hi The_Bludger
The question you have put is a very interesting question
and for me
has a very simple answer the maximum amount of debt that you are comfortable with and that can be service from an external funding stream and is not reliant on you at all.
willys idea is correct and I am just organising a couple of small pilot projects at the moment with the idea that willy has mentioned,
and you will find is mentioned in a couple of book but I am investing in commercial properties as they have the capacity to draw out cash and put back into the deal and 90% are positive investments.
looking at your current status you have alot of built up equity.and here is an example of how one of these projects works and you will see that for me that the debt is not a problem.
a commercial cbd sydney purchase price is 1.2mil plus 60k stamps
lease is 131k per year net plus 5% annual increase
bank valuation is 1.4mil
approved loan 1.05mil
lease at 8% covers 1.637 mil debt
external valuation puts property at 2.015mil
so you get a couple of people to put in the 200k between them
you settle
then you relend on the true valuation
you borrow 1.637 mil
you give back to 200 to you friends or partners with in 6 months
leaving 377k in your loc should you need it
the 200k people get a portion of the built up equity.
you have put nothing in.
and you wait for 5 years .
in 5 years working on the above figures( and these figure are real figure this is a real property)
the lease is at 167 per annum and the true value is 2,572mil
take away 25% as a lender will lend 75% thats 1929 take off the 1.26 that was owed.
thats 669k
times by 45% ( 200k people share) is 301k
divide by 5 (number of years) and they get 60k per year.
so they are in for 200k for 6 month and make 30% per annum for 5 years with there money back.
of coarse the 55% holder that put nothing in gets 368k for the risk.
now lets look at the risk
the property is worth 2mil max /1.4 min
the lease covers 1.6mil and you have 377k if things go pear shaped and you have to get a new tennant ( and sydney comm is running at about 1% vacancy rate)
after the refinance you have 100% lending
full debt coverage
and your away for the ride.
for me on the above how much is too much.
there is NO to much there is a limit to what lender will lend me but that is governed not by the banks or lender but craa as they will send a scrol of loans.
my post for floor plates in different cbd's was for these type of deals.
I hope you do well in investing and welcome
The question you have put is a very interesting question
and for me
has a very simple answer the maximum amount of debt that you are comfortable with and that can be service from an external funding stream and is not reliant on you at all.
willys idea is correct and I am just organising a couple of small pilot projects at the moment with the idea that willy has mentioned,
and you will find is mentioned in a couple of book but I am investing in commercial properties as they have the capacity to draw out cash and put back into the deal and 90% are positive investments.
looking at your current status you have alot of built up equity.and here is an example of how one of these projects works and you will see that for me that the debt is not a problem.
a commercial cbd sydney purchase price is 1.2mil plus 60k stamps
lease is 131k per year net plus 5% annual increase
bank valuation is 1.4mil
approved loan 1.05mil
lease at 8% covers 1.637 mil debt
external valuation puts property at 2.015mil
so you get a couple of people to put in the 200k between them
you settle
then you relend on the true valuation
you borrow 1.637 mil
you give back to 200 to you friends or partners with in 6 months
leaving 377k in your loc should you need it
the 200k people get a portion of the built up equity.
you have put nothing in.
and you wait for 5 years .
in 5 years working on the above figures( and these figure are real figure this is a real property)
the lease is at 167 per annum and the true value is 2,572mil
take away 25% as a lender will lend 75% thats 1929 take off the 1.26 that was owed.
thats 669k
times by 45% ( 200k people share) is 301k
divide by 5 (number of years) and they get 60k per year.
so they are in for 200k for 6 month and make 30% per annum for 5 years with there money back.
of coarse the 55% holder that put nothing in gets 368k for the risk.
now lets look at the risk
the property is worth 2mil max /1.4 min
the lease covers 1.6mil and you have 377k if things go pear shaped and you have to get a new tennant ( and sydney comm is running at about 1% vacancy rate)
after the refinance you have 100% lending
full debt coverage
and your away for the ride.
for me on the above how much is too much.
there is NO to much there is a limit to what lender will lend me but that is governed not by the banks or lender but craa as they will send a scrol of loans.
my post for floor plates in different cbd's was for these type of deals.
I hope you do well in investing and welcome
