With finance becoming more and more difficult for lo-doc property investors how can we still build a business using property?
We (my husband Chris and I) have been lo-doc borrowers for a number of years since making property our full time occupation. We have learnt property investment the hard way. Looking back it would have been much easier if we had utilised the services of a property coach or mentor.
Nearly everything we have learnt has been through doing. We did the smart thing and joined a property investment group a number of years after we were full time investors. I think that if we had not joined the group we would not be full time in property investment today.
I learnt about finance from other investors and speakers. I learnt about structures, creative real estate deals and even how to be accountable to myself as a business owner.
Something I discovered was the importance of understanding finance. Now, you don’t need to become a finance broker to understand finance but purely to take an active role in your financier’s finance choices for you.
If your financer comes back with another question for you, find out why they are asking. If you get knocked back for finance find out why. If your financer puts your finance with a certain lender find out why.
There has never been a more important time to understand what is going on with the finance industry. It is important to understand who you can borrow from and what kind of loans are available to you. You also need to know how to change from full-doc to lo-doc borrowing if you are purchasing on a regular basis.
I recommend a finance strategist, someone who can look at your position today and help you understand how to take your borrowing into tomorrow.
We purchase our property in a corporate entity. That is a company as trustee for a trust. We also use lo-doc loans. The amount of lenders available to us right now can be counted on one hand maybe even on one finger!
One of our most used strategies with property has been to renovate, revalue and keep, or renovate and sell. Considering we have only sold a couple of properties in the last 3 years, the revaluing has become a big part of our strategy. The revalue part of the strategy has now become a little more difficult so we have to move with the times or go broke. The options we are considering now are:
- Purchase in our own names or in a Discretionary Trust, taking out the Company as Trustee. This opens up more lenders.
- Going back to selling a number of properties to assist with cash flow.
In reality we will do a bit of both.
Be careful to move with the times and remain in touch with the reality of the market. This way you won’t be left behind with an outdated strategy.
To find out more about finance listen to our podcast with Mariana Disanto.
And if you need help with your property investment contact me at debbie@equityfinder.com.au
The information provided in the Talking Property podcast is general in nature and should not be relied upon as a substitute for professional advice. Always consult with a professional advisor before making any investment decisions.
