All Topics / The Treasure Chest / Will a LOC allow me to cease work for 6 months?

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of Tasman PropertyTasman Property
    Participant
    @tasman-property
    Join Date: 2003
    Post Count: 126

    This question is one of the biggest issues stopping me moving forwards at the moment, so any help will be hugely appreciated…

    I would really like to concentrate 100% on property for 6-12 months, during which time I would not work [:D]. However I realise that getting finance approved essentially requires a steady income i.e. job. Is a way around this to get some sort of ‘pre-approval’ and/or set up a LOC based on my current salary income now, then simply ‘tap into’ this as needed over the next 6-12 months to buy property. [?]

    If this is possible, how? Otherwise can anyone suggest a similar idea such as working part time or another way to do this… I have equity to tap into and good income, so loan approval is not the issue – simply what would happen if I were not working.

    Thanks in advance [:)]

    John

    Profile photo of G-MAN007G-MAN007
    Member
    @g-man007
    Join Date: 2003
    Post Count: 37

    Ok, this is a question i want some ideas on too. My account demonstrated to me how I could setup a trust structure were i could sell one property and pay my self a wage from the capital gain. In doing this i would require a separate trust/company that would invoice the first trust each week/month. As long as company 2 has a ligitimate commercial name eg: renovation kings or property sourcing Australia it will be deemed a ligitimate income. speak to your accountant as I dont know all the ins and outs.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    John

    You could get a pre-approval, but these only last a short time. usually max 3 months, and then they will want updated details such as payslips etc.

    If you get a LOC, you could use that to live on, and for deposits. You could possibly use low doc loans, but some lenders require you to be self employed for a min 2 years. There are some that don’t, but rates are a bit higher – around 6.95%. Get an ABN now!

    I know the feeling, you are sort of stuck aren’t you. Don’t ahve time to make money! What I did was to get as many wraps as I could which gave me income to live on when I quit work to set up as a broker.

    G-man007
    Sounds good in theory, but if they are your businesses or companies or trusts, banks will probably just deem you to be self employed. It may work, I’ll have to think about this one.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of The DIY Dog WashThe DIY Dog Wash
    Member
    @the-diy-dog-wash
    Join Date: 2003
    Post Count: 696

    John

    Sorry if this sounds a bit sarcastic but it is late and I am tired[:O]

    Why can’t you work and do your investing as well, I just don’t see why you would cut off your income stream and run up debt on non deductable living expenses. Also Terry what are you saying, no bank will lend him money without a job even with pre approval. I know you know more about lending than me but come on man[?]

    John, it sounds like pie in the sky, a lovely thought but be realistic 6-12 months off is not to concentrate on investing it is just so you don’t have to work for a while, I suggest you get married and have a baby that worked for me[;)][:D][:D]

    Keep your job set your plan for retirement, build your wealth now and retire rich and early. Enjoy the money and time then.

    Cheers
    Leigh K[:D]

    Read, learn, grow but most of all just do it.

    Profile photo of JoffJoff
    Member
    @joff
    Join Date: 2003
    Post Count: 50

    Sheesh people,
    Get a grip.The only sense in all that was from theENJOlady.They are the sort of get rich quick attitudes that send people scurrying off to expensive seminars hoping to do it all overnight.
    My strategy is to build assets and reduce debt simitaneuosly and retire early .
    (and i am bang on target at the moment.)
    Tassie, your plan while technicaly feasible is so full of potential traps i am suprised there hasn’t been more feed back here.
    Joff

    Profile photo of Tasman PropertyTasman Property
    Participant
    @tasman-property
    Join Date: 2003
    Post Count: 126

    Thanks everyone I appreciate the comments, especially Terry (your answer was exactly the information I was after – basically I make it 3 months not 6 and it could work – but what happens after 3 months when I resume employment?)

    A little bit more about my situation may help. I live in Sydney yet invest in Tassie. This is quite difficult as you can imagine, yet I am originally from Tas and that is the area I know best. I am starting to look at regional NSW areas also, but right now Tassie is what I know and where my IPs are. Living and working in Sydney CBD makes it too hard to buy +ve CF property here.

