A good reason to have different lenders

[sash]

Not really....there are other options like getting multiple financiers across a deal. Say you have a $3m deal.....getting 2-3 financiers across would be better than just one. The issue here is the title....if it is say strata titled....you could get an even split. One title prenets problems.

By the way...I am not anti-crossing....just practical in the current environment. I recently did some work for one of the majors....believe me they are tightening screws on the risk side like anything.

As a matter of fact I am considering crossing one property...but when I do it they will have no more than 30% of my equity....the deal is still in in its infancy...it is a block of 5 units which now is considered a commercial deal.

I daresay Daz would know more about his contracts than most.

But it's your second paragraph that puzzles me most. Isn't that thinking, kinda, well... small?

I used to be in the anti-cross-coll group. I've since realised that it's a tool, like any other. Sometimes, it's a very useful thing for obtaining the right finance to acquire the right properties. Others, it's like using a hammer to nail in a screw.

As with most things, I'd suggest that ruling it out completely would only limit the available options...

 

[sash]

So Dazz....have you negotiated these clauses out in any of your dealings?

If you did then you should become a professional contract negotiator with the Big 4.

It is far easier to brow beat and out manoveuore (legally of course) the small fish and get your way than deal with the legal w%^kers. People in the legal profession only see black or white...

If you manage to not fall asleep as you read the mortgage documents - yes all of them - and you discover during your third cup of tea, two thirds of the way down on page 77 - you find the all monies clause - and summarily scratch it out completely and then spend the next 2 weeks argy bargying with the Banks legal dept.

Then, and only then, can one remove the words "always" from your quote.

As usual, the Banks legal depts are past masters at stonewalling during negotiations, and have been a constant source of amazement and knowledge for me over the years. Inspirational contract negotiators the lot of 'em.

If you are the type who fall asleep or toss the document away after reading page 5 or 6 with the fluffy bears and contents page, and the schedule page with all of the numbers, then absolutely, all of the nasty clauses shall definitely be in your mortgage contract.

 

[steveadl]

One of the things I have learnt from this forum is to not cross collateralise properties if possible and also not to have all your loans with one lender.

It appears that investors in NZ are learning this lesson the hard way..

By way of background; The NZ economy is not as healthy as ours and the property market is going down.

cheers

RightValue

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10583877

Always amazes me people are so shocked when banks hold back sale funds. A lot of grief could be avoided if people spent 30 secs with a calculator before making big decisions.

 

[willair]

down on page 77 - you find the all monies clause - and summarily scratch it out completely and then spend the next 2 weeks argy bargying with the Banks legal dept.




.

Just wondering "Dazz",on page 77 did the money lenders let you let you cut out the all monies clause, or did they just make a new clause up on the lower section on page 78 in different wording that means the same only it has a name like "Estoppel"..imho willair..

 

[Dazz]

No willair, you read the entire document, and you must comprehend exactly how every statement and clause legally ties in with every other clause, in totality. Yes, it's difficult, and yes it takes a while to learn, and no, most lawyers are pretty bad at it.


This is the *zone* where delegating your financial well being to "advisers", whether they be financial or legal, comes completely unstuck.


1. The all monies clause was in their standard mortgage documentation.
2. I scratched it out.
3. We had words.
4. There was a large delay.
5. They agreed to take it out.
6. We all signed off.


They didn't let me do anything.


Step 4 is where all the action is. Weasel words like 'standard' and 'this is most unusual' and 'I don't have the authority for that' get trotted out.


You need to by-pass all the brokers, all the personal bankers, all the private bankers and all of the dept heads who have no authority to make a decision. You need to get through to a man like NigelW who has the Bank's authority to negotiate.


Dealing with anyone less and you simply get the usual "our policy is" or "I'm sorry, we can't actually do that". Most people hear that and either give up or go elsewhere. Touble is, Bank's legal depts have constant chats and update each other both professionally and privately via the ABA, such that going elsewhere rarely improves the situation.


