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From: Mike .
Increasing Borrowing Power
From: JD
Date: 17 Oct 2000
Time: 21:11:55
NAVRA INVESTMENTS run seminars on how to borrow a lot MORE funds using BONDS, giving you the ability to buy more IP's rather than just simple existing equity. Anyone else heard or used this technique? Its radical, and sounds great on the 'surface'.
It goes like this. You borrow $100k say using your <home> equity, from a LOC loan. Then use the $100K to buy a guaranteed BOND that gives you 100K yearly for say 6 years (total 100K *6 =$120K), payable as an income fortnightly...approx $400 say. The interest on the fortnightly return is low, say 5%, and pay typical higher LOC interest rate for the original 100K to buy the bond.
- the fortnightly BOND income of $400 a fortnight is mostly capital return and only a small portion of this is taxable interest. The banks accept this $400 as basically post tax income, so it has more buying power than $400 in taxable wages say.
- when you get the fortnightly amount, you just pump it bank in the LOC account to slowly reduce the LOC debt.
- accepting this as income, your purchasing power at the banks increases significantly, ie buy 2 to 3 IP's and not just 1!!! All you have done though, is funded an income through a LOC debt.
- the LOC loan is say 9% and the BOND interest rate is 5%, so you pay a premium for the benefit of being able to borrow a large sum to buy now SEVERAL IP's. THE LOC interest is tax deductible, and the minor 5% interest on the BOND pension is taxable.
NAVRA INVESTMENTS say this cost is more than offset by the fact you can now buy more IP's increasing with capital growth at 7-10% of total properties value.
It sounds too good to be true... you simply have money coming out of a LOC loan to buy an income stream, that allows you to buy more IP's than otherwise, even though you have no more money overall???
You gurus' got any comments on this one, I would love to hear them before I have my first appointment with NAVRA INVESTMENTS.
Thanx
Increasing Borrowing Power
From: JD
Date: 17 Oct 2000
Time: 21:11:55
NAVRA INVESTMENTS run seminars on how to borrow a lot MORE funds using BONDS, giving you the ability to buy more IP's rather than just simple existing equity. Anyone else heard or used this technique? Its radical, and sounds great on the 'surface'.
It goes like this. You borrow $100k say using your <home> equity, from a LOC loan. Then use the $100K to buy a guaranteed BOND that gives you 100K yearly for say 6 years (total 100K *6 =$120K), payable as an income fortnightly...approx $400 say. The interest on the fortnightly return is low, say 5%, and pay typical higher LOC interest rate for the original 100K to buy the bond.
- the fortnightly BOND income of $400 a fortnight is mostly capital return and only a small portion of this is taxable interest. The banks accept this $400 as basically post tax income, so it has more buying power than $400 in taxable wages say.
- when you get the fortnightly amount, you just pump it bank in the LOC account to slowly reduce the LOC debt.
- accepting this as income, your purchasing power at the banks increases significantly, ie buy 2 to 3 IP's and not just 1!!! All you have done though, is funded an income through a LOC debt.
- the LOC loan is say 9% and the BOND interest rate is 5%, so you pay a premium for the benefit of being able to borrow a large sum to buy now SEVERAL IP's. THE LOC interest is tax deductible, and the minor 5% interest on the BOND pension is taxable.
NAVRA INVESTMENTS say this cost is more than offset by the fact you can now buy more IP's increasing with capital growth at 7-10% of total properties value.
It sounds too good to be true... you simply have money coming out of a LOC loan to buy an income stream, that allows you to buy more IP's than otherwise, even though you have no more money overall???
You gurus' got any comments on this one, I would love to hear them before I have my first appointment with NAVRA INVESTMENTS.
Thanx
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