1 00:00:00,240 --> 00:00:02,460 but then they will go after the borrower2 00:00:02,460 --> 00:00:04,319 for that money even though the house is3 00:00:04,319 --> 00:00:05,100 gone4 00:00:05,100 --> 00:00:07,140 and if they can't get the money they can5 00:00:07,140 --> 00:00:08,340 default you and go through Court6 00:00:08,340 --> 00:00:10,440 proceedings to try to recover it so7 00:00:10,440 --> 00:00:11,820 something to keep in mind for the8 00:00:11,820 --> 00:00:14,639 listeners that's what LMI can do doesn't9 00:00:14,639 --> 00:00:16,440 protect you it protects the bank and10 00:00:16,440 --> 00:00:17,940 they'll still come after you to property11 00:00:17,940 --> 00:00:21,539 so this is the Financial Freedom series12 00:00:21,539 --> 00:00:24,660 designed to show you how to cash flow13 00:00:24,660 --> 00:00:28,680 your way to Financial Freedom brought to14 00:00:28,680 --> 00:00:32,279 you by Lagos Financial the road to15 00:00:32,279 --> 00:00:35,399 Financial Freedom starts today16 00:00:35,399 --> 00:00:38,640 we are back with the Financial Freedom17 00:00:38,640 --> 00:00:41,160 series my name is Andrew bean and I'm18 00:00:41,160 --> 00:00:43,800 here with top mortgage broker and19 00:00:43,800 --> 00:00:46,800 financial expert Victor Lagos from Lagos20 00:00:46,800 --> 00:00:49,920 Financial how are you mate21 00:00:49,920 --> 00:00:52,440 good Andrew long time no speak man I22 00:00:52,440 --> 00:00:54,180 know mate I missed you I missed you23 00:00:54,180 --> 00:00:56,059 what's going on24 00:00:56,059 --> 00:00:58,800 well we'll be busy doing deals you know25 00:00:58,800 --> 00:01:01,140 working yeah not just podcasters are we26 00:01:01,140 --> 00:01:02,879 yeah that's it's that's the thing is27 00:01:02,879 --> 00:01:04,799 you've gotta you do the podcast and you28 00:01:04,799 --> 00:01:06,479 get heaps of work and then you gotta do29 00:01:06,479 --> 00:01:08,280 more podcasts and you got to do the work30 00:01:08,280 --> 00:01:10,680 and it's just yeah it's uh hard to31 00:01:10,680 --> 00:01:12,060 balance at all isn't it it's a very32 00:01:12,060 --> 00:01:14,340 tough life yeah it's a lot to do yeah33 00:01:14,340 --> 00:01:15,900 you've got a lot going on too I've heard34 00:01:15,900 --> 00:01:18,479 yeah definitely got a lot going on uh35 00:01:18,479 --> 00:01:20,880 just took over a self-story facility so36 00:01:20,880 --> 00:01:22,979 uh yeah really excited about that gotta37 00:01:22,979 --> 00:01:25,259 start making some content about that now38 00:01:25,259 --> 00:01:26,759 um but yeah39 00:01:26,759 --> 00:01:29,280 um yeah a lot more coming out very very40 00:01:29,280 --> 00:01:32,820 soon but that's not why we're here today41 00:01:32,820 --> 00:01:36,479 so we are here today because in this42 00:01:36,479 --> 00:01:37,920 episode we're going to be talking about43 00:01:37,920 --> 00:01:40,860 loan shopping and the different types of44 00:01:40,860 --> 00:01:43,979 loans available for investors45 00:01:43,979 --> 00:01:46,140 um in and I think it's super important46 00:01:46,140 --> 00:01:49,560 because the way that you finance uh your47 00:01:49,560 --> 00:01:53,100 commercial asset can really like dictate48 00:01:53,100 --> 00:01:55,259 um you know whether you it's a make or49 00:01:55,259 --> 00:01:57,780 break asset as in like you know the the50 00:01:57,780 --> 00:02:01,020 way that you finance it can kill you or51 00:02:01,020 --> 00:02:02,759 really make you like a lot of cash flow52 00:02:02,759 --> 00:02:05,540 do you agree53 00:02:05,640 --> 00:02:08,580 yeah yeah most definitely uh the terms54 00:02:08,580 --> 00:02:12,180 of the commercial loan the structure uh55 00:02:12,180 --> 00:02:15,120 the lender all the fees all of that has56 00:02:15,120 --> 00:02:17,700 a massive impact so it's important to uh57 00:02:17,700 --> 00:02:19,800 to understand it all yeah that's right I58 00:02:19,800 --> 00:02:21,120 mean you hear of these like big59 00:02:21,120 --> 00:02:22,800 investors60 00:02:22,800 --> 00:02:25,800 um going Belly Up and people say oh the61 00:02:25,800 --> 00:02:27,300 asset failed62 00:02:27,300 --> 00:02:28,860 um but it's not really the asset that's63 00:02:28,860 --> 00:02:31,200 that failed it's the The Leverage The64 00:02:31,200 --> 00:02:33,780 the debt the way that you structured the65 00:02:33,780 --> 00:02:36,540 the debt on the asset and that's what66 00:02:36,540 --> 00:02:38,459 killed you it's not because the asset67 00:02:38,459 --> 00:02:41,819 was actually bad if it was set up um in68 00:02:41,819 --> 00:02:43,980 a better Financial way the asset would69 00:02:43,980 --> 00:02:46,140 have been flourishing but really it's70 00:02:46,140 --> 00:02:48,660 like the debt can kill you or it can it71 00:02:48,660 --> 00:02:51,480 can make you so make or break you72 00:02:51,480 --> 00:02:56,099 yeah agree all right mate so just so we73 00:02:56,099 --> 00:02:58,500 get a good start can you provide an74 00:02:58,500 --> 00:03:02,040 overview of why uh loan shopping is so75 00:03:02,040 --> 00:03:03,660 crucial for a commercial property76 00:03:03,660 --> 00:03:06,140 investors77 00:03:07,260 --> 00:03:09,660 yeah look I guess it's similar to to78 00:03:09,660 --> 00:03:12,720 residential you want to understand uh79 00:03:12,720 --> 00:03:15,239 you know what lenders going to lend you80 00:03:15,239 --> 00:03:17,879 the money on the best terms based on81 00:03:17,879 --> 00:03:20,819 their policies and based on you know82 00:03:20,819 --> 00:03:23,700 their appetite for uh commercial lending83 00:03:23,700 --> 00:03:25,920 uh it's something the difference with84 00:03:25,920 --> 00:03:27,120 commercial though is there's less85 00:03:27,120 --> 00:03:29,640 players in the market uh especially for86 00:03:29,640 --> 00:03:32,700 investors there's less Banks and less87 00:03:32,700 --> 00:03:36,060 lenders out there that will want a88 00:03:36,060 --> 00:03:37,739 standalone commercial investment89 00:03:37,739 --> 00:03:40,319 property because in their eyes it's it's90 00:03:40,319 --> 00:03:44,940 higher risk and to an extent it is so by91 00:03:44,940 --> 00:03:46,920 by shopping around by talking to a92 00:03:46,920 --> 00:03:49,700 commercial broker like myself93 00:03:49,700 --> 00:03:52,620 that keeps on top of all the different94 00:03:52,620 --> 00:03:55,620 banks and lender policies that's pretty95 00:03:55,620 --> 00:03:57,780 much how you'll know one can you96 00:03:57,780 --> 00:04:00,239 actually get the deal done and two what97 00:04:00,239 --> 00:04:01,440 are the numbers actually going to look98 00:04:01,440 --> 00:04:03,480 like because you're you're assessing99 00:04:03,480 --> 00:04:06,659 each deal in its merits but it's a game100 00:04:06,659 --> 00:04:09,360 of Finance so without knowing what the101 00:04:09,360 --> 00:04:11,700 finance looks like up front you might102 00:04:11,700 --> 00:04:13,200 end up committing to buy a property103 00:04:13,200 --> 00:04:15,599 that's actually gonna cost you money in104 00:04:15,599 --> 00:04:17,220 the short term and possibly even the105 00:04:17,220 --> 00:04:19,440 long term so yeah well that's it I mean106 00:04:19,440 --> 00:04:21,358 if you're buying a commercial property107 00:04:21,358 --> 00:04:23,940 and you're expecting it to cash flow108 00:04:23,940 --> 00:04:25,800 um and then you you get all the finance109 00:04:25,800 --> 00:04:27,600 all sorted and you buy that property and110 00:04:27,600 --> 00:04:29,400 and settle the deal and then you realize111 00:04:29,400 --> 00:04:31,680 oh hang on this is a negative geared112 00:04:31,680 --> 00:04:33,900 property I didn't sign up for this113 00:04:33,900 --> 00:04:35,100 um you know you're going to be in a bit114 00:04:35,100 --> 00:04:37,940 of strife oh yeah115 00:04:38,100 --> 00:04:40,259 well I've spoken to people before that116 00:04:40,259 --> 00:04:42,600 have reached out that that's exactly117 00:04:42,600 --> 00:04:45,060 what happened to them they they left at118 00:04:45,060 --> 00:04:46,800 last minute they thought that their119 00:04:46,800 --> 00:04:48,540 mortgage broker120 00:04:48,540 --> 00:04:50,100 knew what they were doing when it came121 00:04:50,100 --> 00:04:51,660 to commercial lending122 00:04:51,660 --> 00:04:53,940 turns out they didn't and last minute123 00:04:53,940 --> 00:04:56,880 they they had to get a non-bank loan124 00:04:56,880 --> 00:04:58,979 um and that meant that they were paying125 