Forums / Getting Technical / Finance / How to invest with little equity?

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  • Profile photo of Chief BandogChief Bandog
    Participant
    @chief-bandog
    Join Date: 2007
    Post Count: 19

    This post is to pick a range of people's brains about an issue a work mate has. I mentioned about this website and he asked if i could put his problem out there for some advice.
    He and his wife own a house worth about $450K when last valued in August last year he has borrowed 90%LVR ($405K) so has very little in equity but has caught the bug most of us have…the want to start investing in property. He spoke to the bank manager where he has his loan about what paths he should take to start investing, he was told to simply sit and wait 3-4 years to get some equity then think about investing. He and his wife earn somewhere in the $80K region (not exactly sure how much as i didnt want to pry)
    He spoke to me at work yesterday about what he could do to fast track this desire to investing. I mentioned that i too was a mere novice but there seems to be many on this site that have a wealth of information to share…… any suggestions are greatly appreciated, no matter how silly they may seem.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    There are a couple of lenders who offer 100% + loans for investors (upto 106%) with good income so that is an option.

    I guess one thing is that as well as the purchase price there is also the acqusition costs i..e stamp duty etc which add up and therefore he will need all of the extra 6% loan amount and maybe a little more depending on the State in which he buys.

    These loans are very post code restricted and mainly are used for the major cities and regions.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of brentbrent
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    @brent
    Join Date: 2001
    Post Count: 165

    Last property I bought, I got a private financier to help out (although you have to know someone, or know someone who knows someone).

    But there is such thing as being over exposed if your friend already has debts… ie – what if the property market goes south – and the total value of his debts is greater than the total value of his assets?

    Profile photo of Chief BandogChief Bandog
    Participant
    @chief-bandog
    Join Date: 2007
    Post Count: 19

    Im not too sure with his exact financial situation but i do know that his wife is a sole trader and has a high cash turnover and is able to provide extra money and so he is not too worried if the market goes south….

    Qlds007.. I have a feeling he is hoping to invest in the Brisbane/Gold Coast corridor.. but im not too sure about exact area as im only the messenger

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    If she is self employed then would need to show 3 Year Tax returns and her net profit would be used to assess her income.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of mortgageadvisormortgageadvisor
    Member
    @mortgageadvisor
    Join Date: 2007
    Post Count: 31

    We have a free loan that gives you 20% of the property value. It will free the LVR to 70%. No insurance. Saves you $500 per month. The product is exclusively ours and is attached to our lender. The lender will not allow any banks to attach to theirs.

    Eric            mob: 0413 594 675
    Equity Finance & Mortgagages Pty Ltd
    Mobile Mortgage Advisor

    Profile photo of L.A AussieL.A Aussie
    Member
    @l.a-aussie
    Join Date: 2006
    Post Count: 1,488

    Hey Richard;
    is that 18 posts, 18 business ads?

    Profile photo of Chief BandogChief Bandog
    Participant
    @chief-bandog
    Join Date: 2007
    Post Count: 19

    Hey this 'so called' mortgage advisor has laid more posts than a fencing contractor…(attempted humour)…
    What availability are low doc or no doc investment loans? I know due to her work they are able to get $10k-$20k every few weeks and would love to invest this…maybe on cheaper properties? its a thought but hoping for more imput…to those that have already contributed thank you for your advice

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Regretfully again another statement which isnt quiet true:

    We have a free loan that gives you 20% of the property value. It will free the LVR to 70%. No insurance.

    Rismark do insure they 2nd mortgage but the premium is a lot lower than would be normally

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of EtceteraEtcetera
    Member
    @etcetera
    Join Date: 2004
    Post Count: 24

    Hi Debden,

    Have a quick look at this link. By no means comprehensive, but it might help your friend with some ideas.

    https://www.propertyinvesting.com/strategies/creativefinancing

    I've used the vendor finance & delayed settlement a few times with good results.

    Cheers,

    E.

    Profile photo of kellylockkellylock
    Member
    @kellylock
    Join Date: 2007
    Post Count: 60

    I guess may (very simplistic) view is to …. SAVE.

    I would continue to pump money into my homeloan, save some in an investment account and begin small with some shares or something like that. Then, once the market has risen, and some extra is paid into the mortgage, your friend should have some equity there to play with, as well as some investments on the side.

    Kelly

    Profile photo of foundationfoundation
    Member
    @foundation
    Join Date: 2005
    Post Count: 1,153
    mortgageadvisor wrote:

    We have a free loan that gives you 20% of the property value. It will free the LVR to 70%. No insurance. Saves you $500 per month. The product is exclusively ours and is attached to our lender. The lender will not allow any banks to attach to theirs.

    What the heck is this supposed to mean? Surely you're not speaking of the shared equity loan Richard was touting here a while back? If so, you'd better go practice your spiel, and be very careful not to mislead people in the future. What am I talking about? Learn how your product works then check your maths. And logistics.

    Cheers, F. [cowboy2]

    Profile photo of Broome HendersonBroome Henderson
    Participant
    @broome-henderson
    Join Date: 2004
    Post Count: 28

    My advice debden is to invest in your education. Get your friend & yourself to spend more time on this site reading everything and anything you can absorb. The most important element in investing is to have the knowledge.
    All the best,

    Broome Henderson

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