How do you own that many houses??

[feeding_the_fire]

I don't really know much about property, however was wondering if someone in here could help! (Even though it's a Sharemarket forum lol)

Anyhow, I occasionally see things on TV like "I own 78 properties and started off in a caravan" type stories, like what's on A Current Affair tonight.

My question is.. How on earth is this done? Even assuming the lady bought cheap houses (say $250K), she'd be worth nearly $20 million! How do you do that on an average income?? Am I missing something here?? What are the risks, and what is the general principle behind it all???

Some enlightenment would be appreciated.

Cheers!

 

[theasxgorilla]

How do you think they do it?

 

[ducati916]

Debt

jog on
d998

 

[CanOz]

I knew someone who has nearly 20 houses. They bought one, fixed it up and got it revalued, bought another, rented them all out and added to them when they had enough equity. The houses were commision homes that we in a once, poor area. The area's land became valuable and the proprties became more valuable. He got both good income and growth out of his assets.

I plan to do the same in China soon.

Use the power of equity to accumulate assets that pay income and grow.

Cheers,

 

[The Mint Man]

If the income from the property exceeds the expenses then you can own as many as you like. This is called positive cash flow or positive geared property, depending on how you make money from the property. sometimes you will have a positive cash flow property after claiming depreciation against your income, others will be positive geared as the rent covers all expenses.

There are a ton of books on this subject out there, best to read a few different ones to get different views on how to invest like this.

hope this helps.

cheers

 

[CanOz]

Debt

jog on
d998

C'mon Duc, not just debt.

 

[tech/a]

Actually "G" there is a way that those who have massive holdings do do it.
It is well known but not well known to the general public. Yet it is normal people who do it. Ive not done it myself. But know a few who have. Its entirely legal. But wont work as well in flat or decreasing times.
Its meant to be a Win Win situation.

Its a bit involved to explain yet simple in principle.

No one's got it yet.
Its not debt---actually its mitigation of debt (partially).

Enough hints.

I'll let the thread run a bit to see if any others know.

 

[theasxgorilla]

I'll let the thread run a bit to see if any others know.

{biting my tongue, letting thread run}

 

[The Mint Man]

Actually "G" there is a way that those who have massive holdings do do it.
It is well known but not well known to the general public. Yet it is normal people who do it. Ive not done it myself. But know a few who have. Its entirely legal. But wont work as well in flat or decreasing times.
Its meant to be a Win Win situation.

Its a bit involved to explain yet simple in principle.

No one's got it yet.
Its not debt---actually its mitigation of debt (partially).

Enough hints.

I'll let the thread run a bit to see if any others know.

rent to buy or vendors finance?

 

[ice]

Worth noting that whenever you see something like that you're really looking at an example of survivorship bias. i.e you're seeing the one who succeeded not the 100's who didn't, because no-one is interested in their story.

ice

 

[theasxgorilla]

because no-one is interested in their story.

Unless they failed after paying $10,000 to a guru for enlightenment, then the ACA/Today Tonight crowd need to know.

 

[tech/a]

rent to buy or vendors finance?

Mints got it.

WRAPS

 

[The Mint Man]

Mints got it.

WRAPS

yes also known as wraps,
which are also nice to eat for lunch!

cheers

 

[theasxgorilla]

WRAPS

I'm familar with this.

1. Find someone who is finance inhibited
2. Find a house, or let them find a house that they want to buy
3. Buy the house for them, but only IF you can negotiate the selling price down to levels that make the deal work
4. Sell the house to the finance inhibited "customer" for more than you paid ("customer" pays a premium to the market, obviously, but at least they get to "own" their own home, right?)
5. Provide finance to the "customer" and mark-up the interest rate a couple of percent over what you are paying the bank on your smaller mortgage

It's supposed to be WIN/WIN, but even for a free-market advokate like me, it's disgustingly capitalistic.

 

[imajica]

just saw the promo on TV - how could those dense morons own so many houses? is it in rural tasmania?

 

[nioka]

Provide finance to the "customer" and mark-up the interest rate a couple of percent over what you are paying the bank on your smaller mortgage

It's supposed to be WIN/WIN, but even for a free-market advokate like me, it's disgustingly capitalistic.

That is exactly the way banks work. Lend out for more than the cost of borrowing. Why not do it with a home. Capitalistic yes. Disgusting ???????????

 

[ice]

One teensy drawback might be that this is hardly the ideal time to be a lender to the subprime sector of the market.

 

[theasxgorilla]

Why not do it with a home.

Because it doesn't add any VALUE. You've created money for yourself through the alchemy of finance. Fractional reserve banking is the same kind of genius. Banks are not my favourite institutions...why should I adore "wrappers"?

 

[The Mint Man]

I'm familar with this.

1. Find someone who is finance inhibited
2. Find a house, or let them find a house that they want to buy
3. Buy the house for them, but only IF you can negotiate the selling price down to levels that make the deal work
4. Sell the house to the finance inhibited "customer" for more than you paid ("customer" pays a premium to the market, obviously, but at least they get to "own" their own home, right?)
5. Provide finance to the "customer" and mark-up the interest rate a couple of percent over what you are paying the bank on your smaller mortgage

It's supposed to be WIN/WIN, but even for a free-market advokate like me, it's disgustingly capitalistic.

Most cases I know of, the sell price is set at a fair level and then when customer wants to buy (be that 1 year or 10 down the track) then they can re finance and do so, in between paying an inflated interest rate to cover cost, as you said.
The other advantage (for the vendor) of this is that it is similar to commercial property in that the 'customer' pays all out-goings on the property just like you would if you bought the house with a loan from a conventional bank.

tech/a, theasxgorilla implied that to some this seems immoral. Im interested in your opinion on this.
I understand both sides of this and can see where you both come from.
tech/a, In your defence I will say that I have seen friends do this for each other in the past in order for one party to "own their own home". So this is truly a win win situation. just so you know, my brother done this for a mate who couldn't get a loan, about a year or two later his mate was able to get the loan and buy it. My brother is no property guru, just doing a mate a favour!
At the same time I know what you are saing theasxgorilla.

Cheers

No fights please

 

[deftfear]

I saw a similar story a while ago and the guy just bought cheap properties, mainly in rural areas and had them positively geared, so he was making money on the rent and didnt have to worry about interest payments.

I think it's quite common that houses are positively geared in the country, you buy something for around $100,000 and can rent it out for $150-200 a week. Just rough figures of course, don't quote me on that.