00:04:58,979 --> 00:05:01,560 you know exorbitant fees and interest126 00:05:01,560 --> 00:05:04,259 rates because if they didn't they were127 00:05:04,259 --> 00:05:06,419 going to lose their deposit yeah and128 00:05:06,419 --> 00:05:08,460 potentially be pursued by the vendor129 00:05:08,460 --> 00:05:11,340 because you know if you commit to buy a130 00:05:11,340 --> 00:05:12,840 property and you sign a contract and you131 00:05:12,840 --> 00:05:14,160 go unconditional and then you pull out132 00:05:14,160 --> 00:05:16,500 well it's not just a deposit if they133 00:05:16,500 --> 00:05:18,120 lose money and not able to sell at that134 00:05:18,120 --> 00:05:19,919 same price well they can technically go135 00:05:19,919 --> 00:05:21,720 after you so they decided to take the136 00:05:21,720 --> 00:05:23,340 loan and they want to know what their137 00:05:23,340 --> 00:05:25,680 options were to refinance and138 00:05:25,680 --> 00:05:27,660 unfortunately they had no options they139 00:05:27,660 --> 00:05:30,180 were stuck uh because it was going to140 00:05:30,180 --> 00:05:31,680 cost them three months of interest to141 00:05:31,680 --> 00:05:35,220 get out of the loan and um and obviously142 00:05:35,220 --> 00:05:37,080 the valuation and things like that so143 00:05:37,080 --> 00:05:38,639 yeah it's very important to know this144 00:05:38,639 --> 00:05:40,139 stuff up front145 00:05:40,139 --> 00:05:42,300 um especially because pre-approvals are146 00:05:42,300 --> 00:05:44,160 not very common in the commercial space147 00:05:44,160 --> 00:05:46,199 either so you want to make sure you line148 00:05:46,199 --> 00:05:48,900 up these ducts as much as possible with149 00:05:48,900 --> 00:05:51,840 your broker before you sign that dotted150 00:05:51,840 --> 00:05:54,600 line but typically like is it the151 00:05:54,600 --> 00:05:56,400 broker's responsibility to tell you if152 00:05:56,400 --> 00:05:57,840 you're cash flowing or not isn't it153 00:05:57,840 --> 00:05:59,699 really the broker's responsibility just154 00:05:59,699 --> 00:06:02,160 to get the the finance over the line for155 00:06:02,160 --> 00:06:04,020 you usually like156 00:06:04,020 --> 00:06:06,000 um you know a buyer's agent or yourself157 00:06:06,000 --> 00:06:09,180 like uh or you as the investor you know158 00:06:09,180 --> 00:06:11,699 what you want like unless you tell the159 00:06:11,699 --> 00:06:14,220 broker like I want this to cash flow at160 00:06:14,220 --> 00:06:16,440 this percent this is what I need this is161 00:06:16,440 --> 00:06:19,020 what I want this is what I'm expecting162 00:06:19,020 --> 00:06:21,600 um you know is it is it typical in the163 00:06:21,600 --> 00:06:24,600 industry for a a mortgage broker to to164 00:06:24,600 --> 00:06:26,039 flag that I know like with some165 00:06:26,039 --> 00:06:27,900 accountants like166 00:06:27,900 --> 00:06:30,000 um you know there are good ones and bad167 00:06:30,000 --> 00:06:32,160 ones that flag different things you know168 00:06:32,160 --> 00:06:33,900 so if you don't explain to the mortgage169 00:06:33,900 --> 00:06:35,940 broker what you won will they actually170 00:06:35,940 --> 00:06:37,620 say hey this isn't cash flowing what are171 00:06:37,620 --> 00:06:39,620 you doing172 00:06:39,620 --> 00:06:42,600 look to be honest with you I can't speak173 00:06:42,600 --> 00:06:45,180 for all Brokers I can only speak for how174 00:06:45,180 --> 00:06:47,039 I do things yeah and because I175 00:06:47,039 --> 00:06:49,020 specialize with working with investors176 00:06:49,020 --> 00:06:51,900 and Commercial investors then I want to177 00:06:51,900 --> 00:06:53,759 see what that cash flow looks like for178 00:06:53,759 --> 00:06:56,580 them and also for me because I don't179 00:06:56,580 --> 00:06:57,840 want to put them in a position that's180 00:06:57,840 --> 00:07:00,360 going to create financial distress of181 00:07:00,360 --> 00:07:01,979 course like I'm all about Financial182 00:07:01,979 --> 00:07:03,060 Freedom that's why we call this183 00:07:03,060 --> 00:07:04,919 Financial Freedom series184 00:07:04,919 --> 00:07:06,840 um and my own podcast so it's like if I185 00:07:06,840 --> 00:07:08,639 put someone in a position where it's186 00:07:08,639 --> 00:07:10,080 costing them more than it's earning them187 00:07:10,080 --> 00:07:12,419 and they can't afford to hold it and188 00:07:12,419 --> 00:07:15,000 they have to sell it well I don't really189 00:07:15,000 --> 00:07:16,440 care that I got paid I didn't do the190 00:07:16,440 --> 00:07:18,720 right thing for the customer so for me I191 00:07:18,720 --> 00:07:20,340 want to make sure that all that Stacks192 00:07:20,340 --> 00:07:22,680 up up front so I've built my own193 00:07:22,680 --> 00:07:25,620 spreadsheet uh funding calculation where194 00:07:25,620 --> 00:07:27,419 I plug in the numbers and the good thing195 00:07:27,419 --> 00:07:28,800 about commercial property is that you196 00:07:28,800 --> 00:07:30,419 know what the net income is after197 00:07:30,419 --> 00:07:32,479 expenses because usually the ongoing198 00:07:32,479 --> 00:07:35,160 running costs are covered by the um or199 00:07:35,160 --> 00:07:36,539 the outgoings I should call them are200 00:07:36,539 --> 00:07:39,300 covered by the by the tenant so by201 00:07:39,300 --> 00:07:41,580 knowing the net rent you can pretty much202 00:07:41,580 --> 00:07:43,620 estimate what your um what your cash203 00:07:43,620 --> 00:07:45,419 flow is going to be you know residential204 00:07:45,419 --> 00:07:47,280 it's a little bit trickier because you205 00:07:47,280 --> 00:07:49,139 know it's gross rent and then you have206 00:07:49,139 --> 00:07:51,419 to deduct expenses but you still can207 00:07:51,419 --> 00:07:53,220 tell what they're going to be208 00:07:53,220 --> 00:07:57,180 to an extent and so anyway so I I send209 00:07:57,180 --> 00:07:59,280 these numbers to my to my clients and210 00:07:59,280 --> 00:08:01,080 potential clients so that they can have211 00:08:01,080 --> 00:08:02,699 a clear picture as to is this kind of212 00:08:02,699 --> 00:08:04,979 cash flow up front especially if they're213 00:08:04,979 --> 00:08:07,259 taking out Equity to cover the deposit214 00:08:07,259 --> 00:08:09,960 so they're borrowing 100 yeah and costs215 00:08:09,960 --> 00:08:12,300 and if there's a buyer's agent involved216 00:08:12,300 --> 00:08:14,940 you know there's another you know 15 20217 00:08:14,940 --> 00:08:16,259 grand that they've got to add on top as218 00:08:16,259 --> 00:08:17,940 well and if they're borrowing that219 00:08:17,940 --> 00:08:19,860 highly likely it's not going to be220 00:08:19,860 --> 00:08:21,720 positive cash flow but at least they221 00:08:21,720 --> 00:08:24,300 know how much it's going to cost them uh222 00:08:24,300 --> 00:08:26,160 out of pocket each week or each month223 00:08:26,160 --> 00:08:28,199 and then they're prepared for that224 00:08:28,199 --> 00:08:30,960 so that's why I do that but others225 00:08:30,960 --> 00:08:32,399 technically it's not the broker's226 00:08:32,399 --> 00:08:34,500 responsibility if they're not analyzing227 00:08:34,500 --> 00:08:37,399 any investment yes228 00:08:38,219 --> 00:08:40,020 sorry I didn't mean to speak over you229 00:08:40,020 --> 00:08:41,760 but they're they're not the the230 00:08:41,760 --> 00:08:44,700 commercial property analysis team231 00:08:44,700 --> 00:08:46,080 um they're the commercial property232 00:08:46,080 --> 00:08:48,600 Finance team to get you financed233 00:08:48,600 --> 00:08:50,820 um so yeah obviously a good broker like234 00:08:50,820 --> 00:08:53,580 yourself will let you know235 00:08:53,580 --> 00:08:55,380 um if you say I want this to cash flow236 00:08:55,380 --> 00:08:56,640 they'll let you know if it's not cash237 00:08:56,640 --> 00:08:59,459 flowing but I guess like if you're238 00:08:59,459 --> 00:09:01,380 um you know doing the finance for239 00:09:01,380 --> 00:09:03,420 residential property240 00:09:03,420 --> 00:09:04,740 um you know very difficult to get241 00:09:04,740 --> 00:09:07,200 Residential Properties to to cash flow242 00:09:07,200 --> 00:09:09,720 like realistically if you're taking into243 00:09:09,720 --> 00:09:13,080 account all of the expenses all of the244 00:09:13,080 --> 00:09:15,360 outgoings that you realistically do have245 00:09:15,360 --> 00:09:17,040 to pay as the owner of a residential246 00:09:17,040 --> 00:09:18,540 property247 