Equity Loans

[michaelg]

Hi,

Ok but think about this... if the only thing lenders will get is capital gain, imagine the opportunities available for low-growth high yield investing?

In theory, it would mean, little cash risked to secure property, you get to keep all the gains, and if you decide to sell, there will be little gain left?

And what if your intention is to buy and hold?, where's the gain if there's no sale?

What about draw-down, I assume you will only be able to draw down on your protion of any gain?

Hmmmmm, buy high growth properties at lower costs, draw down on gains from loc's, then buy up cashflow +ve properties with high yield - use cashflow to buy high growth properties without equity-share?

Just a thought
Michael G

 

[Lissy]

I can't remember where I picked up this link (apologies if it was in this forum!), but thought it was a good look at some of the issues from the buyer's side.
I also have to ask the question - where's the return for the investor if the house isn't sold? Take a house price of say $300,000 (and it's extremely likely that if people only have to pay for 70%, they'll try to buy a more expensive house). The investor has to put in $90,000, with no guarantee of ever getting a return (ie house not sold or doesn't rise in value).
Sounds like a pretty bad cash on cash return to me.....

http://www.abc.net.au/businessbreakfast/content/2003/s892832.htm