Forums / Getting Technical / Finance / Borrowing as Guarnator in company & trust names Re: Borrowers limit is not applicable

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  • Profile photo of bkingsleybkingsley
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    @bkingsley
    Join Date: 2004
    Post Count: 1

    I recently read in Steve's book,with interest, how potentually given you buy a property in a company or trust name and going guarantor instead of borrower, how you can go from bank to bank and keep borrowing.  I would have thought banks would do a directors search and furthermore a guarantor would have to declear any loan they were currently guaranteeing?  Therefore defeating this option – Am I right or wrong?
    Ben

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Ben

    No you are right and I believe Steve has clarified this and accepted this in his later publications.

    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 MooseheadMoosehead
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    @moosehead
    Join Date: 2006
    Post Count: 42

    While we're myth-busting… anyone care to bust this one?

    I've heard… that once a company has 2 years of financial history showing some profit, the company can borrow without any of the directors needing to provide guarantees or declare their personal income.

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 11,992

    Moose – Bang on it is just that a Myth.

    Assuming we are talking about a private company no lender is going to lend to an entity whereit potentially could have zero security. As soon as the company sells down or disposes of its assets and is unable to pay its debts the Directors can merely walk away with no recourse.

    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 Tysonboss1Tysonboss1
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    @tysonboss1
    Join Date: 2007
    Post Count: 306

    I have spoken to a Broker that said some lender's would lend to a company based on their income provided that they had strong Financel statements for 5years, and did alot of hoop jumping, some Lenders also will lend against the purchase cost of a franchise business you own, normally 40% – 50% but up to 90% in the case of the big franchises like mcdonalds,

     

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    The 3 main franchise lenders in Oz will not lend more than 70% LVR of the purchase price and all each case require a Guarantee from the purchaser or owner of the franchise.

    Non recourse loans maybe acceptable in Commercial cases where the lender can assign the rental income but again the LVR is extremely limited.

    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 MortgagemanMortgageman
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    @mortgageman
    Join Date: 2004
    Post Count: 164

    Non recourse loans are available on freehold properties through the commercial arms of most of the majors at 65% max. These loans are typically used for syndicates or unit trusts with a number of unit holders. However, the issue is generally the servicing as for non-recourse loans, the rental income is the only income that can be taken into consideration. Therefore you need a strong yield on a commercial property to borrow 65%. You will generally also need a strong borrower/s. No lender as far as I know will lend non-recourse on a business only. It would be crazy to do so.

    Kind Regards,

    Cameron Perry
    Director
    Perry Financial Strategies
    Level 13, 30 Collins St

    Melbourne VIC 3000
    Ph (03) 9662 1999
    Fax (03) 9662 2044
    email: [email protected]

    Profile photo of ScrufffScrufff
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    @scrufff
    Join Date: 2007
    Post Count: 4

    I want to get into property investment and I am currently reading and studying Steve's book 260+ properties in 7 Years. Please tell me where I can find all the details about these trust accounts, like  setting them up, risks, pros and cons etc.  I would like to keep my personal and investment assets separate for protection as Steve described. I think it makes good sense.

    Profile photo of MortgagemanMortgageman
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    @mortgageman
    Join Date: 2004
    Post Count: 164

    Hi Scruff,

    You need to get yourself a good accountant.

    Kind Regards,

    Cameron Perry
    Director
    Perry Financial Strategies
    Level 13, 30 Collins St
    Melbourne VIC 3000
    Ph (03) 9662 1999
    Fax (03) 9662 2044
    email: [email protected]

    Profile photo of ScrufffScrufff
    Member
    @scrufff
    Join Date: 2007
    Post Count: 4

    Thanks Cameron. I've got an appointment with one on Monday so I'll check it out.

    Scrufff

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