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Bridging Loans / Angel Investors

Discussion in 'Property Finance' started by Michael V, 7th Oct, 2016.

  1. Michael V

    Michael V Well-Known Member

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    Hey everyone,

    So I went to the 'free' Rich Dad Property seminar here in Adelaide this week out of curiosity - no I did not purchase the discounted 'less than half price' $1,250 3 day workshop. The presenter was Stephen Wolf Sweet, fairly nice guy who was very persistent on the upsell.

    However I am really interested in the idea of "no money down" or "other peoples money" to get into the investment game. One of the things he talked about was Angel Investors and Bridging Loans. Now this is where I would like to know more.

    Has anyone here used Angel Investors or Bridging loans to purchase properties to either keep or fix and flip? Would like to just get an overall view of this type of investing to see if it is even worth doing here in Australia.

    Thanks :)
     
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  2. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    An "angel investor" could be a parent, family member or in some cases a friend who could offer up their property as security and act as a guarantor OR gift you the cash to get started. Do plenty of these types of deals.

    A "bridging loan" in Australia is used to purchase another property whilst you are selling the one you live in so not sure if the presenter has a different definition of this?

    bridging loan
    noun
    BRITISH
    plural noun: bridging loans
    1. a sum of money lent by a bank to cover an interval between two transactions, typically the buying of one house and the selling of another.
     
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  3. Michael V

    Michael V Well-Known Member

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    Thanks Colin,

    I was aware of the possibility to have a family member or friend as a guarantor with the security of their property as well. This is definitely something I am considering to do.

    As for the bridging loan, the presenter had said that it could be used to secure a investment propery, rennovate and then sell it to pay off the loan and make good $$$ profit. In the example he used, someone bought a house for $500k on a bridging loan, did $30k renovations and sold it for $600k. Leaving them $70k profit.

    Now he says $70k profit, but what about the taxes involved??
     
  4. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Im assuming he is US based and dont think the property taxes are as high there. I believe they dont pay stamp duty plus you need to factor in holding costs. 70k - costs for the risk you are taking isnt worth it IMO.
     
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  5. Michael V

    Michael V Well-Known Member

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    Exactly what I thought... The guy himself was from the UK but mainly did presentations in UK / US by the sounds of things.

    I think I will avoid bridging loans for investment opportunities until I can better understand that component when I am more experienced haha.

    I might have to work on my Angel Investors a bit more ;) I know my parents would be happy to do this for me as well so that would be good.
     
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  6. D.T.

    D.T. Adelaide Property Manager Business Member

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    A lot of the concepts he talks about are common in america and uncommon / unheard of / not allowed here.
     
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  7. Michael V

    Michael V Well-Known Member

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    This is exactly what I was wondering in the back of my mind... I feel bad for the ~8 people that signed up! I almost did but held back as I didn't want to rush into something for a 'today only half price special' pressure environment.
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Maybe you need to unlearn things
    After these sorts of seminars.
     
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  9. Michael V

    Michael V Well-Known Member

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    Haha I've only been to just this seminar out of curiosity. I take everything with a pinch of salt. :)
     
  10. albanga

    albanga Well-Known Member

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    The Rich Dad Poor Dad seminars IMO attracts the absolute worst kind of spruikers. I think it speaks volumes about Kyiosaki himself TBH. People I respect would never share the stage with these types of people flogging off things like this. Y? Well it's just garbage!
    In your simple example it fails to take Into consideration entry costs (stamps and closing), interest costs on the loan and ofcourse interest costs to the angel investor, exit costs which include advertising, agents fees, staging. Then what little profit that may have been made, what about the tax consideration of that?

    Let's not forget sorry any legal requirements between you and the angel investor.

    I went to Kyiosaki a couple of years ago and wanted to send him an invoice for my wasted time. The second someone started trying to flog me "domain" real estate I was gone. And no not real estate from the domain website, domain as in an Internet name.
     
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  11. Michael V

    Michael V Well-Known Member

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    You are exactly right.. I already have been learning about all the other costs and taxes for a while now so to me it was like something major was missing and people are being misinformed in mass because they are a "warm market" according to the presenter.... People who are fans and want to be rich!
     
  12. PS88

    PS88 New Member

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    Hey guys first post ever here ! I actually did the 3 day course out of curiosity with a mate, never made it to the third day didn't feel like getting hammered with more marketing of there 45k advanced training course haha! But I don't regret like ya said take like a pinch of salt some stuff was really good and some was relevant but it's got me thinking with an open mind

    They mainly wanted you to invest uk and nz 1. no stamp duty 2 no capital gains through corporations etc and the property yields are incredibly higher [i had to double check this my self ] mainly through HMOs the way they do it is so well researched and getting around hurdles but I quickly worked out couple hrs on a comp researching and finding a good buyers agent and solicitor in either country would be way easier and cheaper amazingly I over heard so many ppl excited to sign up and pay this ridiculous money
    But Angel investing isn't something is considered but after settling on my 2nd property Friday its likely my next move bring it will get my first development rolling considerably faster and cheaper and avoiding lmis etc
     
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  13. Darren

    Darren Well-Known Member

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    @josh123
    Matt might want to check this thread out.
     
  14. albanga

    albanga Well-Known Member

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    Thanks for the post @PS88. It's never a good sign when you already pay for something and during that they upsell their next level product.

    Your spot on though and even the worst of courses or seminars tend to open the mind and get you motivated.

    Glad you got some stuff out of it and look forward to hearing your progress.