    Regarding chucking in my job. ENJOlady is correct in that taking 6 months off is so I don’t have to work in a JOB for a while, but its also to concentrate on investing. I have to ask why can’t I take time off AND do my investing as well? It sounds to me as though you regard investing as work?

    I have been with the same company in the same industry for 6 years. There is no question that I will leave this job and take 6 months off – I have already decided, and can afford to – and of course I will notice the reduced income. Sorry if this upsets a few people – it hasnt been an easy decision to make, I can assure you.

    The point is that I know that I am not going to sit on my hands, or a beach, for 6 months doing nothing, and that naturally I would like to focus on property, so the question relates to HOW can I do this whilst not employed. For those at the PIM weekend you will know that this is also Steve’s way of thinking. I am a little surprised at the ‘pie in the sky’ and ‘get rich quick attitude’ remarks… maybe you think it is (and I do realise that what I am asking is like the Holy Grail of property investing to many people) but I believe it is feasible.

    Joff, would you mind expanding on your last line regarding the plan being feasible yet full of traps please? Its the traps that I am trying to identify in order to minimise risk.

    The answer I seek may be to move to Tassie, get part time work (2-3 days p.w.) for loan approval reasons, and spend the rest of the week looking at property, rather than simply not working. That’s what I am trying to work out.

    Profile photo of scottscott
    Member
    @scott
    Join Date: 2003
    Post Count: 110

    Hi guys,
    The advice that I got (I’m not willing to disclose where, but he may have spoken at Steves seminar), was to quit work! My current paysilps aned letter should be good for 6 MONTHS, BY THAT TIME i SHOULD HAVE DONE ENOUGH TO SUPPORT ANY FURTHER LOAN APPS!(sorry hit caps lock somewhere there) If you can guess who you will understand where he is coming from. my decision was to stay employed (for the time being![:D])
    If you want to quit your job do it! BUT be prepared for a long hard slog, before youy are actually financially independant(It won’t be easy).
    I do believe any of us could do this it’s just a matter of having the knowledge and confidence to do so![;)]
    For more info on what it takes for this approach go to http://www.guerillarealestate.com.au. There are heaps of good ideas for this type of strategy there!

    Hope this helps,
    Scott S

    “Aim for the stars and you’ll shoot the top of the telegraph pole. Aim for the top of the telegraph pole and you’ll shoot yourself in the foot!”
    -anon

    Profile photo of JoffJoff
    Member
    @joff
    Join Date: 2003
    Post Count: 50

    Tassie investor,
    having read your last post I can see you have given this a good deal of thought.So that means I change my attitude a little.
    The traps i was referring to are the notion of living off equity and forgetting the old maxum, that there is no such thing as a free lunch.
    You dont mention your age, and that obviously effects any future planning issues.
    I have been investing in property for about 6 years now and while i am happy to say i have done pretty well out of it, I really believe my success has come from prudent,well researched,and patient planning.I have purchased 1 property per year and each one has been very good to me.My portfolio is returning me an average of 9.5% plus capital gains, which for 2 of them has been fantastic.
    Investing is like any buisness,in that there is a huge learning curve and success does not come overnight.Dont get distracted by shortcuts and “clever ideas”, just be smart and invest wisely.
    This gets back to the statement of the “get rich quick” thing.That is precisely why all these gurus who charge for the knowledge are doing so well. Nobody wants to do the hard yards, they want instant wealth.
    Well, it ain’t going to happen.Believe me I tried and I wasted a lot of time.
    Anyway Tassie, sorry for jumping down your throat but i guess i saw a bit of the way i started and had to put my bit in.
    Joff

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I know how you feel.

    If you are going to do it, plan carefully. Some banks require payslips no more than 2 months old, a letter would help (including wage, time there, stating you are full time and not on any probabtion etc). You will be getting your group certificate soon,so that should be ok. But when you fill in the application you will have to declare if you are working or not. Somebanks actually ring your employer to check.

    After 6 months when you go back to work will you be going back to the same company (not if it goes good I guess). If it is the same industry, may be ok with a different employer, but if you change industry if may be harder to get a loan for 3 months or so. It would be good if you could take some sort of leave (unpaid leave?).

    Good luck and let us know how you go.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

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