Jan Somers is she realistic?

[WebBoard]

From: Rod Myers


Reading Jans books I felt that her investment 'recipes" were the way to go. But i find they dont work,, BANKS WONT LEND WITH DSRs over 45%. she says that they will if its under 100% got the name of that bank? Advocates keeping your loan "interest only" for more or less forever or until you sell. All lenders from my experience restrict "interest only loans to 3 years" well maybe some 5 years but cant find any lending longer.
I have $240,000 equity minus $60000 for 1st IP, then 50,000 for 2nd IP in Sept. According to Jan I should be able to buy another 2 IPs using her formulas, LVRs DSRs
etc. But in reality everyone says NO that includes Rolf.

Anyone have the same problems or doubts?

 

[Les]

Reply: 1
From: Les .



G'day Rod,

In Jan's new book she uses a formula that ends up with a figure of 100 (as you say) - but this is a different formula to that which lenders use. I have loaned her new book to a friend, so can't go further than that at this time.

Just keep in mind that most lenders use different formulas for DSR (but similar to each other). In earlier books, Jan used a similar formula too.

Just don't use Jan's new "100" figure as the Bank's DSR figure - they are not the same.

Re Fixed Rate loans, one of the recent posts (front page of forum) today quoted even 10 and 20 year loans were becoming available - sorry, can't give you a title as I've already "Marked as Read" today's posts.

If Rolf has already done his thing for you, and can't help, then you might have just "hit the wall" temporarily.

Jan also comments on the "watching grass grow" aspect of IP ownership, especially in the early days. And, yes, I believe her to be totally realistic in her teachings.

Regards


Les


- "Eschew Obfuscation" - ;^)

 

[Michael Yardney]

Reply: 2
From: Michael Yardney


Rod
While I don't agree with everything Jan says, I probably have some authority to comment as I've probably been investing longer than she has, been in the property industry as long as she has and have a very substantial property portfolio.
I think she is the most balanced and sensible of all the writer /guru's in Australia.
She was amongst the first to show ordinary Australians how to invest in property and she has updated her ideas and her books to keep pace with the changing times. She has a long successful track record. Something few other "gurus" can claim.
You will not "go broke" following her principles, but you could easily do so following some of the recommendations of some of the cowboys around today.
Sure the banks won't give you an interest only loan with a term of greater than 3 or 5 years, but that's OK. At the end of the term, refinance the loan and you can extend the term another 3 or 5 years. Further, you will probably borrow more against the extra equity in your property and buy another one.
As for DSR, different banks have different policies and I'm sure Rolf knows more than I do about it. I guess it depends a little upon your bank and your overall financial position and also where your properties are located. I'm not having difficulty achieving what you say can't be done and I will name the bank - NAB
Maybe you're trying to grow too big too quickly. Get a track record with your lender, show them that your budgets and projections are right. Show them that you understand property values and they will begin to respect you. I think there is a lot to be said for using only one bank and building a good relationship with them.
Stick with Jan's concepts Rod....you could do a lot worse.
Michael Yardney
Metropole Properties

 

[Rolf Latham]

Reply: 3
From: Rolf Latham


Hi Rod

You could buy an annuity with part of the equity AKA Steve Navra method and convert some of the equity to cashflow?

ta

Rolf

 

[WebBoard]

Reply: 4
From: Simon St John


Rod

I have been looking at the PIA Software and considering it for myself.

If you download the manual you can see examples of how the software assists in calculating Personal Investment Capacity and Affordability Index (AI). Whilst this differs between banks, the software takes a conservative angle on the AI.

I have found this interesting myself; perhaps this might help?

Simon