Navra Cashbond?

Essentially the bank needs to be convinced (or it put in writing etc) that the LOC in fact will be used to purchase a cashbond, and the ability to service the LOC will be created by the purchasing of that cashbond. Steve tells us that you can in fact convince a bank to go with this.

This is what confuses me too. Can a bank be convinced on this? Because the annuity that is purchased with the LOC will not be able to cover repaying the amount used to purchase it in the first place because of the interest difference.

I suppose this is where the NAVRA company comes in and actually makes some guarrantees to the bank to enable you to get the LOC in the first place. Thats what the fees are for?
 
I think I may have raised this question before and doesn't necessarily relate to the Cashbond but rather your ability to use equity, a LOC and a Lo-Docs type product.

Ok. The purpose of all this is to increase my borrowing capacity. I may well have enough cashflow from tax deductions etc. but since many lenders ignore these anyway I have to show an improved 'serviceability' to cover the bank.

Also, I want to do this legally in any declarations I make.

Now I guess this all comes down to the wording of many Lo-Docs Applications, but what stops me simply doing the following:

1. Setup a LOC for say $150,000 that I could theoretically withdraw say $30,000pa over 5 years(IF I needed to).
2. Apply for a Lo-Doc loan stating I do indeed have access to an additional $30,000 'income'source. Which I do, IF and when required.
3. Obtain my loan based on the increased serviceability and off I go.

The point here is I may not even need to touch that LOC and incur any interest anyway.



??????
 
Originally posted by XBenX
i find it interesting that with all the comments in this thread no one has replied to this comment....

is my original post confusing ?

just wondering why there has been no comments

Hi Ben,

Yeah I'm confused . . . what exactly is the question :confused:

Regards,

Steve
 
Hi Terry and Alan,

The answer to both your set of questions is:

TerryW ANSWER:
Yes we seem able to do this for our clients . . .

Alan ANSWER:
What you propose sounds logical and fine by me . . . yet nobody seems able to get a bank to agree to it, so . . .

Regards,

Steve
 
Originally posted by Steve Navra


Alan ANSWER:
What you propose sounds logical and fine by me . . . yet nobody seems able to get a bank to agree to it, so . . .

Regards,

Steve

So when does the Navra Bank open?


:D :D
 
quote:
--------------------------------------------------------------------------------
Originally posted by XBenX

it does represent quite a large gap - but as long as your property is out performing the interest rate you are being charged (assuming neutral cashflow) by this amount or greater then your happy

--------------------------------------------------------------------------------

Steve,

the gap i was refering to was between the wholesale market rate (ie what challenger etc use to determine annuity yields) and the interest rate on your loan.

i was asking for comments on the quote above or essentially whether people feel this comment is true.

it was just a point of discussion I felt important to the cashbond strategy...ie its how I would consider whether to use a cashbond style strategy

Cheers,

X
 
Originally posted by XBenX
the gap i was refering to was between the wholesale market rate (ie what challenger etc use to determine annuity yields) and the interest rate on your loan.

The annuity rates quoted by various insurers changes on a weekly basis . . . The rate currently hovers around 4% depending on the term. As a rough guesstimate I use a 2.5% difference so:
$2,500 per $100,000 X number of years.

Now before Bill.L jumps all over me . . . :p

Yes this is an EXTRA cost, BUT I maintain that as long as the structure is used to acquire a half decent asset (PROPERTY) bought in the 'right'place at the 'right' time and definitely at the 'right' price . . . then the capital growth should be in excess of the cost.

NOTE The structure is flexible . . . so at times of high interest rates the term of the annuity can be varied to reduce the extra cost. (What you save in cost is offset by the length of time of the cashflow)

regards,

Steve
 
I believe this is a good strategy for investors like me that DON"T do it.

