Im currently overseas till 11th January...so email only for now till January, so if it's not urgent speak to you after jan else email me
Sorry.
Cheers
Finance broker for large portfolios
- Thread starter Christianlaws
- Start date
Im currently overseas till 11th January...so email only for now till January, so if it's not urgent speak to you after jan else email me
Sorry.
Cheers
Thanks Mick, I'll speak with you when you are back.
Cheers
Cheers
I don't think you need to look for a broker that has written loans for people that own 20+ properties, but one that has experience with multiple structures. Whether a person has 4 or 20 properties, if they are all in the one entity it's just a matter of dropping in the numbers on the serviceability calculator, knowing which lenders have issues with customers with large portfolios and if working in LMI territory, know the limits for each insurer. I know I've dumbed it down here so apologies to the brokers but this stuff should be basic for an experienced broker.
It's the clients with multiple properties in different entities, trusts, companies, where the rent is their primary income where the brokers have to know their stuff. This is the question you should be asking a broker. The number of properties that each of those clients has shouldn't really matter.
But the most important question to ask is "are you an investor"? If yes, ask how many properties they have. Without an investor mindset, a broker is a calculator who looks at the biggest upfront and trail (which when I was broking, Wide Bay were up there).
As a seasoned investor, I think it is up to us to have more input with the broker too. I only have 8 properties at present, but whenever I need to find more money from somewhere or am looking to buy another property, my broker and I have a strategy session to work out where to get the equity from, what vals we need to get, whether to top-up or refinance and looking for the best solution not just for the current need but to set up for the next purchase.
It's the clients with multiple properties in different entities, trusts, companies, where the rent is their primary income where the brokers have to know their stuff. This is the question you should be asking a broker. The number of properties that each of those clients has shouldn't really matter.
But the most important question to ask is "are you an investor"? If yes, ask how many properties they have. Without an investor mindset, a broker is a calculator who looks at the biggest upfront and trail (which when I was broking, Wide Bay were up there).
As a seasoned investor, I think it is up to us to have more input with the broker too. I only have 8 properties at present, but whenever I need to find more money from somewhere or am looking to buy another property, my broker and I have a strategy session to work out where to get the equity from, what vals we need to get, whether to top-up or refinance and looking for the best solution not just for the current need but to set up for the next purchase.
Thanks. What did you mean by "trail" when referring to widebay?
They leave crumbs in your portfolio?
No but seriously Trail = trailing income. Usually about 0.15% pa of the loans balance paid from the lenders margin.
No but seriously Trail = trailing income. Usually about 0.15% pa of the loans balance paid from the lenders margin.
I think Beachgirl is suggesting that some brokers simply make their recommendations based on which lender pays them the most.
Certainly this does happen, it happens in pretty much any service industry. Like any industry I think the dodgy operators are in the minority however.
The reality is that most lenders pay roughly the same over a period of time. The other think that good brokers know is that we get our best business by direct referrals. If we do the wrong thing by clients, eventually they will figure it out and there definitely won't be any referrals.
For a broker to put their own interests ahead of their clients is short term thinking and generally is against their own interests in the long term.
I suspect very few brokers have clients with more than 20 properties, most people never even get to 10. It's not really the fault of the broker. Even with the best support and advice from a broker, most people simply don't have the resources, persistence, desire, X-factor to get themselves there.
Certainly this does happen, it happens in pretty much any service industry. Like any industry I think the dodgy operators are in the minority however.
The reality is that most lenders pay roughly the same over a period of time. The other think that good brokers know is that we get our best business by direct referrals. If we do the wrong thing by clients, eventually they will figure it out and there definitely won't be any referrals.
For a broker to put their own interests ahead of their clients is short term thinking and generally is against their own interests in the long term.
I suspect very few brokers have clients with more than 20 properties, most people never even get to 10. It's not really the fault of the broker. Even with the best support and advice from a broker, most people simply don't have the resources, persistence, desire, X-factor to get themselves there.
Very interesting thread!
Reading over it though I think some questions need to first be answered and in the following order:
What is your end goal? (Why are you investing in property)
What is your timeframe? (How many years have you given yourself to reach your goal)
What is your strategy? (What will allow you to reach your goal within your given timeframe. Your strategy is determined by answering the first 2 questions).
For example I'm investing in property to build an unencumbered portfolio with a value of 1.25 million which I will then sell to invest in commercial real estate at 8% for an annual Cashflow of $100,000 (pre tax) on which I will retire from the workforce. I am giving myself 10 years to achieve this goal.
Now if that is your goal then owning 20 properties is totally irrelevant. You could achieve that with 3 well purchased capital growth properties instead.
But what about if your timeframe is 5 years and you have only say 150k to start with. Well waiting on capital growth won't get you there, you need to roll up your sleeves and start taking on some highly proactive and highly risky strategies such as development.
Personally the only relevance I see in owning 20 properties is your goal is to retire on the Cashflow of a highly CF+ portfolio and your timeframe to acquire these is very long. Then honestly why would you even want to Adopt this strategy? 1 tenant is enough, let alone 20!
