Will the banks still lend you money without a job

[vluu28]

Hi all,

I just need a bit of direction. I have been thinking about changing careers and came up with a question. When can you basically quit your JOB and go property investing FULL TIME AND the BANKS STILL LEND YOU MONEY FOR IPs?

I came up with the conclusion as long as you have certain amount of security, WONT the banks still LEND you against that security.

Say for example you have $300,000 CASH in the bank. Can't you use that as security to borrow more Investment Home Loans.

With that $300k you just use that as a buffer just in case smething goes wrong and keep borrowing for even more IPs, insuring everything for each IPs and so forth?

You might ask where are u going to get $300k.
Well fter u have a no of IPs and by refinancing each and putting it all into 1 bank account over time you should be able to accumalate some funds.

Please tell me if my thinking or this strategy is good or bad or flawed.

Youo input is much appreciated

vluu

 

[Rolf Latham]

Hiya

Its doable, BUT the first thing I would be doing is registering a business name and getting an ABN quick smart.

ta

rolf

 

[vluu28]

Rolf,

Thanks for your reply. I heard somewhere there is a stage where the banks wont need your income anymore to lend you money for an IP. Is that true?

Depending of course how much it is but i guess for residential u want to invest into a market thats affordable for everyone ..ie $200-300K.

Regards

vluu

 

[Rolf Latham]

Hiya

There comes a point where the size of the protfolio becomes self sustaining.

Having said that I have a number of clients with 20 + individual titled IPs, still, most lenders want all the paper.

Ta

rolf

 

[Simon]

You might be thinking of a LODOC loan where the bank doesn't need your income substantiated.

This is available at any stage. To best qualify you need an ABN and better still if it is two years old. I believe this is what Rolf was referring to.

Cheers,

 

[bundy1964]

I am going down the ABN path.

Low Doc's are my tool of choice for now

I want to change to a trust set up with a Pty Ltd trustee and would look at another 2 years in the wilderness after doing that.

Just have to be more careful that the numbers do work for you.

bundy

 

[gailh]

Okay, I'm lost.

What's the relevance of having an ABN?

Gail

 

[Simon]

LODOC loans were designed for self employed folks who found the documentation required to substantiate their income onerous.

Therefore in order to utilise a LODOC. It would help your application if you can provide an ABN and be able to show 2 years in that business. Of course there are exceptions.

Hope this answers your question.


Edited to try to be less misleading.

 

[Mikhaila]

Originally posted by Simon

Therefore in order to utilise a LODOC one must have a business (ABN) for two years - generally.
Hope this answers your question.

Simon,
This answer doesn’t help at all as it is misleading. To utilize LODOC you don’t have to have ABN. It is possible to be self-employed and don’t have ABN and there is nothing wrong with it.

 

[bundy1964]

With no ABN no. your customers are suposed to withhold tax at the highest marginal rate.

More details can be found here -

http://www.ato.com.au/businesses/content.asp?doc=/content/25316.htm

bundy

 

[Mikhaila]

Originally posted by bundy1964
With no ABN no. your customers are suposed to withhold tax at the highest marginal rate.

More details can be found here -

http://www.ato.com.au/businesses/content.asp?doc=/content/25316.htm

bundy

Oh, if only everything was black and white in this world. There is 80/20 rule in place as well and many, many others. I’ll be short – I am self-employed for the last 5-6 years, don’t have ABN and my customers don’t withhold tax at highest rate and everything is legal…

I’ve never heard that LODOC loans are for ABN holders only, hence to my view Simon’s statement is incorrect.

 

[Rolf Latham]

Hi Mikhaila

I have to side with Simon here (which makes a change snigger snigger), the vast majority of reasonably priced and featured Lo doc product requires you to have an ABN OR some other form of readily provabel business regitration.

The problem comes about when you "earn" $ 150 000 on your declaration, AND you are not registered for GST , this can send the alarm bells ringing.

Ta

rolf