be a lot harder, my goal for next year is to buy another 5 properties.