While people keep borrowing to the hilt so they can leap-frog, keep paying thousands to attend seminars that will make them rich from real estate, keep purchasing cashbonds so they can get a loan they can't really afford (as the last possible solution) assuming that the next few years will provide the same amount of growth, investors like myself are happy because:

1. Those are the ideal people to provide our existing portfolio with excellent growth.

2. They provide a great market for us to supply property to.

3. When the tide turns, inflation goes up along with interest rates, we are then happy to buy your properties when you can no longer afford the interest bill and the bank is about to foreclose, or it already has and is selling the property on your behalf. We are happy to buy off those desparate sellers (at rock bottom prices) and relieve them of their misery & suffering of having to deal with those abusive phone calls from the debt collectors, as good social citizens that we are.
K Packer said there is only one Allan Bond in a lifetime, fortunately for us we can get in many more property cycles in our lifetime.

So please keep borrowing as much as you can, don't forget to make the most from deposit bonds too,and when you run out of credit, borrow more and purchase cashbonds to "create" income you really don't have so can again borrow even more.

a very happy
bbg2003

:cool
 
Originally posted by bbg2003
I believe this is a good strategy for investors like me that DON"T do it.
Hello BBB 2003

Here is an open invitation for you to come and tell this to the many of us who have made in excess of $1,000,000 of net equity, (Within a reasonably short time frame I might add) using the structure.

It is very easy to 'knock' a methodology . . . especially when you do this anonomously.

So do come forward and show us what you have achieved and we will certainly show you ours. :)

Regards,

Steve
 
BBG 2003,

What type of an investor are you?

From your post, should we assume that you have knowledge of cashbonds and Steve's structure?

What would you suggest and investor who has in excess of $1M in equity, but limited cashflow do to continue their investment structure?

1. Sell to suck the cash out? Then purchase more investments, pay capital, gains, stamp duty etc etc. - Not real bright.

2. Sit tight and hope your rental returns increase? - Could take forever and if you have excellent capital growth properties, your rental return will never catch up to your growth.

OR 3. Set up a cash bond to utilise some of the equity to continue purchasing growth investments to let your money work for you.


MMMMMMMMMMMMM tough question. I'll go with option 3.

Research, Discipline and structure are vital in any investment portfolio.

Cheers
BUNDY:eek:
 
Steve i'm expressing my opinion based on my experiences, methodology does'nt need an identity.
I too made many $$$ in the last few years, and I know many who did many mils more than I. It's called a "bull market", and it's been one of the best ever.
---
good questions bundy:

I would not assume bank officers are stupid, yes some incompetent, some ignorant and some could'nt care less, but there are some damn good ones.

Do you forget that income generated from the IP is considered as "loan servicable income".

I have always been a "high equity low income" type investor and had no problems getting loans. I go in prepared with a very detailed plan allowing for many contingencies.

Here are some of my adventures:
In 1990 at age 22(recession time remember?) I went to the bank and said "I got 60K and want to buy this block of land for 160K will you lend me 100K?" I told them I had a taxable income of $300 per week. Guess how much it's worth now that it's being split into many residential lots?

In 1994 (still recession)I went again to the same bank and said "I want to buy this business, here are the numbers and here is my plan" I have 5K cash but I got this block of land that's worth a bit more now. On the same taxable income I got 160K loan (total purchase amount).
....In 2001 my taxable income was 25K, I went to the broker and said I got 100K and want to buy this place for 400K with no further collateral. Sure enough suncorp gave me a LOC for 300K.
In 2002 with 20K taxable income and 30K deposit I got a 115K LOC for an apartment in Brisbane CBD, no other collateral.
A few months ago I asked for 280K was offered 305K FDA based on 80% of valuation. My last tax assessment was 24K taxable income...

So I just don't get the point Bundy, why would I ever need to borrow and pay fees to create an income? Or create a "paper based" structure that creates income.
I do like the idea of annuities in ~30 yrs time, but for retirering.
So am I the only one this happens to? Are there any other out there?