Reading over it though I think some questions need to first be answered and in the following order:
What is your end goal? (Why are you investing in property)
What is your timeframe? (How many years have you given yourself to reach your goal)
What is your strategy? (What will allow you to reach your goal within your given timeframe. Your strategy is determined by answering the first 2 questions).
For example I'm investing in property to build an unencumbered portfolio with a value of 1.25 million which I will then sell to invest in commercial real estate at 8% for an annual Cashflow of $100,000 (pre tax) on which I will retire from the workforce. I am giving myself 10 years to achieve this goal.
Now if that is your goal then owning 20 properties is totally irrelevant. You could achieve that with 3 well purchased capital growth properties instead.
But what about if your timeframe is 5 years and you have only say 150k to start with. Well waiting on capital growth won't get you there, you need to roll up your sleeves and start taking on some highly proactive and highly risky strategies such as development.
Personally the only relevance I see in owning 20 properties is your goal is to retire on the Cashflow of a highly CF+ portfolio and your timeframe to acquire these is very long. Then honestly why would you even want to Adopt this strategy? 1 tenant is enough, let alone 20!
Pink Boy,
Firstly, you need to knock that chip off your shoulder. If your going to make comments like "bahahahahaha" don't make any at all.
Secondly, if you had 4 mil of many properties with a cash flow of 170pa + 200cg that would make more sense than 1 $4m property that is only only getting 200k, you never get to see that until you sell AND it's probably going to cost you 10k a month to hold the thing because it would be so negatively geared. So you 200cg is now looking like 80k after holding costs:-/
Please don't follow up with anymore comments though
Firstly, you need to knock that chip off your shoulder. If your going to make comments like "bahahahahaha" don't make any at all.
Secondly, if you had 4 mil of many properties with a cash flow of 170pa + 200cg that would make more sense than 1 $4m property that is only only getting 200k, you never get to see that until you sell AND it's probably going to cost you 10k a month to hold the thing because it would be so negatively geared. So you 200cg is now looking like 80k after holding costs:-/
Please don't follow up with anymore comments though
Your maths is wrong on your gross income
You will learn more not insulting old timers on the board Christian.
Remember 20 resi props more maintenance, more tenant issues etc. capital gain not guaranteed maybe?
Some old timers have commercial props which return more than 20 resi props. There are many ways to get the similar outcomes in this game.
You will learn more not insulting old timers on the board Christian.
Remember 20 resi props more maintenance, more tenant issues etc. capital gain not guaranteed maybe?
Some old timers have commercial props which return more than 20 resi props. There are many ways to get the similar outcomes in this game.
Highlights exactly what I said before.
Only reason to hold 20 properties would be to own a CF+ portfolio and live of the income but why would anyone want this?
You get higher returns of commercial property with far less stress (yes there are Ofcourse the other issues with commercial such as long vacancy) but none the less you can own a single commercial property doing more for your Cashflow than 20 properties with 1 tenant.
Christian can I ask your reasoning for wanting a broker that can handle 20 properties? Is there a reason for asking this over say 5?
Keep in mind the days of Steve McKnight buying 135 properties are long gone! He achieved a lot of this with vendor finance which in this market is not very common at all, not to mention it's impossible to buy properties for 20k in regional town centers.
There's no insult and the 4 mil comment is referring to resi from previous comments, not commercial.
So are you suggesting that someone starting out should buy commercial property like that first? I don't think I'd get finance or have the despot it for 1 commercial property like that.
I can think of a number of reasons. I've also been around a long time & seen several people do this. Look up Brenda Irwin. From memory she was on a low income.
To me that is much MORE stress. To have all your eggs in one basket & all of a sudden that basket is empty and likely to stay that way for a long time.
While an unusual request, I feel it's quite reasonable to ask this. Remember, you should always start with the end game in mind. If your goal is to own a certain number of properties, it would be reassuring to know that your broker is up to the task. I've experienced the difference between a lousy one & a great one, and I know it does make a huge difference.
Also, the sticking point for many seems to be the OP's income. Remember someone on a low income may not always be on a low income.
If you had 20 properties that each put $100 a week in your pocket you would only be making 104k gross profit.
20x100= 2000
2000x52= 104k
The typical way of calculating cash flow is rent x52-rates and PM fees. We'll assume that the 104k gross is after rates and PM fees have already been accounted for. However, insurance, vacancy, leasing fees, and maintenance aren't even taken into account. By the time you take into account every realistic expense very few properties are cash flow positive at all due to rising rates/maintenance. So that 104k is probably going to be considerably less at the end of the day.
Furthermore, the logistics of having 20 tenants is anything but passive. The only passive income associated with property is capital growth.
Mate, you go and buy your 20x $h!tty $200k properties. Make sure they are all rented out at $330+ per week to get your $100/wk cp+ income from them.
Oh, and on that extra $104k income, you will need to pay tax of around $30k.
Then you can take your $h!tty $70k pa wage where you work 40hrs, and add the extra hours you will need to commit to 20x slums for maintenance, Consumer Affairs, QCAT/VCAT/Court/whatever, plus look after most of your accounting so you can give to your accountant so they don't bite into your profits with their $400/hr fees.
No need to thank me, you're welcome.
pinkboy