00:09:18,540 --> 00:09:22,140 um you know it'd be very difficult248 00:09:22,140 --> 00:09:24,899 yeah exactly and with commercial249 00:09:24,899 --> 00:09:28,200 property it's like you know that the250 00:09:28,200 --> 00:09:30,899 rent's gonna grow right each year you're251 00:09:30,899 --> 00:09:33,480 building in you know CPI increases or252 00:09:33,480 --> 00:09:35,399 fixed increases253 00:09:35,399 --> 00:09:38,760 um you know if you're finding ways to254 00:09:38,760 --> 00:09:41,220 um add value as well or if you know that255 00:09:41,220 --> 00:09:42,480 the tenant's going to move out you can256 00:09:42,480 --> 00:09:44,580 get new tenants in increase the rent if257 00:09:44,580 --> 00:09:46,860 it's if it's under rent it so there's258 00:09:46,860 --> 00:09:48,720 things that are going to259 00:09:48,720 --> 00:09:51,240 um impact the investment to allow you to260 00:09:51,240 --> 00:09:53,000 have more cash flow and then of course261 00:09:53,000 --> 00:09:55,620 the interest rates262 00:09:55,620 --> 00:09:58,740 will eventually come down at some point263 00:09:58,740 --> 00:10:01,800 but if you've got enough capital and you264 00:10:01,800 --> 00:10:04,440 can you know contribute a decent deposit265 00:10:04,440 --> 00:10:06,240 which is usually required for commercial266 00:10:06,240 --> 00:10:09,600 and we'll get into that uh then it's267 00:10:09,600 --> 00:10:12,000 likely going to be you know neutrally268 00:10:12,000 --> 00:10:14,580 geared or positive cash flow from the269 00:10:14,580 --> 00:10:16,380 you know from the gecko270 00:10:16,380 --> 00:10:17,760 and so therefore it becomes271 00:10:17,760 --> 00:10:19,440 self-sufficient and you can sort of set272 00:10:19,440 --> 00:10:20,519 forget273 00:10:20,519 --> 00:10:21,779 and that's what you want that274 00:10:21,779 --> 00:10:23,160 predictable income275 00:10:23,160 --> 00:10:25,500 yeah another flow of income yeah276 00:10:25,500 --> 00:10:27,540 definitely so mate what are the key277 00:10:27,540 --> 00:10:29,459 factors that differentiate a commercial278 00:10:29,459 --> 00:10:34,399 property loan to a a residential one279 00:10:34,860 --> 00:10:37,740 well as I was saying before there's only280 00:10:37,740 --> 00:10:39,959 not all play not all banks are playing281 00:10:39,959 --> 00:10:41,519 this in this space282 00:10:41,519 --> 00:10:43,440 um but the ones that do let's just say283 00:10:43,440 --> 00:10:46,560 we go to the the Big Four284 00:10:46,560 --> 00:10:48,360 so the Big Four285 00:10:48,360 --> 00:10:51,060 they look at uh one they've got a286 00:10:51,060 --> 00:10:53,820 Commercial Banking arm and it depends on287 00:10:53,820 --> 00:10:55,500 how much you borrow then you're dealing288 00:10:55,500 --> 00:10:58,440 with a a business Banker so it's not289 00:10:58,440 --> 00:11:00,600 under retail it's not under uh290 00:11:00,600 --> 00:11:03,420 residential uh it's a separate arm of291 00:11:03,420 --> 00:11:07,019 the bank and they'll analyze each292 00:11:07,019 --> 00:11:09,000 commercial property293 00:11:09,000 --> 00:11:11,940 in its own category so if it's a if it's294 00:11:11,940 --> 00:11:14,100 a specialized property if it's just a a295 00:11:14,100 --> 00:11:16,980 standard you know retail office or296 00:11:16,980 --> 00:11:19,620 industrial uh versus say something297 00:11:19,620 --> 00:11:22,140 specialized like a pub uh child care or298 00:11:22,140 --> 00:11:24,480 something like that they'll have a299 00:11:24,480 --> 00:11:26,040 different team that looks after that to300 00:11:26,040 --> 00:11:27,959 analyze the risk of the deal that's301 00:11:27,959 --> 00:11:31,079 that's one the second thing is the way302 00:11:31,079 --> 00:11:35,399 it's uh the lvr is is lower so big banks303 00:11:35,399 --> 00:11:39,540 will typically go up to 60 possibly 70304 00:11:39,540 --> 00:11:42,240 lvr305 00:11:42,240 --> 00:11:42,959 um306 00:11:42,959 --> 00:11:46,260 they won't go up to 80 well maybe one of307 00:11:46,260 --> 00:11:49,920 them will and they'll also tie the loan308 00:11:49,920 --> 00:11:50,760 term309 00:11:50,760 --> 00:11:53,100 with the lease even if it's not a lease310 00:11:53,100 --> 00:11:54,899 stock loan311 00:11:54,899 --> 00:11:57,060 they will actually want to have a short312 00:11:57,060 --> 00:11:59,459 term on the loan so313 00:11:59,459 --> 00:12:01,380 you know when when you get a normal314 00:12:01,380 --> 00:12:04,079 residential loan it's going to be for 30315 00:12:04,079 --> 00:12:06,420 years usually up front316 00:12:06,420 --> 00:12:08,339 whereas a commercial loan from a big317 00:12:08,339 --> 00:12:10,500 bank will usually be two or three years318 00:12:10,500 --> 00:12:12,240 up front319 00:12:12,240 --> 00:12:13,740 and320 00:12:13,740 --> 00:12:15,540 that doesn't mean you need to pay the321 00:12:15,540 --> 00:12:17,220 loan back in that time otherwise the322 00:12:17,220 --> 00:12:18,980 repayments will be unaffordable right323 00:12:18,980 --> 00:12:22,140 but what they'll do is they'll324 00:12:22,140 --> 00:12:24,480 um they'll do annual reviews and then325 00:12:24,480 --> 00:12:26,700 they'll want an updated lease and then326 00:12:26,700 --> 00:12:28,920 they'll renew the loan or roll it over327 00:12:28,920 --> 00:12:31,200 for another two or three years328 00:12:31,200 --> 00:12:33,899 so it's um it's a way to mitigate their329 00:12:33,899 --> 00:12:35,820 risks to make sure that the property is330 00:12:35,820 --> 00:12:38,579 rented out yep and that the that the331 00:12:38,579 --> 00:12:40,680 borrower the borrower being that it's332 00:12:40,680 --> 00:12:43,019 usually a commercial entity like like a333 00:12:43,019 --> 00:12:44,760 company or or a trust334 00:12:44,760 --> 00:12:47,579 is up to date with their taxes they want335 00:12:47,579 --> 00:12:49,380 to see that so ask for336 00:12:49,380 --> 00:12:51,360 ATO portals337 00:12:51,360 --> 00:12:53,820 to see that you actually and and tax338 00:12:53,820 --> 00:12:55,800 returns to see the largest tax returns339 00:12:55,800 --> 00:12:58,680 and that it's you know up to date340 00:12:58,680 --> 00:13:00,600 and then on top of that they'll also341 00:13:00,600 --> 00:13:02,880 want to revalue the property so they'll342 00:13:02,880 --> 00:13:05,279 actually every couple of years they'll343 00:13:05,279 --> 00:13:07,019 say we need to make sure that our344 00:13:07,019 --> 00:13:10,620 security position is not too high so345 00:13:10,620 --> 00:13:12,180 then they'll revalue and if they value346 00:13:12,180 --> 00:13:14,880 and a property come down347 00:13:14,880 --> 00:13:17,880 and say it goes from 60 to 80 then348 00:13:17,880 --> 00:13:19,800 they're going to want you to restructure349 00:13:19,800 --> 00:13:22,200 your loan to quickly get it back down to350 00:13:22,200 --> 00:13:23,940 60 so they're going to adjust your351 00:13:23,940 --> 00:13:26,700 repayments so that you amortized it down352 00:13:26,700 --> 00:13:29,639 to 60 ASAP or they're going to basically353 00:13:29,639 --> 00:13:33,540 ask you to to leave yeah ask you to354 00:13:33,540 --> 00:13:35,579 refinance to another bank or worse case355 00:13:35,579 --> 00:13:36,899 sell the property because they don't356 00:13:36,899 --> 00:13:38,339 want they don't want to be under that357 00:13:38,339 --> 00:13:40,740 position so that's how they handle it358 00:13:40,740 --> 00:13:42,360 and then you've got359 00:13:42,360 --> 00:13:45,540 um second tier banks that I try to focus360 00:13:45,540 --> 00:13:47,399 more on because they'll do set and361 00:13:47,399 --> 00:13:49,440 forget learn similar to to residential362 00:13:49,440 --> 00:13:51,600 where they'll give you up to sort of 25363 00:13:51,600 --> 00:13:55,500 years up front no annual reviews but it364 00:13:55,500 --> 00:13:57,300 all depends on if you're borrowing you365 00:13:57,300 --> 00:13:59,100 know less than a million dollars366 00:13:59,100 --> 00:14:01,740 or more so the higher you borrow the367 00:14:01,740 --> 00:14:03,360 higher the risk usually the lower the368 00:14:03,360 --> 00:14:06,839 lvr so in a nutshell that's kind of the369 00:14:06,839 --> 00:14:09,120 things that I navigate with with all my370 00:14:09,120 --> 00:14:12,180 clients and investors to try to371 00:14:12,180 --> 00:14:13,920 understand which is the best option for372 00:14:13,920 --> 00:14:14,880 them373 00:14:14,880 --> 00:14:17,279 and was that 25-year loan for a374 00:14:17,279 --> 00:14:19,200 commercial property or for a residential375 00:14:19,200 --> 00:14:21,060 property376 00:14:21,060 --> 00:14:23,880 no for a commercial I can I usually go377 00:14:23,880 --> 00:14:26,579 for that so I've got a bank that I deal378 00:14:26,579 --> 00:14:27,959 with I won't say which bank that is379 00:14:27,959 --> 00:14:29,639 because usually380 00:14:29,639 --> 00:14:31,200 um you know I have to obviously talk to381 00:14:31,200 --> 00:14:32,639 the customer and make sure that that's382 00:14:32,639 --> 00:14:34,680 the right bank for them before I start383 00:14:34,680 --> 00:14:36,300 disclosing it384 00:14:36,300 --> 00:14:39,720 um and they'll do 25 years from the385 00:14:39,720 --> 00:14:41,399 beginning and they won't do annual386 00:14:41,399 --> 00:14:42,300 reviews387 00:14:42,300 --> 00:14:45,300 and they won't do valuations along the388 00:14:45,300 --> 00:14:46,920 way so they'll literally do it straight389 00:14:46,920 --> 00:14:48,300 off the bat and they'll even do up to390 00:14:48,300 --> 00:14:51,000 five years interest only as well so that391 00:14:51,000 --> 00:14:53,399 would be the ideal option but the lvr on392 00:14:53,399 --> 00:14:55,620 that particular product is capped at 75393 00:14:55,620 --> 00:14:58,980 yeah uh so it's still decent like it's394 00:14:58,980 --> 00:15:01,019 not 60 like the major Banks395 00:15:01,019 --> 00:15:03,839 but 75 is obviously less than what a lot396 00:15:03,839 --> 00:15:06,060 of people want most people uh especially397 00:15:06,060 --> 00:15:09,060 first-time investors will want 80 and398 00:15:09,060 --> 00:15:12,060 it's it's harder to get so I try and399 00:15:12,060 --> 00:15:14,579 avoid 80 for any commercial lending just400 00:15:14,579 --> 00:15:16,800 just because serviceability is a massive401 00:15:16,800 --> 00:15:18,720 constraint and then we might end up402 00:15:18,720 --> 00:15:19,920 going to403 00:15:19,920 --> 00:15:22,440 a non-bank and if you go to a non-bank404 00:15:22,440 --> 00:15:25,199 then the rates are higher uh the fees405 00:15:25,199 --> 00:15:26,399 are higher406 00:15:26,399 --> 00:15:28,800 um but you can get 30 years up front so407 00:15:28,800 --> 00:15:30,720 keep that in mind with a non-bank yeah408 00:15:30,720 --> 00:15:31,920 you're going to be it's not going to be409 00:15:31,920 --> 00:15:33,480 positive cash flow probably410 00:15:33,480 --> 00:15:35,279 yeah definitely I mean that's the thing411 00:15:35,279 --> 00:15:37,740 about commercial property is that412 00:15:37,740 --> 00:15:39,480 um you know usually it is a shorter type413 00:15:39,480 --> 00:15:42,240 loan I mean I I would say that it is414 00:15:42,240 --> 00:15:44,940 quite uncommon to have even a 25-year415 00:15:44,940 --> 00:15:46,380 loan I haven't heard of too many416 00:15:46,380 --> 00:15:47,880 investors I know417 00:15:47,880 --> 00:15:49,440 um James Dawson I remember him talking418 00:15:49,440 --> 00:15:51,240 about a loan that he's had you know for419 00:15:51,240 --> 00:15:53,279 30 years or so or like it's a 30-year420 00:15:53,279 --> 00:15:55,139 loan or product421 00:15:55,139 --> 00:15:56,880 um but your general investor422 00:15:56,880 --> 00:15:59,820 um you know 25 years 15 20. yeah that'd423 00:15:59,820 --> 00:16:01,260 be nice like that's a really really424 00:16:01,260 --> 00:16:04,860 strong position to be in and like I know425 00:16:04,860 --> 00:16:06,600 it's it probably doesn't happen it426 00:16:06,600 --> 00:16:08,339 doesn't happen in Australia427 00:16:08,339 --> 00:16:10,139 um but in America like you can get like428 00:16:10,139 --> 00:16:12,000 a 30-year loan that's fixed interest429 00:16:12,000 --> 00:16:13,380 rate430 00:16:13,380 --> 00:16:15,480 um you know so that means the debt431 00:16:15,480 --> 00:16:17,699 starts outstripping the interest rate so432 00:16:17,699 --> 00:16:20,100 it becomes of like a a really big433 00:16:20,100 --> 00:16:21,899 benefit to you434 00:16:21,899 --> 00:16:23,760 um you know in time435 00:16:23,760 --> 00:16:26,880 um but yeah it's that 25-year Loan in436 00:16:26,880 --> 00:16:28,320 Australia would have to be a variable437 00:16:28,320 --> 00:16:30,980 rate surely438 00:16:31,139 --> 00:16:34,260 you can get fixed uh up to five years439 00:16:34,260 --> 00:16:36,360 even on the 25-year loan term yeah it's440 00:16:36,360 --> 00:16:38,940 five years but you can't yeah yeah you441 00:16:38,940 --> 00:16:40,980 can't do the 30-year fixed rates don't442 00:16:40,980 --> 00:16:43,320 exist uh there is a issue I was reading443 00:16:43,320 --> 00:16:44,820 something about that there's a there's a444 00:16:44,820 --> 00:16:47,519 history behind that uh when it came up445 00:16:47,519 --> 00:16:50,100 it was Australia didn't take it on446 00:16:50,100 --> 00:16:52,139 Australian banking didn't take it on it447 00:16:52,139 --> 00:16:54,660 was a I think it might have been after448 00:16:54,660 --> 00:16:57,600 World War II potentially and they kind449 00:16:57,600 --> 00:16:59,100 of missed the boat on that I think they450 00:16:59,100 --> 00:17:01,740 had a change of of government and then451 00:17:01,740 --> 00:17:03,480 the new government didn't take uh missed452 00:17:03,480 --> 00:17:06,660 out and that doesn't exist anymore like453 00:17:06,660 --> 00:17:08,760 that type of funding for Australia so454 00:17:08,760 --> 00:17:11,400 yeah it's kind of cool obviously to have455 00:17:11,400 --> 00:17:13,439 fixed uh for long term then you it's456 00:17:13,439 --> 00:17:15,660 predictable yeah you know Australians457 00:17:15,660 --> 00:17:17,640 are used to variable rates and and458 00:17:17,640 --> 00:17:19,859 navigating that anyway so yeah fixed459 00:17:19,859 --> 00:17:23,099 long-term loans are like lower risk than460 00:17:23,099 --> 00:17:25,319 a variable long-term loan obviously461 00:17:25,319 --> 00:17:26,939 because you know the expenses and they462 00:17:26,939 --> 00:17:28,919 just out start to outweigh463 00:17:28,919 --> 00:17:31,440 um you know the expenses over time464 00:17:31,440 --> 00:17:33,120 um so I just wanted to jump back as well465 00:17:33,120 --> 00:17:35,580 because you mentioned a term that you466 00:17:35,580 --> 00:17:37,799 and I probably take um you know like a467 00:17:37,799 --> 00:17:39,240 grain of salt because we understand what468 00:17:39,240 --> 00:17:42,120 it means but I was just wondering if you469 00:17:42,120 --> 00:17:43,440 can explain470 00:17:43,440 --> 00:17:47,220 um the concept the concept of an lvr to471 00:17:47,220 --> 00:17:49,140 say a first-time investor what that472 00:17:49,140 --> 00:17:50,880 actually means and the significance of473 00:17:50,880 --> 00:17:53,059 it474 00:17:53,220 --> 00:17:56,460 yeah sure so lvr stands for loan to475 00:17:56,460 --> 00:17:58,320 value ratio476 00:17:58,320 --> 00:18:00,419 um so it's a percentage of what you477 00:18:00,419 --> 00:18:04,020 borrow versus the value so when we talk478 00:18:04,020 --> 00:18:07,200 about an 80 lvr in in you know if you're479 00:18:07,200 --> 00:18:08,820 looking at dollars if the property is480 00:18:08,820 --> 00:18:11,220 worth a million dollars481 00:18:11,220 --> 00:18:14,700 um then an 80 OVR would be a loan of 800482 00:18:14,700 --> 00:18:18,240 000. a 60 LBI would be a loan of six483 00:18:18,240 --> 00:18:19,980 hundred thousand484 00:18:19,980 --> 00:18:23,400 Etc that's that's how the banks analyze485 00:18:23,400 --> 00:18:25,559 the risk on the property itself on the486 00:18:25,559 --> 00:18:27,240 security487 00:18:27,240 --> 00:18:29,039 um and the lower the lvr the lower the488 00:18:29,039 --> 00:18:30,840 risk and the main reason is because if489 00:18:30,840 --> 00:18:34,380 there's a fluctuation in in the price or490 00:18:34,380 --> 00:18:35,880 in the market value491 00:18:35,880 --> 00:18:39,360 the they're protected all right because492 00:18:39,360 --> 00:18:42,840 say there's a ten percent you know crash493 00:18:42,840 --> 00:18:45,059 well not even crash let's say 10 uh494 00:18:45,059 --> 00:18:48,120 reduction well there's still a buffer of495 00:18:48,120 --> 00:18:51,299 say if it was a sixty percent of VR in a496 00:18:51,299 --> 00:18:54,539 drop down 10 well it's now 70 over here497 00:18:54,539 --> 00:18:57,179 so it's still okay if the bank had to498 00:18:57,179 --> 00:18:59,640 foreclose and sell that property they're499 00:18:59,640 --> 00:19:02,160 still gonna uh you know recover