vluu27Member@vluu27Join Date: 2003Post Count: 59
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 a 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 something 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 after 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
vluuMJKMember@mjkJoin Date: 2003Post Count: 157
Having a clear plan is really important.
You do need to set a figure that your chasing. The point is it can be achieved in many ways.
Say for example you want a passive income of say 60K. You may achiieve it by;
Paying off a 600K comercial property returning 10%
How do you pay it off? With income generated and capital gains from other properties.
Pay of 850k worth of residential property earning 7% in the same way.
Owning the motgages on 3,000,000 worth of positive cash flow property that retuns a net profit of 2%.
Any combination of the above.
Note I have been very simplistic…
Banks require more than just equity. They are also looking for income when they approve loans. So you can only borrow, if you leave your job, if you can show another income.
I’m very interested in others ideas re strategies.
MJKvluu27Member@vluu27Join Date: 2003Post Count: 59
MMM not as simple as it sounds. But i’m really interested what strategies are out there or some people are implementing.
I also heard once all you have is a +ve geared property portfolio, this also helps.
vluuTerrywParticipant@terrywJoin Date: 2001Post Count: 16,190
It is not hard to get aloan without a job, but it is hard to get a GOOD loan! I would get an ABN number now, so that you could get a good low doc loan. Some of these need 2 years self employment history, which they prove by the date of ABN registration.
You could use the $300,000 as security if it was a term deposit. But why? You could just use this a deposits and borrow the rest.
The real question is how comfy you would like to be, I have friends that are comfy on 30K pa & some on 500K +.
When you feel you are ready, & only then will that happen.
Never mistake activity for progress.
You never know what is enough unless you know what is more than enough. (Wm.Blake) [8D]
hope this helps
” just be “kaydeeMember@kaydeeJoin Date: 2003Post Count: 29
I am no expert because I am just in the process but one thing I have learned is that you cannot afford to give up your job until you have at least 3 months worth of expenses in the bank and your positive cashflow is greater than your expenses each month. How you acheive that is really up to you. Have you read and played Rob Kiyosaki’s “Positive Cashflow Games” This will give you a great understanding.
Good Luck!dannadsMember@dannadsJoin Date: 2003Post Count: 37
I have heard alot about Rob Kiyosakis games. I take it you’ve played one or two? Did you learn alot about investing from playing them? He talked about his games alot in the book , “Rich Dad, Poor Dad” but I thought it may have just been a free plug.maximusMember@maximusJoin Date: 2003Post Count: 189
Hi all. Good question. MJKMJK, using your examlpe of $60,000 passive income, if someone had paid off $850,000 worth of property and was living off the rent, would the bank/s still lend out more money for further investing?? I thought that they may have considered you too rent reliant.
MartyrosspjMember@rosspjJoin Date: 2003Post Count: 6
It depends on your relationship with your lender. If you have a good history with a lender, and understands your situation, they wont consider passive income only as too rent reliant. I have recently walked away from my business to concentrate only on investing,as I have a comfortable passive income from I.P’s, but checked with the 2 banks I deal with to see their opinion on purely passive income. Both said no problem, that they look at more than just capacity to service loans. But I would suggest that you build a good working arrangement with a lender or 2, before leaving your day job.Gatbe7Member@gatbe7Join Date: 2003Post Count: 42
The issue may be that the banks are lending to an individual. If you are looking at doing property investment full time would there be benefits in establishing a (limited) company? You then have a company bank account that holds this $300,000, plus all the properties you own. Obviously there will be the paper work and legal issues to sort out with this arrangement. Anyone have a comment on this structure?
[8D]Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
I agree with Terry on this one. If you are considering investing in property as a full time business apply for an ABN now. I have several clients who were income poor although asset rich before they started in investing in positive cash flow properties and wrapping.
There is no such thing as a problem.
Just a solution waiting to be foundMJKMember@mjkJoin Date: 2003Post Count: 157
Once youve set up your passive income stay at work another year or two and buy several more properties then leave work. Once youve got the loan its yours. What do you think ?
