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"