asset rich/ cash poor

[Bushy]

Hi all,
I'm trying to help a 74yr property investor increase his cashflow.He has about 4 ips and lives off the rent ,approx 20k per year. all are freehold and wants some extra cash for lifestyle.all ips are high growth and would be silly to sell so that would be his last option.
Could he get a lo doc at his age and what l/v ratio would be would they settle for. He's not your average 74yr old and have told him he's good for another 25 (imagine the growth he would miss out on if he sold now)
Any other ideas would be appreciated
Thanks Bushy

 

[geoffw]

What equity does he have?

Could equity be used to fund a loan/annuity/Navra cashbond?

 

[Bushy]

Geoff,
my estimate probable about 1 mill, no debt, he's just watched the increase in value and had small increase in rents
Bushy

 

[geoffw]

Bushy,

Some sort of loan product against his equity could well give him a great income. He could borrow, say $200K for a five year annuity, which would give him $40K pa for that time.

Of course, that would leave him interest payments. But they would be serviced by the rent.

He's increasing his debt- but the growth in the property value would probably offset that.

I guess it depends if he wants to enjoy the increased value himself, or to pass it on to relatives. Because increased debt would mean that his heirs would not get quite so much in their pockets. There are many who would not regard this as a problem.

Just a few random thoughts.

Originally posted by Bushy
Geoff,
my estimate probable about 1 mill, no debt, he's just watched the increase in value and had small increase in rents
Bushy

Another thought- are those rents up to market value? There are palces where the rent is increasing quite well. Another R/E agent could give an appraisal to determine if rent was below market value.

 

[Kevmeister]

That sounds like a classic use for Steve Navra's cashbond idea.

 

[Rolf Latham]

Hiya

There are products like the St George Seniors loan that are designed especially for that situation.

ta

rolf

 

[Macca]

Bushy,

I reckon his rents are too cheap, that is only 2% return, he should be able to do better than that.

At his age he should be able to spend some of HIS money before he leaves this earth, the rellys can have whats left!!

Tell him to go for it, either cash bonds or a low doc will give him some spending money and then bring the rents up to market to make the repayments.

If he is worried about the loan tell him to plan on selling 1 place in 10 years to pay for it and leave the rest unencumbered for when he "gets old"

 

[Bushy]

Thanks go to all for the ideas, Iwill discuss the options with him soon
Cheers Bushy