"Jan Somers, IPs and reality"

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From: Anonymous


I have read all the Jan Somers books and are most impressed but in reality regarding getting an IP portfolio that will allow a comfortable retirement I seem to have hit a brick wall.
Me? salary 62,000 pa, own my home valued 332,000. Got one IP 190,000, rent $185 pw, another that will settle in August, 227,000, est rent $235 pw, shopping around for the best loan. the 1st Ip, interest only loan, 80%, 20 % from LOC, My LoC is a total of $75000, of which $54,000 has been used to pay that 20% above. Looking for the best finance deal for the 2nd IP, which does not seem to be a problem.

But after that, when looking at properties OTP, that will settle in 8 to 12 months no lender will have anything to do with me, in fact one at ***** Loans, I was literally told to leave.

What I am finding is despite having good equity, no debts outside of IP, getting a prop portfolio looks unlikely.

In the latest Jan Somers book the example of
the couple getting 4 IPs using the equity of their home, is this real????. Unfortunately this book is outdated before it was released, "Buy median priced IPs " she uses IPs priced at $160,000. Only 6% of Melbournes auctioned properties are near this price. And they are largely on the city fringe. as we know median prices in good or potentially
good areas are around $300,000.

Maybe I will try lenders using the example in the book to see what happens.

Any hints feedback would be gratefully received.

During my travels have learnt a lot. One thing is that people who work in banks do not know very much about IP etc.

Example, one lending officer had never heard of "deposit gaurentee bonds'. Another was amazed to learn that OTP Ip incur very little stamp duty.
One loan offer for a large bank, was conditional, on no more borrowing, this was related to an interest only loan, asking how long this condition would be in place, I was told " until some of the principle is paid" when I asked how you can pay off principle on a interest only loan? they weren't able to answer.
 
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Reply: 1
From: Rolf Latham


Hi Anon

Jans ways DO work. BUT..........

You have to adjust the application of the methods to your own situation.

I suggest that part of your solution is two fold:

1. See www.navrainvest.com.au to get around your serviceability problem.

2. Use an independent mortgage broker rather than playing the lending game yourself.


Ta

Rolf
 
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Reply: 1.1
From: Simon St John


Rolf

Great advice on both fronts.

I'm discovering it's all about building a team of people around that will help unravel the mystery. After all, it's all a learning process and to learn we need teachers.

With decent equity and a good income, building a portfolio should be easier than Anon. has described.

Certainly, it's no surprise that many people in banks are ignorant about IP. Even the bank that chants the mantra "the one with the most property wins" in its advertising campaign has staff who are in the dark about what this means and how to do it!

Cheers, Simon
 
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Reply: 1.1.1
From: Rolf Latham


Hi Simon

Its funny that the same bank you are talking about also uses a monopoly model for that campaign :eek:)

Ta

Rolf
 
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Reply: 1.1.1.1
From: Rolf Schaefer


Hi,
I am a newbie to this forum and find it just great to get all this good advise.
However, sometimes I am just a bit confused about all the abbreviations the experienced people are using, i.e. OTP, what does this mean?

For that matter, is there a FAQ that a newbie like myself can read first to come up to speed on all the terms and abbreviations.

Any help is greatly appreciated

Rolf
 
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Reply: 1.1.1.1.1
From: Projects .


OTP = Off the Plan, although sometimes I think maybe 'Off the Planet' might be more apt.
Projects

There is more than one way to climb a mountain.
 
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Reply: 1.1.1.1.1.1
From: Gee Vee


But you can but properties OTP that are under construction and can be tenanted on completion. I am having one built, bought OTP and it has worked out well. It is not some swank development in Melb, but a new estate in regional Vic.
 
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Reply: 1.1.1.1.1.1.1
From: J Parker


A FAQ with abbreviations explained. Now hasn't this been suggested before, Robert F? Sim? Someone did anyway, very recently.
I think it's a grand idea myself, as people new to PI can become confused and dejected, when they can't decipher the jargon.

I think the IT people with the know-how should start up a new section with a glossary of terms (webmaster?).

Just my thoughts...
Cheers, Jacque :)
 
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Reply: 1.1.1.1.1.1.1.1
From: Lee T


Hi

To answer your last query - St George allow you to pay $5000 per year off the principle with an I/O loan.

Does anyone offer higher???

LeeT
 
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Reply: 1.1.1.1.1.1.1.2
From: Robert Forward


Hi Jacque

You are correct, this has been mentioned before. And guess what, I have one on my website....

Here is the link...

http://creativefinance.com.au/pages/duediligence.asp

Cheers
Robert

PSSST (a touch of spam): You will be able to submit online for a Property Inspection Report in the next few days, once it's finished.

Property Inspection Reports @
http://www.creativefinance.com.au

The Sydney "Freestylers" Group Leader.
 
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Reply: 1.1.1.1.1.1.1.1.1
From: A Jones


Commonwealth Bank allow $10,000 to be paid off the principal on an interest only loan in any one year.

These payments can be made whenever you chose and in whatever amount provided the total of payments reducing the principal is under $10k/annum.
 
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Reply: 2
From: Gail H


Dear anonymous,

Your rents are low in relation to your prices, which means you'll hit a wall more quickly re serviceability. My advice is think outside Sydney and Melbourne. Capital growth is less dramatic, but still steady in most places and you can hold more property.

Gail
 
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Reply: 1.1.1.2
From: Simon St John


H Rolf

Tee hee.....that's true. I forgot about the use of the Monopoly!

Humm...perhaps most bank staff are more comfortable with Mayfair and Park Lane, hence the use in the advert.

No surprise many are told to pass go, do not collect $200, etc. etc.....!

'course, now they're saying there's better places to stash your money - rather a brave slogan I would have thought.

Simon
 
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