their500 00:19:02,160 --> 00:19:03,960 their money essentially501 00:19:03,960 --> 00:19:06,120 so if they go up to 80 percent502 00:19:06,120 --> 00:19:08,880 it's obviously a higher risk because if503 00:19:08,880 --> 00:19:11,340 there's a 20 reduction then it's then504 00:19:11,340 --> 00:19:15,900 it's a uh you know a property that's uh505 00:19:15,900 --> 00:19:18,679 basically not enough to cover the sale506 00:19:18,679 --> 00:19:21,840 so uh negative equity they call it so507 00:19:21,840 --> 00:19:23,940 that's what that's why508 00:19:23,940 --> 00:19:26,100 um you know for residential lending509 00:19:26,100 --> 00:19:28,260 you've got mortgage insurance to cover510 00:19:28,260 --> 00:19:31,740 that to that risk and something511 00:19:31,740 --> 00:19:34,980 interesting is that LMI protects the512 00:19:34,980 --> 00:19:37,200 bank but it doesn't actually protect the513 00:19:37,200 --> 00:19:39,660 borrower I know I'm just514 00:19:39,660 --> 00:19:41,580 veering off for a moment because I just515 00:19:41,580 --> 00:19:44,400 wanted to cover this off so say there516 00:19:44,400 --> 00:19:46,799 was an LMI claim so a bank would sell517 00:19:46,799 --> 00:19:47,880 the property518 00:19:47,880 --> 00:19:50,160 uh they recover their money whatever519 00:19:50,160 --> 00:19:52,440 they could if there was a shortfall they520 00:19:52,440 --> 00:19:54,600 could claim it from LMI mortgage521 00:19:54,600 --> 00:19:57,120 insurance and then LMR will pay that to522 00:19:57,120 --> 00:19:57,900 them523 00:19:57,900 --> 00:20:00,000 but then they will go after the borrower524 00:20:00,000 --> 00:20:01,860 for that money even though the house is525 00:20:01,860 --> 00:20:02,820 gone526 00:20:02,820 --> 00:20:04,799 and if they can't get the money they can527 00:20:04,799 --> 00:20:06,000 default you and go through Court528 00:20:06,000 --> 00:20:08,100 proceedings to try to recover it so529 00:20:08,100 --> 00:20:09,480 something to keep in mind for the530 00:20:09,480 --> 00:20:12,360 listeners that's what LMI can do doesn't531 00:20:12,360 --> 00:20:14,160 protect you it protects the bank and532 00:20:14,160 --> 00:20:15,419 they'll still come after you if the533 00:20:15,419 --> 00:20:17,820 property so add a shortfall the lower534 00:20:17,820 --> 00:20:20,580 the lvr obviously there is no Lamas that535 00:20:20,580 --> 00:20:22,799 can't happen and in commercial lending536 00:20:22,799 --> 00:20:26,160 LMI also doesn't exist but something to537 00:20:26,160 --> 00:20:28,679 keep in mind though is that risk fees do538 00:20:28,679 --> 00:20:29,580 exist539 00:20:29,580 --> 00:20:31,200 and540 00:20:31,200 --> 00:20:32,039 um541 00:20:32,039 --> 00:20:34,380 they usually they call them application542 00:20:34,380 --> 00:20:38,100 fees or establishment fees and and they543 00:20:38,100 --> 00:20:40,919 also have early exit fees as well544 00:20:40,919 --> 00:20:44,100 because commercial lending falls under545 00:20:44,100 --> 00:20:46,500 um unregulated lending it's not under546 00:20:46,500 --> 00:20:49,020 the consumer credit protection547 00:20:49,020 --> 00:20:51,000 um which is something that came out548 00:20:51,000 --> 00:20:52,860 after the GFC549 00:20:52,860 --> 00:20:55,740 it's called nccp and so they can550 00:20:55,740 --> 00:20:59,220 technically charge early early repayment551 00:20:59,220 --> 00:21:01,380 um costs if you pay the loan out in the552 00:21:01,380 --> 00:21:03,900 first few years and they can also charge553 00:21:03,900 --> 00:21:06,299 upfront establishment fees and they can554 00:21:06,299 --> 00:21:09,179 range from half a percent of the loan555 00:21:09,179 --> 00:21:10,679 amount you know all the way up to say556 00:21:10,679 --> 00:21:12,240 two percent557 00:21:12,240 --> 00:21:13,980 um and then so that's something to keep558 00:21:13,980 --> 00:21:15,179 in mind as all these are The Upfront559 00:21:15,179 --> 00:21:16,320 costs560 00:21:16,320 --> 00:21:19,200 and um you know when I send out the561 00:21:19,200 --> 00:21:21,480 numbers to my potential clients I'll562 00:21:21,480 --> 00:21:24,000 always show them what those fees look563 00:21:24,000 --> 00:21:25,980 like transparently I'll break it down in564 00:21:25,980 --> 00:21:27,720 in a spreadsheet and show them all those565 00:21:27,720 --> 00:21:30,120 upfront costs and show them how much you566 00:21:30,120 --> 00:21:31,740 know their contribution is because567 00:21:31,740 --> 00:21:33,299 sometimes you don't know about this568 00:21:33,299 --> 00:21:34,919 stuff it's kind of hidden you find out569 00:21:34,919 --> 00:21:36,539 about it later so I try to make it all570 00:21:36,539 --> 00:21:39,059 up front so there's no uh no no571 00:21:39,059 --> 00:21:40,140 surprises572 00:21:40,140 --> 00:21:42,120 and so for the listeners who aren't up573 00:21:42,120 --> 00:21:44,280 to date with all of the uh real estate574 00:21:44,280 --> 00:21:47,159 acronyms LMI means lenders mortgage575 00:21:47,159 --> 00:21:49,919 mortgage insurance and it only comes576 00:21:49,919 --> 00:21:53,880 into play when you're um at a 90 lvr so577 00:21:53,880 --> 00:21:56,580 usually a commercial property over 80578 00:21:56,580 --> 00:21:58,860 yeah so if you usually if you're usually579 00:21:58,860 --> 00:22:02,520 at a um for a commercial property580 00:22:02,520 --> 00:22:04,260 um it'll be 80 it would be the absolute581 00:22:04,260 --> 00:22:06,960 Max so that that's where Victor said582 00:22:06,960 --> 00:22:09,179 that it doesn't exist because you can't583 00:22:09,179 --> 00:22:11,580 get debt um that high on a commercial584 00:22:11,580 --> 00:22:13,020 property585 00:22:13,020 --> 00:22:14,220 um so when you're going for your normal586 00:22:14,220 --> 00:22:16,200 residential property587 00:22:16,200 --> 00:22:18,179 um that does come into play because you588 00:22:18,179 --> 00:22:21,980 can get you know 85 90 even sometimes 95589 00:22:21,980 --> 00:22:24,780 lvr on a property so you need that LMI590 00:22:24,780 --> 00:22:26,940 lender's mortgage insurance for the591 00:22:26,940 --> 00:22:29,659 bank's protection592 00:22:29,820 --> 00:22:33,659 that's it so mate what kind like how593 00:22:33,659 --> 00:22:36,240 does the loan you choose impact the594 00:22:36,240 --> 00:22:37,860 profitability of the commercial property595 00:22:37,860 --> 00:22:40,500 investment so I just want to go to that596 00:22:40,500 --> 00:22:41,880 question because597 00:22:41,880 --> 00:22:45,360 we've just spoken about lvrs so the lvr598 00:22:45,360 --> 00:22:48,120 really dictates how much debt you have599 00:22:48,120 --> 00:22:50,460 on the property so why does that make a600 00:22:50,460 --> 00:22:52,820 big difference601 00:22:53,580 --> 00:22:56,400 so the higher the debt the higher the602 00:22:56,400 --> 00:22:58,380 repayments the higher the interest costs603 00:22:58,380 --> 00:23:00,360 and the less of the rent that you get to604 00:23:00,360 --> 00:23:01,620 keep605 00:23:01,620 --> 00:23:03,780 so that's how it impacts your investment606 00:23:03,780 --> 00:23:06,240 the more leverage you have the more607 00:23:06,240 --> 00:23:07,679 gearing608 00:23:07,679 --> 00:23:10,260 um the less cash flow609 00:23:10,260 --> 00:23:14,520 and if you have less cash flow then at610 00:23:14,520 --> 00:23:16,020 some point or another you know you611 00:23:16,020 --> 00:23:18,179 either it's either not feasible to hold612 00:23:18,179 --> 00:23:19,500 on to it613 00:23:19,500 --> 00:23:22,919 um or it has to be paid so you have to614 00:23:22,919 --> 00:23:24,539 pay it down so it becomes cash flow615 00:23:24,539 --> 00:23:27,059 positive otherwise it's it's a liability616 00:23:27,059 --> 00:23:29,580 more than an investment right617 00:23:29,580 --> 00:23:32,880 um more than an asset I should say so um618 00:23:32,880 --> 00:23:35,400 and then you know the costs as well to619 00:23:35,400 --> 00:23:37,620 consider that I mentioned620 00:23:37,620 --> 00:23:39,059 but depending on the loan you're going621 00:23:39,059 --> 00:23:40,620 to be paying higher establishment fees622 00:23:40,620 --> 00:23:42,480 as I talked about623 00:23:42,480 --> 00:23:44,039 um you always have to pay the valuation624 00:23:44,039 --> 00:23:46,320 fee out of pocket so that's something to625 00:23:46,320 --> 00:23:48,720 consider I know it's not necessarily to626 00:23:48,720 --> 00:23:50,400 the you know tied in with the loan but627 00:23:50,400 --> 00:23:52,380 