Overall, I can thoroughly recommend X-coll as a superb tool for growing the size of your portfolio. People often say on this forum that everyone has different strategies and different goals.....but I hazard a guess that controlling the largest amount of property possible would be a prime objective of a large number of folks here. X-coll, as James pointed out, is but one tool to assist in that endeavour. However, it's like comparing three little garden spades and a bobcat. All 4 move dirt and perform the same function, it's just that one of the tools does it slightly better. For sure, there is more danger in driving the bobcat than the spade....but then isn't in incumbent on us as investors to improve our skills driving the bobcat rather than stick with the spade and say it's too dangerous and we are "happy" with the spade.

 

[willair]

No willair, you read the entire document, and you must comprehend exactly how every statement and clause legally ties in with every other clause, in totality. Yes, it's difficult, and yes it takes a while to learn, and no, most lawyers are pretty bad at it.


This is the *zone* where delegating your financial well being to "advisers", whether they be financial or legal, comes completely unstuck.


1. The all monies clause was in their standard mortgage documentation.
2. I scratched it out.
3. We had words.
4. There was a large delay.
5. They agreed to take it out.
6. We all signed off.


They didn't let me do anything.


Step 4 is where all the action is. Weasel words like 'standard' and 'this is most unusual' and 'I don't have the authority for that' get trotted out.


You need to by-pass all the brokers, all the personal bankers, all the private bankers and all of the dept heads who have no authority to make a decision. You need to get through to a man like NigelW who has the Bank's authority to negotiate.


Dealing with anyone less and you simply get the usual "our policy is" or "I'm sorry, we can't actually do that". Most people hear that and either give up or go elsewhere. Touble is, Bank's legal depts have constant chats and update each other both professionally and privately via the ABA, such that going elsewhere rarely improves the situation.


Overall, I can thoroughly recommend X-coll as a superb tool for growing the size of your portfolio. People often say on this forum that everyone has different strategies and different goals.....but I hazard a guess that controlling the largest amount of property possible would be a prime objective of a large number of folks here. X-coll, as James pointed out, is but one tool to assist in that endeavour. However, it's like comparing three little garden spades and a bobcat. All 4 move dirt and perform the same function, it's just that one of the tools does it slightly better. For sure, there is more danger in driving the bobcat than the spade....but then isn't in incumbent on us as investors to improve our skills driving the bobcat rather than stick with the spade and say it's too dangerous and we are "happy" with the spade.

Thanks for you time to post that up it just interested me to the outcome,
and also about the spade and the bobcat,but i like the Fable i used to read to all of my daughters by Aesop about the "Hedgehog" and the "Fox"
the Fox knows many way to kill and hide and becomes the non-sucker variety,while the hedgehog only knows one,btw bobcats at the auctions this morning with very low hours on the machines could not get any bids above 900 bucks, while shovels per lot of 100 sell for 50 bucks.imho willair..

A FOX, while crossing a river, was driven by the stream into a narrow gorge, and lay there for a long time unable to get out, covered with myriads of horse-flies that had fastened themselves upon him. A Hedgehog, who was wandering in that direction, saw him, and taking compassion on him, asked him if he should drive away the flies that were so tormenting him. But the fox begged him to do nothing of the sort. Why not? asked the Hedgehog. Because, replied the Fox, these flies that are upon me now are already full, and draw but little blood, but should you remove them, a swarm of fresh hungry ones will come, who will not leave a drop of blood in my body.

Moral:
When we throw off rulers or dependants, who have already made the most of us, we do but, for the most part, lay ourselves open to others. who will make us bleed, yet more freely.

 

[tobe]

Surely xcoll all properties up to a percentage of their value with one lender is the same as taking stand alone mortgages with the same LVR with diferent lenders? I dont see why xcoll with one lender per se makes a quantum leap? I can see it would be easier to xcoll with one lender, less paperwork, only having one entity to deal with etc, but surely they still will only lend a set percentage of their valuations of the securities value? Where does the quantum leap from spade to bob cat come from?

 

[Dazz]

Holy smokes willair - that's a horrible fable. Won't be rushing to tell that one to the kids any time soon.