Nathan Birch defaulting on IP mortgages...

Discussion in 'Property Market Economics' started by hash_investor, 5th Jan, 2018.

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  1. sash

    sash Well-Known Member

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    Hmmm....he bought it for 825k......mortgage of 550k....why would he not have sold it or paid the interest?

    There is about 250-260k net of costs?

    Interesting....me thinks this story is morph even more.....if that was the sort of stuff he was buying and GC is a growth market now...what does the remaining portfolio going to look like?
     
  2. HGM

    HGM Well-Known Member

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    Gloating is a perfect equivalent...
     
  3. sash

    sash Well-Known Member

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    A due diligence check ...do you have any association for BInvested or Nathan?

    I am not gloating...but this is a property forum..if this has happened to Nathan ...I can think of a couple others this can happen to....
     
  4. HGM

    HGM Well-Known Member

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    ROFL! My comment was merely that "gloating" means exactly the same as "Schadenfreude"... ;)
     
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  5. kierank

    kierank Well-Known Member

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    If NB came to me and submitted a good business case, I would have lent him the $2,500 or $5,000 or ...

    He wouldn’t have been the first person I have helped when they got themselves into a bit of cashflow bother and the wolves were knocking on the door.

    Better done this way and keep it out of the press, keep the lawyers at bay, keep the banks at bay, ...

    Not saying NB is in this situation though as I don’t know.
     
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  6. melbournian

    melbournian Well-Known Member

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    he could have just sold his Bentley? unless that is financed?
     
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  7. Pete Arendt

    Pete Arendt Well-Known Member

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    According to ASIC who regulate companies such as HLG One Holdings Pty Ltd:

    Insolvency - ASIC

     
  8. Humphrey

    Humphrey Active Member

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    No it doesn't. Quite different meanings.
     
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  9. euro73

    euro73 Well-Known Member Business Member

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    Yeah, could well be... but this particular loan was a long term IO loan and he couldn't keep up repayments. It wasnt a P&I loan. And you are right that it would have taken months of arrears and lender warnings before it went this far. That tells a very worrying tale in itself, that he has quite likely been struggling with repayments on this mortgage for quite some time. Having studied his numbers in the past, I have always felt his model had gaping holes and extreme fragility. It was very very fragile- susceptible to only very minor changes of the wind. It operates on very very thin margins and BS valuations, from what I can see . Its just very very fragile - simple as that. No safety net whatsoever other than selling up... and that safety net is even questionable because he holds so much crappy stock in crappy locations that have LVR restrictions. And he will find much of it difficult to re-sell...even to his own client base who wont have any borrowing power left either.

    I think all we are seeing here is evidence of a fragile business model that assumed easy credit was available forever. It relied on high revaluations so that there was access to equity release , and that equity needed to be available on long term IO arrangements... when any or all of those components hit a speed hump, the ponzi - excuse me , the portfolio came under extreme pressure. That would be my guess anyway...

    This type of approach to resi property investment is getting a lesson in post APRA economics. It might be the first high profile lesson, but its a lesson Im sure many others are starting to experience and it's damn sure a lesson everyone should be learning from....

    Its a very simple lesson. Pre APRA is different to post APRA. Genuine cash flow management and debt reduction is now king. Net worth accumulation isnt going to save you from banks coming after you when you cant pay your bills... so get at least 1 or 2 cash cows into your portfolio so they can

    1. help you make some real inroads into paying down non deductible debt
    2. help improve your ability to meet your P&I repayments in future years
    3. eventually improve your borrowing power

    And the other lesson is this; a cash cow isnt 2-2.5K CF+ , as Nathan's seemed to be. It needs to be 5, 6,7,8K CF+.
     
    Last edited: 5th Jan, 2018
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  10. sash

    sash Well-Known Member

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    Privet comrade..Euro73! :D

    For once I largely agree......;)

     
  11. twobobsworth

    twobobsworth Well-Known Member

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    T
    There is one in blacktown for sale.....
     
  12. kierank

    kierank Well-Known Member

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    I would have just raided my grandkids’ piggy bank :D
     
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  13. euro73

    euro73 Well-Known Member Business Member

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    Eventually common sense had to prevail, right? :)
     
  14. sash

    sash Well-Known Member

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    I have no common sense...I just say yell "Banzai" and charge.....:D....that is how got to my position ...pure fluke...

    Your wife is going to hit you with a rolling pin.....hopefully it has a cap and not the one you have to break! Oh the shame.....:oops:
     
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  15. kierank

    kierank Well-Known Member

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    For such a small amount, neither the wife nor the grandkids would notice that it had been raided :)
     
  16. GreenMedallion

    GreenMedallion Member

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    This is what I don't get. For what would seem to be a small sum of money the negative media consequences for his business and personal brand are huge.
     
  17. sash

    sash Well-Known Member

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    Yep...thus my concern not all is well in Denmark....
     
  18. Karina

    Karina Well-Known Member

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    Perhaps the lender called in the loan and didn't offer the chance to "catch up on late repayments". It can't be easy coming up with over 1/2 million dollars in 30 days in this new lending environment.
     
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  19. HGM

    HGM Well-Known Member

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    We only know of this case because it went to court. There might have been others settled on the quiet. Maybe the Bentley was already spoken for?
     
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  20. melbournian

    melbournian Well-Known Member

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    if you drive a Bentley should be able to foot those payments irrespective

    this reminds me of guy I know in university days who got a Porsche on loan after couple of months off finding it difficult to make the car repayments, was delivering takeaways and pizzas.