it's something that investors sometimes628 00:23:52,380 --> 00:23:53,820 aren't aware of that when they buy a629 00:23:53,820 --> 00:23:56,640 commercial property they have to Fork630 00:23:56,640 --> 00:23:58,500 Out The Upfront cost for that and that631 00:23:58,500 --> 00:24:00,000 can range from you know a thousand bucks632 00:24:00,000 --> 00:24:01,580 all the way up to sort of five grand633 00:24:01,580 --> 00:24:03,840 depending on on the price of the634 00:24:03,840 --> 00:24:05,220 property635 00:24:05,220 --> 00:24:07,080 um Banks aren't going to cover that636 00:24:07,080 --> 00:24:09,240 residential they're happy to because637 00:24:09,240 --> 00:24:10,740 they you know they might only charge 400638 00:24:10,740 --> 00:24:11,760 or something639 00:24:11,760 --> 00:24:13,500 uh but640 00:24:13,500 --> 00:24:15,659 for commercial they want641 00:24:15,659 --> 00:24:18,240 um and then the you know642 00:24:18,240 --> 00:24:22,200 the loan if it's in if it's p and I so643 00:24:22,200 --> 00:24:23,880 a lot of the time644 00:24:23,880 --> 00:24:26,940 if you pay p i then and you're wanting a645 00:24:26,940 --> 00:24:29,039 self-sufficient positive cash flow646 00:24:29,039 --> 00:24:30,179 property647 00:24:30,179 --> 00:24:31,919 well648 00:24:31,919 --> 00:24:33,780 the cash flow is impacted if you're649 00:24:33,780 --> 00:24:35,580 making principal and interest repayments650 00:24:35,580 --> 00:24:36,600 because they're going to be higher than651 00:24:36,600 --> 00:24:39,299 just just the interest right652 00:24:39,299 --> 00:24:42,419 um but something to to be aware of that653 00:24:42,419 --> 00:24:44,820 even though it does impact your your654 00:24:44,820 --> 00:24:47,100 cash flow it doesn't655 00:24:47,100 --> 00:24:50,280 it's not a bad thing as such because the656 00:24:50,280 --> 00:24:52,860 principal part is your Equity so some657 00:24:52,860 --> 00:24:54,120 people don't realize that every time you658 00:24:54,120 --> 00:24:56,039 make a principal payment you're actually659 00:24:56,039 --> 00:24:58,620 taking Equity back from the bank yeah so660 00:24:58,620 --> 00:25:00,480 they've got their equity which is the661 00:25:00,480 --> 00:25:02,220 leverage but when you pay make a662 00:25:02,220 --> 00:25:04,679 principal payment the debt comes down so663 00:25:04,679 --> 00:25:06,000 that's your Equity you're taking it back664 00:25:06,000 --> 00:25:07,500 so you're building Equity when you pay665 00:25:07,500 --> 00:25:10,140 back principal but if you're forced to666 00:25:10,140 --> 00:25:11,640 pay p i667 00:25:11,640 --> 00:25:14,340 up front then that could make it a668 00:25:14,340 --> 00:25:15,539 difficult669 00:25:15,539 --> 00:25:17,880 you know Venture for you because if you670 00:25:17,880 --> 00:25:19,440 want the rent to cover that and you've671 00:25:19,440 --> 00:25:21,059 still got your own home mortgage to pay672 00:25:21,059 --> 00:25:23,880 off your ppor and and maybe a couple of673 00:25:23,880 --> 00:25:25,320 other negatively geared Residential674 00:25:25,320 --> 00:25:27,240 Properties well now you've just added on675 00:25:27,240 --> 00:25:31,140 you know another cash flow constraint to676 00:25:31,140 --> 00:25:34,440 your to your portfolio on a uh while you677 00:25:34,440 --> 00:25:35,940 should be really putting all your678 00:25:35,940 --> 00:25:37,740 principal payments the Equity Building679 00:25:37,740 --> 00:25:40,440 payments into your ppoi your home680 00:25:40,440 --> 00:25:43,200 because that's non-tax deductible debt681 00:25:43,200 --> 00:25:44,940 that should be the priority682 00:25:44,940 --> 00:25:46,799 so that's another part of the683 00:25:46,799 --> 00:25:48,000 structuring that you've got to be aware684 00:25:48,000 --> 00:25:48,659 of685 00:25:48,659 --> 00:25:50,700 and then of course you know we talked686 00:25:50,700 --> 00:25:53,640 about the the lvr so of course the687 00:25:53,640 --> 00:25:55,919 higher the lvr the higher the repayments688 00:25:55,919 --> 00:25:58,080 if you can bring that down and you can689 00:25:58,080 --> 00:26:00,659 have a larger cash contribution then690 00:26:00,659 --> 00:26:01,919 that's going to put you in a better691 00:26:01,919 --> 00:26:04,080 position from day dot because you'll be692 00:26:04,080 --> 00:26:05,580 able to get you know positive cash flow693 00:26:05,580 --> 00:26:07,919 straight away yeah 100 use that money to694 00:26:07,919 --> 00:26:10,220 pay that debt down695 00:26:10,220 --> 00:26:12,480 just an assigned note there I had a696 00:26:12,480 --> 00:26:15,480 quote for ten thousand dollars for a697 00:26:15,480 --> 00:26:19,500 valuation on a self-story facility698 00:26:19,500 --> 00:26:22,200 um this year so yeah they can get pretty699 00:26:22,200 --> 00:26:24,179 uh pretty pricey700 00:26:24,179 --> 00:26:26,100 um mate so could you just walk us701 00:26:26,100 --> 00:26:28,799 through the various types of loans702 00:26:28,799 --> 00:26:30,059 available703 00:26:30,059 --> 00:26:31,799 um for you know your average commercial704 00:26:31,799 --> 00:26:34,820 property investor705 00:26:34,860 --> 00:26:38,700 yeah so as I talking about earlier706 00:26:38,700 --> 00:26:41,400 earlier types of loans would then be the707 00:26:41,400 --> 00:26:45,000 short-term stuff yep where it's um so if708 00:26:45,000 --> 00:26:47,279 it's a full doc loan well let's break it709 00:26:47,279 --> 00:26:49,260 down you've got full dock710 00:26:49,260 --> 00:26:52,679 um low Dock and Lease doc yep711 00:26:52,679 --> 00:26:54,960 and full dock is just basically fully712 00:26:54,960 --> 00:26:56,940 verified you're providing tax returns713 00:26:56,940 --> 00:26:59,640 payslips you know rental income bank714 00:26:59,640 --> 00:27:01,559 statements everything to show what your715 00:27:01,559 --> 00:27:03,659 income is and can you actually uh afford716 00:27:03,659 --> 00:27:05,760 the loan itself717 00:27:05,760 --> 00:27:08,100 um and then the loan itself the loan718 00:27:08,100 --> 00:27:11,400 structure will then be short term like a719 00:27:11,400 --> 00:27:14,100 one or two years from a big bank or set720 00:27:14,100 --> 00:27:15,900 and forget so I still consider that a721 00:27:15,900 --> 00:27:17,039 different type of loan because the722 00:27:17,039 --> 00:27:18,960 short-term stuff is a bit more723 00:27:18,960 --> 00:27:20,760 maintenance required right you need to724 00:27:20,760 --> 00:27:23,220 be aware of those things coming up when725 00:27:23,220 --> 00:27:24,840 you're doing annual reviews and staying726 00:27:24,840 --> 00:27:26,220 on top of your taxes and all that sort727 00:27:26,220 --> 00:27:28,380 of stuff and keeping on top of the728 00:27:28,380 --> 00:27:29,700 tenants to make sure they're paying729 00:27:29,700 --> 00:27:31,559 everything on time730 00:27:31,559 --> 00:27:33,960 um whereas if you get set forget you're731 00:27:33,960 --> 00:27:35,940 getting 25 years potentially up front732 00:27:35,940 --> 00:27:37,860 and you're literally setting it and733 00:27:37,860 --> 00:27:39,720 forgetting it now you're still alive734 00:27:39,720 --> 00:27:41,400 would make the repayments but the bank's735 00:27:41,400 --> 00:27:44,039 not chasing you yeah to say hey what's736 00:27:44,039 --> 00:27:45,240 going on with the lead send me an737 00:27:45,240 --> 00:27:47,279 updated copy Etc738 00:27:47,279 --> 00:27:50,940 um and then when you've got a a low doc739 00:27:50,940 --> 00:27:52,080 loan740 00:27:52,080 --> 00:27:54,659 this is where you are self-employed so741 00:27:54,659 --> 00:27:56,720 it doesn't work for payg742 00:27:56,720 --> 00:27:59,700 borrowers or guarantors it only works if743 00:27:59,700 --> 00:28:03,480 you're self-employed and you can instead744 00:28:03,480 --> 00:28:05,520 of providing tax returns to verify your745 00:28:05,520 --> 00:28:10,320 income you either provide baz so this is746 00:28:10,320 --> 00:28:12,779 your business activity statement but747 00:28:12,779 --> 00:28:14,640 when you Lodge your GST you provide that748 00:28:14,640 --> 00:28:17,159 and then that they kind of estimate what749 00:28:17,159 --> 00:28:19,320 your profit would be based on the750 00:28:19,320 --> 00:28:20,880 industry that you're in so they're kind751 00:28:20,880 --> 00:28:23,059 of just you know shave down the revenue752 00:28:23,059 --> 00:28:26,340 and sort of estimate what What expenses753 00:28:26,340 --> 00:28:27,299 you'd have754 00:28:27,299 --> 