start with no cash. can it be done and how?

[Shalodge]

pardon me for making it seem like im trying to out fox the system. but the only person whose going to be hurt in this is me. and all the facts present itself that this is viable.

[RANT]

When housing bubbles collapse lots of people get hurt .. not just those who figure out ways to "out fox" the system.. IMHO those who use the residential housing market for commodity trading schemes (or pyramid schemes) cause harm to the security and stability of our society (shelter being an esential item to the health and welfare)..

[/RANT]

[McDuck]

How can you not have any money?
Look to be honest my friend, if you can't get up a deposit then there must be something wrong with your work habits.
If you are lazy or reckless then no one can make you rich.
Where do youblow all your cash? Drugs? Girls? the casino?
I'm amazed by your starting premise.

[quest2]

so to conclude

no no no no no. this talk is not about my pay cheque or bank status. if thats the case then i would be in the queens club reading the newspapers whislt my shares float up or down looking like an old fart.
If moneys the talk then this talk is cheap.Its about ideas i mean we should be beyond that. And seriously i called the bank and they replied nervously and very reluctantly that yes there is an equity if such happens.
and being lazy an all that crap is putting the subject way all the way to the wizard of oz.

regards

quest2

[One]

You've mentioned buying "through Homealone" a couple of times. What's that about?

[flyernzl]

As has already been mentioned, the Bank is going to want to look at your income as well as the value of the house.

Now a loan at say 7% on $250,000 interest only is $17,500 interest per year ($337 per week). Not only is the bank going to need to know that you have sufficient income to service that loan, but you are actually going to need sufficient income not only to service those payments, keep yourself, pay running costs of rates, power, water, insurance, and also finance any repairs or improvements that you make to the property. Out of tax-paid income (as we have established that you have no savings).

I have seen people enter into a deal where they intend to buy, live in the house while they do it up, and resell - then they find that they have run out of money for the do-up, and are caught out, basically camping in a half-renovated house.
So to make it stand up you will require an above average income.
So if you have this income, why have you no savings? Why are you not currently saving $17,500 per year?

Also . . .
Whenever I have one of my rentals empty, I have this unsettling habit of working out just how much it is costing me per day to have it untenanted.
Based on the interest calculated above, and if your running costs are about $2500pa, the house will be costing you $55.00 per day just sitting there. Seven days a week. How many days will it take to chew up your profit margin? Speed is of the essence.

[Lynda]

Hi Quest.

I know most of the posts so far have not been very encouraging, and that's not what you wanted to hear. However, I'm going to disappoint you as well, and advise you to take a bit more time to save a bit of money. You can use that time to become a bit more educated in property investment, as well. Hang out on this forum for a while; join your local Property Investor Association; get to know some successful investors and emulate them.

With regard to this thread, the grammar and spelling in your posts are not helping you to be taken seriously by the PT community. With respect, you are coming across as "all thrust and no rudder". Perhaps if you took a bit more time to compose your posts, you might get some more helpful replies.

It's great to see you wanting to get ahead. Just make sure you learn to walk before you try to run.

Cheers,
Lynda.

[McDuck]

... this talk is not about my ...bank status......it's about ideas...

quest2

Ok, I'm confused.
Are you in this just for the sport?
Strange if you are.
The mega-rich people I know would rather not think about money in recreation time.
In fact, the poor people I know also do not want to think about money in their spare time.
I will stick to what I said before.
If you have no money for a deposit, it is because you have personality traits that need some work.
Figure them out first.
Once you see your bank balance start to grow, then you can try and figure out ways to optimise your capital.
Good luck.

[Aston]

six months later i go to the bank and present my valuation report and true anough it will accept the new value of my property $300,000 thats $50,000 equity.

OK.. so you buy the house for $250,000 in August 2009: Valuation = $300,000. You go to the Bank 6 months later in February 2010.

These days the bank will require an up to date valuation, so you get it revalued.

Now lets say, for arguments sake, values actually go up from August to February by say 2%.



If you have not improved the property, the new valuation will be in the vicinity of $255,000 because the valuer is going to take into consideration the price achieved for the property in August 2009.

So... equity in February 2010 = $5,000.

Not bad going, considering the current state of the market..

[revdev]

talk is cheap

You said it.

Quest2, beneath your wishlist of magic bullets, unfortunately, lies the financial humdrum of property investment; proof of income, LVR, DSR, statements of position, cashflow, deposits etc etc

Regardless of whether your intention is to buy-and-hold, do-up, trade, lease-option, no-money-down, joint venture, WHATEVER....a basic understanding of these concepts is a necessity.

If moneys the talk then this talk is cheap. Its about ideas i mean we should be beyond that.

How can you be "beyond" anything, when you are just starting?

[quest2]

I need a break... !!

Gona take a break from this heated discussion. But please keep the advice flowing. for this little think tank thats been created i hope would have a life of it's own. because i believe it brings a lot of good.
Good advice is hard to find.
And last but not least theres a book im going to buy a $40 investment sort to speak. Its called The Housing Bubble by Kieran Trass.
give some reviews on this book so i could decide whether its worth every penny.


Regards

Quest2

[Grads]

Hi Quest2 - After reading all these comments I will try to be as supportive as possible with positive ideas:
* if you have no current savings now - begin your savings NOW with every pay (this way you will build up savings - along with savings history to show your 1st lender)
* invest in as many property investment books / join your local property investors association - learn then decide on an effective strategy that suits your risk profile
* when you know where you would like to own property (and the particular type of property) become an Expert on this area.
* of everyone that gives you advice - friends, family, & real estate agents - only take on board the advice from those that have owned investment property for YEARS.
* Know your market, know your criteria & stick with it!
* In your statements you are trying to purchase really well - so you must learn negotiation skills - in order to buy well.
* In this environment - you will need some deposit, this will vary with lenders & the better your purchase is the better the lender may be able to assist you.
* U will have to hold any loan for a minimum of 90 days before you will be able to redraw funds.
* Become familiar with mortgage calculations & what you can really afford to service if rates increase 1-2%
* Be aware of the other costs associated with property - that is; rates, insurance & Maintenance (even property manager fees - if you do not do yourself).
* U must consider worst case scenarios - for example can you service the property if it becomes vacant.
* Any property that will suit a family in an average area close to employment opportunities, services / schools / transport / shopping centres - will all assist with both suitable tenants & low vacancy - is a good place to start.
* Look to add value with any purchase - that way in a slumping market, will help to maintain value, & quicker gains in an upwards market.
* Look for a twist if possible - perhaps extra room in future, extra building, subdivision in time.
* Worst case scenario - if it doesn't work out, if you have brought well you will be able to sell quicker.
* Learn your market, Learn the Sale & Purchase agreement, Clauses - learn due diligence - as this will be needed in acquiring any property.

The market has changed hugely in the last couple of Years, anyone this decade could afford to have made mistakes and it was harmless. In this environment you can not afford to make A mistake.

Become Educated & Good Luck!