Clear titles in the vault

[GoAnna!]

I know that many with larger portfolios are making moves to sure up their position and weather the financial storm ahead. I am just sharing a step in my own personal plan.

I am concerned about liquidity and I am concerned about giving banks too much control over my portfolio as we do in the end have opposing goals. In the end I think my success or otherwise over the next 5 years will come down to cash flow (or lack of!)

As I sit here and watch the Vice Presidential debate an e-mail has come through from my solicitor to say that the titles sent to her after my last settlement have been fully cleared and are now sitting in the vault. I won't pretend that I know where the economy and interest rates will be even a year from now let alone 3 years form now but clear titles are sure comforting.

For those that are not already bored with my story I have recently strata'ed an apartment block in Hobart and refinanced out of my development loan. Out of the 13 apartments I have handed over 5 as part of he refinance leaving 8 unencumbered. I don't know how easy it will be to borrow against these titles in the future should I need to but at worst I can sell one or more to gain cashflow. I am finding that enormously comforting as I calculate how long my buffer will last if rents do not rise and interest rates fall as much as I anticipate.

 

[craigb]

thanks anna, good of you, i also agree and those of you should shore up, or decrease the LVR, as to wether perhaps an un seeable storm heading our way, not a shotgun and palet of beans , but a threat nontheless.

 

[josko]

Good on you GoAnna,

I have decided against exchanging titles on a couple of IP's with my PPOR when it sells.

As you know I have had a contract for sale on one of my IP's. I received a call from the R/E Agent yesterday telling me the buyer's bank - ANZ have now UN-approved their PRE-approved loan. I don't know how correct this is as I am receiving the information third hand. The Buyers were using a Full Doc loan.

I think they have cross-collatoralised property and now ANZ are giving them trouble in releasing any capital for a deposit. They are refinancing over to The Greater.

Of course, I don't know how true any of this is, but I am fearful of tying up my IP's in such a way with one bank.

My BIG PICTURE plan is to lower my LVR's as much as I can, and plow every spare cent into them to give me more flexibility.

It seems from all that I am reading/hearing that the banks are extremely unpredicatable at the moment and nothing we used to rely on can be taken for granted.

The times are changing and we had best be prepared.

Regards JO

 

[HiEquity]

Agreed. We are fully leveraged on about half our loans and have the others "in the vault" ready if and when we need them, including our PPOR. Some have suggested that all titles should be leveraged to protect from litigation but we operate in low risk employment so prefer the safety of free and clear titles instead, particularly at this time.

Mind you, with lower IRs and rising rents, I'm still not quite sure that this will pan out badly for us in the end. I'm sure the ride will be fun though! It's times like these where the opportunities of a lifetime come up after all.

May you live in interesting times...

 

[craigb]

some of the fear is not the unemployment issues but the falling value's of the property, if your at say 80% lvr and the prop goes to -10% then you might be called to increase the ratio out of your own pocket, esp if banks have gone tight.

 

[AUSPROP...]

For those that are not already bored with my story I have recently strata'ed an apartment block in Hobart and refinanced out of my development loan. Out of the 13 apartments I have handed over 5 as part of he refinance leaving 8 unencumbered.

wow did you go in at a low LVR on the devy or was it just extremely profitable? 8 clear titles, that's awesome.

 

[GoAnna!]

wow did you go in at a low LVR on the devy or was it just extremely profitable? 8 clear titles, that's awesome.

Bought in 2001 in Hobart when no-one was interested for borrowing 100% of purchase price plus oncosts. It was under market compared to the yields on similar properties in the same area. The area boomed. I renovated much of the block pretty much tripling rents. I added an additional apartment. I strata'd. Strata alone added about $700K in value (for $4K in paperwork)