Cant get Bank Finance???

Im focusing on dual occupancy in the form of auxillary units now with $19k net pa once completed. Finance is getting easier and easier.

 

This is what I was thinking. There has been hysterical posts about this and that but it is realistic for many of us to simply save a larger deposit. No need for risky moves to try to increase borrowing power. It has been claimed that once borrowing capacity is reached it's game over. Not correct. Sure a bank may not loan at 80% LVR but how about 70% or 60%? Buying at a lower LVR is great for cashflow too.

 

Assuming the 30% or 40% deposit is coming in the form of cash, yes.... but if its coming in the form of an equity loan, whether you borrow 30% + costs from equity and borrow the other 70% , or 40% + costs from equity and borrow the other 60% , you are still borrowing 100% + costs.

If you are fortunate enough to have that sort of cash available, and are still carrying PPOR debt, far better to use the 30%-40% + costs to pay that down, and draw the equity out as deductible investment debt.

 

I am talking cash. Not borrowed funds.

I do have that sort of cash available and I don't have any PPoR debt.

 

How long do you guys see the banks raising IO loans for? Just locked in 3 out of my 4 loans right before the gates shut, locked for 3 years at 4.15, happy with that. The one i left variable went from 4.15-5.09 overnight. IO expires 2022. Thank you CBA

 

Nice. We also paid off our PPoR and vowed then to never touch the equity in our home no matter what. For us, not everything is about scraping every last dollar of equity to invest. We are more than happy to use our cash for investments. We are fortunate to be in this position because we made many good decisions years before that. It is what it is. Unfortunately or fortunately, decisions/actions/investments people make early on will often greatly affect their investment journeys/options as it progresses later on.

That's why I so strongly hold the belief and advocate to newbies (though I'm less bothered to do so these days) who are at the beginning of their investment journeys to get it 'as right as possible' from the beginning by education, networking with the right people and developing the right mindset. Because once you make a mess of loans and structures, buying wrong types of stock, wrong locations, wrong strategies suited to their goals etc etc the ramifications simply won't go away and it will often greatly restrict how they can invest in the future which then will ultimately affect what goals can be achieved and what goals can't. It all has a flow on effect which largely can't be undone.

 

That ^^^^^ is sage advice

 

Cash is receiving terrible returns In the bank so more and more people are open to funding small developments. Get a few together and you could go a duplex development and share in the proceeds or offer them a percent rate on their cash contribution. Use these profits to pay down debt til lenders relax their policies.

 

Im in discussions with a well known Perth builder to do exactly what youu have outlined.

 

as long as those funding know what they are doing.

Good if the development stacks up and market conditions are good and the developer has a track record of making money, otherwise it could go pearshaped

 

Be careful. That sounds an awful lot like an unlicensed investment scheme

 

Or a Joint Venture? What's the difference?

I know @Westminster and @Blacky have undertaken a JV they have named Blackminster.

Mindarie WA: Blackminster Joint Venture 4 apartments

It's not an unlicensed investment scheme.

 

Giving funds to someone else to invest with on your behalf is much different to a JV.

pinkboy

 

We are trying to move towards having enough cash and on the last two joined forces with my Mum. It adds a bit of stress however she has been investing (more passively than us) for a long time so understands the risks.

 

I too like the idea of being cashed up.

If servicing is an issue you have enough reserves to continue investing but not necessarily hold, keep generating capital