I find it hard to believe that you could have 1million net equity and can't borrow money Bundy...

oh and did you miss that the tax investigation into K Packer revealed a taxable personal income of 25K...I bet he too has a hard time getting loans lol.

bbg2003
 
Originally posted by Homer J Simpson
very impressive bbg2003,

Hi BBG2003,

I agree . . . VERY impressive.
It is not HOW BBG got the loans, the point is that he DID get the loans.

The most important point of all remains that as long as one is able to get loans . . . then income structure (and the costs associated with the structure) is not necessary.

One would only employ this methadology (Cashbond) in situations where you CANNOT get a loan because of serviceability issues.

Regards,

Steve
 
H J Simpson, all I did is went to the banks, presented my plan & numbers and asked for a loan.
I do have many relatives that were probly know to the bank(s), but they did'nt guarantor or even know I was borrowing.
They really lent me the money based on the real estate valuations, none of my loans could've possibly been based on income as I stated my personal, and my companies don't make a profit either.
But I'm very thorough and detailed in my analysis. I give them everything they want and have much more ready. I know my stuff and answer any question they ask. I try to answer their questions b4 they ask. Hey, if I was lending you money I'd want to know you new your stuff, the bank is no where near as fussy as I'd be if I were lending my own funds.
My loan contract states that every year I must show them my financials, so I always made sure I had them by october and rang *them* up and said "I got my financials ready, when can I come and see you". After a few years I forgot and they never asked since. And they see them once I apply(quiet often) for more money anyway.
Keep in mind they still have a personal guarantee, which means if I default they can take away my other assets, and more than once I pointed out to them that I had much more to lose then the bank in the deal. Also my LVR is below 40% due to the last 2 yrs gains, so they are happy to keep lending.

One practical eg:
My land is being divided in ~580 sqm blocks. Why sell and pay fees & taxes? (you're right there Bundy). Nearby block of 450 sqm are selling for 200-220K. Do you think the bank won't lend me 150K for each block to build a house on that LVR?
land + house = 350K; loan=150K; interest=10K; net rent=11K; Tons of depreciation mean I(and companies) can make more money and have less taxable income. Capital growth just keeps powering on...It also keeps me on a very safe LVR and very managable loan payments and keeps banks happy.
Now this did'nt happen in a couple years, more like >15. But real estate is long term. We've had a big upturn and history tells us that it quietens down after it, so I can't assume that it will continue at this rate much longer and put myself in a position where I can't take advantage of bargains that will come when interest rates start going up. I'm happy for anyone to believe that they won't, I'l be there patiently waiting for you to give me your best price...

This is why I don't understand the argument of not being able to borrow with lots of equity. I'm sorry if I come on a little strong at times, but its a really weird concept to me.

PS you'll find some good tips in Dale's "Trust Magic"
 
Hi BBG,

Could you please expand on your borrowing techniques. You know something I don’t know about how banks lend money. You said bank(s) lend you based on real estate valuations. As I know, this is true but they also want to see your ability to service a loan, and that has little to do with the equity you have. I noticed you provided more that 20% deposit in all your examples. Do you always put such deposits on the properties? If yes, that explains why you can borrow as pretty much all properties are cash positive or neutral straight from the beginning.

Regards,
M.
 
Hiya

Its likely that lo doc loans could be used in such examples.

We also need to be careful when people say they "cant" borrow.

Often this means not being able to borrow at "reasonable" cost or LVR etc .

If you have equity you can get money, it really is that simple. You might not like the rates or LVRs but you can almost ALWAYS get it.

Ta

rolf
 
Hi Rolf,

You have alot of clients who want loans both in this forum, and outside of it. I dont want any names, but whats your/your client's experience with getting loans using annuities as income?

This is an important point of part of a structure that includes a cashbond, or any other type of annuity.

---------------------------------

BBG2002,

At that level of deposit, anyone could get a loan. Theres lots of other methods (such as Navra's or no-docs), that can get ya a loan too. People who want to reach their goals in a timely matter need to do things outside the regular, dont ya think?

-Regards

Dave
 
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