00:28:29,760 minus the salaries of course755 00:28:29,760 --> 00:28:32,039 um and then the other one is bank756 00:28:32,039 --> 00:28:33,480 statements so if you provide business757 00:28:33,480 --> 00:28:35,279 bank statements they'll do the same sort758 00:28:35,279 --> 00:28:36,179 of thing they'll look at all your759 00:28:36,179 --> 00:28:38,600 revenue and they'll work out how much760 00:28:38,600 --> 00:28:42,539 can they use for for income and if that761 00:28:42,539 --> 00:28:45,120 if none of those work then you can also762 00:28:45,120 --> 00:28:48,000 um get your accountant to write up a763 00:28:48,000 --> 00:28:50,520 declaration so the the lenders that764 00:28:50,520 --> 00:28:53,419 accept low doc have a specific765 00:28:53,419 --> 00:28:55,860 declaration form that an accountant has766 00:28:55,860 --> 00:28:59,100 to fill out which basically declares how767 00:28:59,100 --> 00:29:01,020 much your income is768 00:29:01,020 --> 00:29:02,820 uh and that's what they use that's a low769 00:29:02,820 --> 00:29:03,779 doc770 00:29:03,779 --> 00:29:06,539 and another one which is a Lee stock is771 00:29:06,539 --> 00:29:08,520 similar to load docking that you don't772 00:29:08,520 --> 00:29:10,500 have to provide tax returns but773 00:29:10,500 --> 00:29:12,960 serviceability is purely on the lease774 00:29:12,960 --> 00:29:15,419 itself so it's only on the rent that you775 00:29:15,419 --> 00:29:16,919 generate from that commercial investment776 00:29:16,919 --> 00:29:19,260 property it's not got to do with your777 00:29:19,260 --> 00:29:20,580 income778 00:29:20,580 --> 00:29:24,320 so those types of loans were up to about779 00:29:24,320 --> 00:29:27,360 65 lvr when the interest rates were780 00:29:27,360 --> 00:29:28,140 lower781 00:29:28,140 --> 00:29:30,360 but now that they're where they are at782 00:29:30,360 --> 00:29:32,880 the moment uh we're sort of hovering783 00:29:32,880 --> 00:29:37,140 around that 45 to 50 percent uh lvr so784 00:29:37,140 --> 00:29:39,120 you need a larger deposit785 00:29:39,120 --> 00:29:42,720 keep in mind though that you could you786 00:29:42,720 --> 00:29:44,760 could um787 00:29:44,760 --> 00:29:49,320 borrow the deposit from your residential788 00:29:49,320 --> 00:29:52,080 property as a full dock loan first789 00:29:52,080 --> 00:29:54,059 right and I do that for some customers790 00:29:54,059 --> 00:29:56,220 so you take out the equity as cash791 00:29:56,220 --> 00:29:58,440 and then you do a low Doc and then that792 00:29:58,440 --> 00:30:00,840 sorry at least Doc and then your deposit793 00:30:00,840 --> 00:30:02,760 comes from essentially borrowed money794 00:30:02,760 --> 00:30:04,080 anyway795 00:30:04,080 --> 00:30:05,940 um and then you can obviously claim the796 00:30:05,940 --> 00:30:07,919 interest across both797 00:30:07,919 --> 00:30:10,260 um so it's not a798 00:30:10,260 --> 00:30:12,720 like a lead stock is still they still do799 00:30:12,720 --> 00:30:14,460 want to know who you are though it's not800 00:30:14,460 --> 00:30:15,600 like oh yeah you're just getting at801 00:30:15,600 --> 00:30:16,919 least we don't know who you are they802 00:30:16,919 --> 00:30:17,940 still want to understand what your803 00:30:17,940 --> 00:30:19,919 financial position is so you still have804 00:30:19,919 --> 00:30:21,000 to declare805 00:30:21,000 --> 00:30:23,580 um you know your assets and liabilities806 00:30:23,580 --> 00:30:26,940 um and whether you're working or not uh807 00:30:26,940 --> 00:30:29,059 they don't ask about your income808 00:30:29,059 --> 00:30:30,659 necessarily809 00:30:30,659 --> 00:30:33,120 uh because I don't need it but if you're810 00:30:33,120 --> 00:30:35,039 you know on the pension for example or811 00:30:35,039 --> 00:30:36,899 you're really old uh you're sort of812 00:30:36,899 --> 00:30:38,820 elderly and don't have any assets to813 00:30:38,820 --> 00:30:41,159 your name renting uh what something like814 00:30:41,159 --> 00:30:43,140 that that's not really going to be a815 00:30:43,140 --> 00:30:45,419 type of deal that they would do they816 00:30:45,419 --> 00:30:46,380 still want to understand who they're817 00:30:46,380 --> 00:30:47,640 lending to818 00:30:47,640 --> 00:30:48,899 and of course they'll do their credit819 00:30:48,899 --> 00:30:53,340 checks and ID verifications as well so820 00:30:53,340 --> 00:30:55,799 um but it's still a good uh option for821 00:30:55,799 --> 00:30:59,340 someone who has got access to cash and822 00:30:59,340 --> 00:31:01,320 may not necessarily have the823 00:31:01,320 --> 00:31:04,200 serviceability in their own names to to824 00:31:04,200 --> 00:31:06,480 fund another investment property you825 00:31:06,480 --> 00:31:09,679 know what I just realized826 00:31:11,220 --> 00:31:14,419 yes you do know827 00:31:15,020 --> 00:31:18,720 you tell me I just realized that we are828 00:31:18,720 --> 00:31:21,299 almost wearing identical shirts we've829 00:31:21,299 --> 00:31:24,440 really done well here830 00:31:25,559 --> 00:31:27,600 I just I've been looking at you for like831 00:31:27,600 --> 00:31:30,480 half an hour and I just realized we're832 00:31:30,480 --> 00:31:31,799 matching833 00:31:31,799 --> 00:31:33,000 look at that834 00:31:33,000 --> 00:31:35,159 didn't even do it purposely let's not835 00:31:35,159 --> 00:31:36,899 tell everyone that we message each other836 00:31:36,899 --> 00:31:38,760 first and said uh what are you wearing837 00:31:38,760 --> 00:31:41,159 today it's really not true he's just838 00:31:41,159 --> 00:31:43,640 saying that839 00:31:43,760 --> 00:31:46,440 so mate I was one of the primary840 00:31:46,440 --> 00:31:48,299 differences between like a traditional841 00:31:48,299 --> 00:31:51,720 bank loan and like alternative financing842 00:31:51,720 --> 00:31:53,159 who I've had a little bit of experience843 00:31:53,159 --> 00:31:55,559 with uh in the last couple of months844 00:31:55,559 --> 00:31:57,779 um you know like private Finance what845 00:31:57,779 --> 00:31:59,580 for a listeners that haven't had any846 00:31:59,580 --> 00:32:01,919 experience in those two Realms what are847 00:32:01,919 --> 00:32:03,240 the difference between your standard848 00:32:03,240 --> 00:32:06,240 bank loans and and private Finance on849 00:32:06,240 --> 00:32:09,020 Commercial properties850 00:32:10,200 --> 00:32:12,779 Okay so851 00:32:12,779 --> 00:32:14,640 first and foremost852 00:32:14,640 --> 00:32:17,220 um banks are probably the highest853 00:32:17,220 --> 00:32:19,860 regulated lender there is so they've got854 00:32:19,860 --> 00:32:21,059 a lot more855 00:32:21,059 --> 00:32:23,220 um rules that they have to operate by856 00:32:23,220 --> 00:32:26,659 and uh and risk that they need to857 00:32:26,659 --> 00:32:29,520 basically cover off before they can lend858 00:32:29,520 --> 00:32:31,740 out commercially but they are the859 00:32:31,740 --> 00:32:33,840 cheapest so if you can get Bank funding860 00:32:33,840 --> 00:32:37,620 it's always the kind of the the main861 00:32:37,620 --> 00:32:40,320 goal for any investor or borrower out862 00:32:40,320 --> 00:32:42,899 there but there's a lot more red tape863 00:32:42,899 --> 00:32:45,659 and it can take more time to get loans864 00:32:45,659 --> 00:32:47,760 approved from Banks865 00:32:47,760 --> 00:32:51,440 private money sorry non-bank uh lenders866 00:32:51,440 --> 00:32:54,720 they're the next layer down from Banks867 00:32:54,720 --> 00:32:57,179 so they are they're non-adis so868 00:32:57,179 --> 00:32:59,820 non-deposit taking institutions uh869 00:32:59,820 --> 00:33:01,799 they're not regulated by by870 00:33:01,799 --> 00:33:03,960 um apra for residential lending they're871 00:33:03,960 --> 00:33:05,940 regulated by Asic872 00:33:05,940 --> 00:33:08,159 um and for commercial lending same sort873 00:33:08,159 --> 00:33:09,480 of thing they're not regulated anyway874 00:33:09,480 --> 00:33:12,899 but they still uh you know they've still875 00:33:12,899 --> 00:33:15,419 got rules because of the way they they876 00:33:15,419 --> 00:33:17,399 get their Capital they usually borrow it877 00:33:17,399 --> 00:33:19,260 from Banks to be honest non-banks borrow878 00:33:19,260 --> 00:33:21,120 it from Banks initially through what's879 00:33:21,120 --> 00:33:23,159 called a warehouse facility and then880 00:33:23,159 --> 00:33:25,140 they uh and then they pay it back after881 00:33:25,140 --> 00:33:26,700 so there's still