Opportunity

[grossreal]

hi all
I agree with tubs.
there is no problem using equity but I would only use my own.
if some one else want to us ethere equity thats fine but they use it for there own gain or possible loss.
I would think very carefully before use others equity who ever it belongs to

 

[Aaron Sice]

Freinds,

I would like to give you my situation and seek your input on finding the best solution to becoming a property developer.

My role was recently made redundant and my wife have two small children which places our houshold with no income. We own our own house having approx $900k in equity and cash of approx $26k (Equates to 4 months of living expenses). We also own an investment property with only $10k in equity as it was a recent purchase and positively geared, therefore not a burdon on cash flow.


My father is a pensioner who is willing to transfer ornership of his property to me so that i can use the equity to start a business in developing properties.
This would provide me with total equity of approx $1.3m

I also have a line of credit to approx $600k.

In my view, the following structure is the best vehicle for success:

1. Set up a company and register for GST.
2. Inorder to live during the development cycle, transfer $100k in a savings account which will then fund my living expenses.
3. The balance of my equity will be used to purchase a site
4. Need to gain further finance on the finished properties for the construction costs, plus interest payments probably as a construction loan?.
5. Construct duplexes in the right locations say one per year initially working towards two maximum.
6. Sell the investment to fund all expences during the process.

If you were in my situation, what would you recommend in terms of approach, the right finance structure vehicle and company v PAYG?

I understand that I would be living off my capital in the hope that my return will exceed total costs,but unfortunately cannot see any other option.

I recommend you learn about Portfolio Margining.

with only $30k invested in October 07, a good friend of mine (we work together on share "stuff") made against QQQQ (Nasdaq Powertrust)

$8k for October
$11k for November
$7.5k for December

It's about creating passive income. all positions are fully hedged, and you can buy up to 2 years of hedging.

The way it works?

You buy 10 puts (=1000 shares) at strike. the CBOE then GIVE you (well, with interest) the stock those puts cover.

You generate income every month by writing calls against that stock for as long as you bought the put for.

with 600k to invest from your line of credit (no different to what we are doing), i would imagine you could pay the money back AND still have a tidy profit every month.

it's like buying insurance for a car, the insurance company then giving you the car for as long as the insurance is valid then you renting the car out for 2-6% per month of the car's value.

 

[clubbie]

Blue card...just wondering how did he go with his margining in January 08?

Clubbie