House "Flipping"- Renovating Rehab

[HouseWorks]

there are good deals in any market but not for the inexperience.

I know you're the man for trading and renos Hadar. A few years ago I lived around the corner from a house you did in Sandringham. Maybe you could do mentoring and help us newbies. I've got some ideas I'm working on and getting funds together atm.

[Orkibi]

I am however going to the property tutors on Sunday if thats what you mean.

no its not them, its the NZ Property Investors federation annual conference.

i booked it last year for much less then the $700+ it was recently... but anyway its money well spent IMHO.

[Bluekiwi]

Yes its getting harder to obtain finance for trading, but there are few ways around it. ie equity release and or joint ventures.
Banks don't regard (or not allowed to) profits from property trading as verified business income.
We may as well trade Cars or Bananas..!

Are you coming to the NZPIF conference this weekend FH?

I think you are wrong Hadar.
As long as you have 2 years professional accounts showing trading profit, that is treated fairly as business income.
Banks will use that.

[Orkibi]

I think you are wrong Hadar.

that's not my recent experience with ANZ and feedback i received from my mortgage broker.
it is business income but it is my understanding that buying and selling properties is not something they can "count on"..
Few recent change of rules (last few months) have changed they way banks look at it.

Ie: one year you make 100k, then the next 180k, then again say 80k and then 300k. so not steady..
perhaps mortgage broker and an accountant on this forum can comment..

I know you're the man for trading and renos Hadar. A few years ago I lived around the corner from a house you did in Sandringham. Maybe you could do mentoring and help us newbies. I've got some ideas I'm working on and getting funds together atm.

Happy to talk House Work, im in Auckland this weekend.
Was that Columbia Ave?

[Damap]

It may depend on how your accounts are done maybe Hadar?. I have never had trading income "ignored" by banks ever.

[Orkibi]

It may depend on how your accounts are done

they are done by my competent accountant and that is forward to the lender or broker.

ie: "We also consider property sales as an unreliable source of income, particular if you are trading properties as in your case. There is potential for the property market to change and the sale of properties to become difficult once more. "

"If we were to lend on the basis of property sales as income and the property market takes a tumble that would be irresponsible lending and breach our duty of care to you."

"when you make significant profit from property sales but the basics are we can only use the following as income for you:
Rental income from the properties you own across your portfolio
Any wages and salaries you may earn from your various entities or an outside source
Any interest earned"

Are you suggesting Dean to distribute profit as wages and be taxed at maximum tax?

[Frezzinghot]

I think you are wrong Hadar.
As long as you have 2 years professional accounts showing trading profit, that is treated fairly as business income.
Banks will use that.

So can you not trade full time any earlier? if your earning 100k from trading per year vs a employment with less income why do the banks not lend against this.

[Damap]

Are you suggesting Dean to distribute profit as wages and be taxed at maximum tax?

Not exactly. And I am not saying your accounts are done "badly" I am just saying maybe the way your accounts are presented could be looked at. The 2 banks I have dealt with recently both took my US trading income as income no questions asked other than verifying it on a tax return. To your question it has always been recommended that you draw a salary to show provable income but I am surprised at the banks comments above. Maybe you need to get higher up the tree?

[Orkibi]

draw a salary to show provable income

I do. but up to a limit.

Maybe you need to get higher up the tree?

i was dealing with commercial and then business lending which were ruining around consulting around them and then area manager. both didn't give an answer until the last minute... i ended up buying the property which is the most important thing. but from now on im back to dealing with my mortgage broker.

i learned a lot from this, about my goals and how trading without Banks makes life more easy, one of the things is that banks regard commercial property income at 100% so on the long term i will be looking to increase that side of my business as passive income.

sometimes banks forget who is the client here... what service is all about.

[HouseWorks]

Happy to talk House Work, im in Auckland this weekend.
Was that Columbia Ave?

Yes Columbia corner property, I still look at it when stopped at the lights. I think you did well.

I'll leave it this weekend Hadar thanks for the offer. Can I PM you when I have something concrete?

Enjoy nzpif conference I missed out on tickets

[HouseWorks]

It took guts to paint the brick work but it's a good result. BTW why do you go through real estate agent, they take a huge cut of your profit,, is it logistics they are in the area?

[Orkibi]

BTW why do you go through real estate agent, they take a huge cut of your profit

Yes.
for me been in and out of Auckland all the time it is necessary to have agents. if the deal doesn't stack up with commission on sale then its not a deal. And, whats goes around comes around...

[Damap]

back to dealing with my mortgage broker.

Goodness why did you ever stop? :-)

[Orkibi]

Goodness why did you ever stop? :-)

No special reason, i was introduce to the local area commercial manager and he was very competent and investor minded.
He helped me with obtaining a commercial loan. after 6 month he left the bank and the rest wasn't the same..

All good!

[Bluekiwi]

they are done by my competent accountant and that is forward to the lender or broker.

ie: "We also consider property sales as an unreliable source of income, particular if you are trading properties as in your case. There is potential for the property market to change and the sale of properties to become difficult once more. "

"If we were to lend on the basis of property sales as income and the property market takes a tumble that would be irresponsible lending and breach our duty of care to you."

"when you make significant profit from property sales but the basics are we can only use the following as income for you:
Rental income from the properties you own across your portfolio
Any wages and salaries you may earn from your various entities or an outside source
Any interest earned"

Are you suggesting Dean to distribute profit as wages and be taxed at maximum tax?

I think you need a new broker.
I would suggest mine but he is currently "Indisposed".

It is very dangerous to use banks directly.
As bank managers change and if you get a good one they are likely to not be in that role for very long.