Also its areally good point about having a good relationship with your banker/broker. Buy the time someone has achieved passive income through property they should have a good relationship with at least one banker/broker.
MJKPhillipeMember@phillipeJoin Date: 2003Post Count: 7
Random question here, I have just sold an apartment in Sydney and have about $80k in the bank, I am about to register a limited company as this seems to be by everyones opinion the best way forward but is this enough capital to start a property investing business or am I just a kid dreaming of the bigtime?ADParticipant@adJoin Date: 2002Post Count: 636
How did you come to the idea that a limited company was the best option ?
As to the amount of money that is a great way to start. As to where it will take you …that will depend on your gumption and drive.
“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”maximusMember@maximusJoin Date: 2003Post Count: 189
Thanks MJK (apologies to vluu27, didn’t mean to over-ride your question, just ad to it). I suppose there are many ways around getting loans, just have to get to the position of living off passive income first.
MartyPhillipeMember@phillipeJoin Date: 2003Post Count: 7
Hey Andrew, thanks for responding. I came to the conclusion that a limited company would be the best way forward really just from listening to people that have done well in IP as well as a few books, I have a reltively high income and thought that it would be the smartest move for tax purposes as well. I am 26, completely ignorant but having just sold the first IP in Sydney which I did when I was 22, I am completely open to the suggestions and ideas of those who know better. Any help would be graciously accepted. PhillipeADParticipant@adJoin Date: 2002Post Count: 636
Buy Steve’s Wealth Guardian from the Resources page and it will teach you heaps about the best structure. That is a great place to start.
It is good to have an end to journey toward, but it is the journey that matters in the end.TeacherK6Member@teacherk6Join Date: 2003Post Count: 164
Hey there Vluu
No matter how good you think u are at maintaining your debt, the main banks seem to still want blood out of a stone…
Unless you hav a full time job, or a business number more then 2 years old its very hard, no matter what ur circumstances are… i did exactly the same thing 3 months ago, i re financed all my places, had about $240K of play money to use, and just thought i could stroll into a bank and say, here is 20 % deposit to cover ur bums, lend me the rest…. (i had this “crazy” idea of buying 5-8 more places)
still needed group certificates, still needed work history, and still needed work, even though my loan repayments were about 50 % of my gross rental income… i got declined….
i had to buy the places outrite.. which i didnt want to do…
2 years ago i bought a unit in Worrawong, past Wollongong, cost $71 K, rented at $125 pw, and the repayments on 80 % loan were about $65 pw interest only… that was not enough for the lender… i STILL needed a job…
doesnt make sense, and its not fair sometimes… (70% of my work is casual by choice – banks still wont touch me lol)
My suggestion is, as mentioned by other ppl, get an ABN asap, get as much property as you can while ur still working and then decide about quitting working… its funny how after u get a 25 or 30 year loan u never get bothered again about work or even if ur in the same job….
All the best!
Curious TerryW , Quote :[i]Some of these need 2 years self employment history, which they prove by the date of ABN registration.
If you have registered an ABN & have had it for 2 years or more, will the banks still look at it if you havn’t done any trading for the whole period from rego ?
Food for thought.
I know of a gentlemen who stopped working @ 29 yo, owns 3IP’s & lives in a caravan park along a beautiful coast line. He also has a loving partner & 2 kids ( 1 boy 1 girl ). There sole income is the 3IP’s ( ~ $600 less taxes ), I am yet to see a happier family group.
He borrowed for his first IP @ 19, now @ 36 he still has no intentions of being employed, he is a qualified non – practising solicitor & his wife is a naturapath. There 9yo boy will excel in surfing & 7yo daughter will excel in dancing.
I did however ask ” what if you get asked by the owner to leave the caravan park one day “, his reply was ” if we can be happy here we can be happy anywheres “.
My thoughts are:
Basically, life is so simple.
Happiness is made to be shared.
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