things that they need882 00:33:26,700 --> 00:33:29,100 to cover off so they're not but you can883 00:33:29,100 --> 00:33:31,080 get away with more so longer terms up884 00:33:31,080 --> 00:33:34,679 front 30 years higher ovrs up to 80 I885 00:33:34,679 --> 00:33:36,120 know one that will even go up to 90886 00:33:36,120 --> 00:33:37,140 percent887 00:33:37,140 --> 00:33:40,320 on an smsf but they'll charge a risk fee888 00:33:40,320 --> 00:33:41,940 for that889 00:33:41,940 --> 00:33:43,019 um890 00:33:43,019 --> 00:33:47,039 not LMI and if you're looking at the891 00:33:47,039 --> 00:33:49,500 next layer down then you've got uh892 00:33:49,500 --> 00:33:51,960 private money or private equity and this893 00:33:51,960 --> 00:33:54,840 is this is basically not even regulated894 00:33:54,840 --> 00:33:58,019 by Asic or apra there they can kind of895 00:33:58,019 --> 00:33:59,580 do whatever they want to an extent and896 00:33:59,580 --> 00:34:02,460 they do um and usually how they operate897 00:34:02,460 --> 00:34:06,840 is they will uh get money from investors898 00:34:06,840 --> 00:34:10,040 like family offices or uh you know899 00:34:10,040 --> 00:34:12,719 basically create like a fund and they'll900 00:34:12,719 --> 00:34:16,320 pay them back the investors a return901 00:34:16,320 --> 00:34:18,780 um High interest depending on the risk902 00:34:18,780 --> 00:34:22,440 and then they will you know lend that903 00:34:22,440 --> 00:34:27,418 money out for for property purchases and904 00:34:27,418 --> 00:34:29,219 the the good thing about them is that905 00:34:29,219 --> 00:34:31,918 they'll do it in a very fast uh time906 00:34:31,918 --> 00:34:33,899 frame and they can take on sometimes907 00:34:33,899 --> 00:34:37,139 bigger risks and take on properties that908 00:34:37,139 --> 00:34:39,000 a bank may not necessarily like909 00:34:39,000 --> 00:34:41,280 something that's a bit more specialized910 00:34:41,280 --> 00:34:44,940 like um self-storage for example911 00:34:44,940 --> 00:34:45,659 um912 00:34:45,659 --> 00:34:48,000 and uh and they can you know settle a913 00:34:48,000 --> 00:34:50,520 deal within you know a few days uh914 00:34:50,520 --> 00:34:51,540 potentially915 00:34:51,540 --> 00:34:53,219 they'll still want to Value the property916 00:34:53,219 --> 00:34:55,500 nine times out of ten but the cost for917 00:34:55,500 --> 00:34:57,420 them is higher because they're taking on918 00:34:57,420 --> 00:34:59,760 the risk they're a solution lender so919 00:34:59,760 --> 00:35:02,160 your interest rates are you know 10 to920 00:35:02,160 --> 00:35:06,540 12 uh plus you're paying you know two to921 00:35:06,540 --> 00:35:09,839 four percent uh on the amount you borrow922 00:35:09,839 --> 00:35:13,440 um as a fee and then but the good thing923 00:35:13,440 --> 00:35:15,359 about them as well is that a lot of the924 00:35:15,359 --> 00:35:18,420 time you're you're not having to make925 00:35:18,420 --> 00:35:20,880 repayments on them so that so you can926 00:35:20,880 --> 00:35:22,980 actually depending on the927 00:35:22,980 --> 00:35:25,680 lvr again you you can actually928 00:35:25,680 --> 00:35:28,440 capitalize the interest yeah let's say929 00:35:28,440 --> 00:35:30,480 12 months so then you're essentially930 00:35:30,480 --> 00:35:32,220 borrowing the interest from the equity931 00:35:32,220 --> 00:35:34,680 to pay for the cost of borrowing and932 00:35:34,680 --> 00:35:35,579 then you're not having to make933 00:35:35,579 --> 00:35:37,560 repayments every month934 00:35:37,560 --> 00:35:38,339 um935 00:35:38,339 --> 00:35:40,500 but then you need an exit strategy so936 00:35:40,500 --> 00:35:43,140 you need to get out of that loan so937 00:35:43,140 --> 00:35:45,119 if they're riskier but you need to know938 00:35:45,119 --> 00:35:46,800 that you've got a plan and that's939 00:35:46,800 --> 00:35:48,720 usually because you're gonna make a940 00:35:48,720 --> 00:35:51,300 profit and then you're gonna sell it or941 00:35:51,300 --> 00:35:53,760 you've um you know942 00:35:53,760 --> 00:35:55,680 whatever reason you you'll be able to943 00:35:55,680 --> 00:35:58,619 borrow from a either a non-bank or a944 00:35:58,619 --> 00:36:00,839 secondary lender or even a big Bank in945 00:36:00,839 --> 00:36:02,640 the future so you can prepare for that946 00:36:02,640 --> 00:36:04,619 so you've got a 12 months or a two year947 00:36:04,619 --> 00:36:07,920 loan uh with a private lender then you948 00:36:07,920 --> 00:36:09,720 can start planning ahead and say all949 00:36:09,720 --> 00:36:11,339 right come three months before I'm going950 00:36:11,339 --> 00:36:12,780 to start applying for finance so I can951 00:36:12,780 --> 00:36:16,500 refinance and get out of that and look952 00:36:16,500 --> 00:36:19,440 it's risky if you don't go to one that's953 00:36:19,440 --> 00:36:21,900 reputable as I said they can kind of do954 00:36:21,900 --> 00:36:23,520 whatever they want so it can be risky955 00:36:23,520 --> 00:36:25,619 dealing with private lenders that don't956 00:36:25,619 --> 00:36:27,839 have a proven track record957 00:36:27,839 --> 00:36:29,700 and aren't reputable but there are some958 00:36:29,700 --> 00:36:31,500 that really are and some of them that959 00:36:31,500 --> 00:36:36,119 are uh you know endorsed by the uh you960 00:36:36,119 --> 00:36:39,960 know mfaa FB double a CA fb8 is the uh961 00:36:39,960 --> 00:36:41,579 the mortgage broking and Commercial962 00:36:41,579 --> 00:36:43,680 Finance broking associations so you can963 00:36:43,680 --> 00:36:45,660 find them as well and also some of them964 00:36:45,660 --> 00:36:47,400 that are part of a large aggregator965 00:36:47,400 --> 00:36:49,680 panels so always best to talk to a966 00:36:49,680 --> 00:36:51,480 broker see who they're who they're967 00:36:51,480 --> 00:36:52,740 recommending who they've got experience968 00:36:52,740 --> 00:36:54,240 with and then do your research on those969 00:36:54,240 --> 00:36:56,520 lenders and see you know970 00:36:56,520 --> 00:36:58,560 what people are you know saying about971 00:36:58,560 --> 00:37:01,680 them out there in whether it's in in the972 00:37:01,680 --> 00:37:04,320 you know Facebook groups or Google973 00:37:04,320 --> 00:37:06,900 reviews or product review or whatever it974 00:37:06,900 --> 00:37:09,000 is just to make sure that you're not you975 00:37:09,000 --> 00:37:10,200 know putting yourself at risk because976 00:37:10,200 --> 00:37:13,680 remember they analyze the deals based on977 00:37:13,680 --> 00:37:17,460 their feasibility so if they know that978 00:37:17,460 --> 00:37:20,400 there can be money to be made they979 00:37:20,400 --> 00:37:23,040 might help you but they're also thinking980 00:37:23,040 --> 00:37:25,920 how can we potentially take ownership of981 00:37:25,920 --> 00:37:28,680 this property so we can take the profit982 00:37:28,680 --> 00:37:30,960 so remember they can they can they take983 00:37:30,960 --> 00:37:32,760 out a mortgage so they they have control984 00:37:32,760 --> 00:37:34,680 over it if you can't make your payments985 00:37:34,680 --> 00:37:36,359 on time and if you're not making986 00:37:36,359 --> 00:37:38,040 payments because you need to get out of987 00:37:38,040 --> 00:37:39,480 that loan in 12 months well they've got988 00:37:39,480 --> 00:37:41,280 a right to take that property something989 00:37:41,280 --> 00:37:44,099 to keep in mind yeah 100 I was um990 00:37:44,099 --> 00:37:46,140 helping the the vendor of my991 00:37:46,140 --> 00:37:48,180 self-storage facility um I was helping992 00:37:48,180 --> 00:37:50,040 him organize some private Finance993 00:37:50,040 --> 00:37:52,680 because he's 75 years old994 00:37:52,680 --> 00:37:54,720 um and the Commonwealth Bank knocked995 00:37:54,720 --> 00:37:55,500 back996 00:37:55,500 --> 00:37:57,540 um getting him some more Finance997 00:37:57,540 --> 00:37:59,280 um for one of his particular properties998 00:37:59,280 --> 00:38:02,400 and I went down to get a like the the999 00:38:02,400 --> 00:38:05,280 private Finance route um to see what was1000 00:38:05,280 --> 00:38:10,440 on offer and um they came back with a 201001 00:38:10,440 --> 00:38:13,980 interest on the loan and this is a1002 00:38:13,980 --> 00:38:16,320 second a second position non1003 00:38:16,320 --> 00:38:19,020 non-approved second position mortgage on1004 00:38:19,020 --> 00:38:21,240 the property so like it's just having1005 00:38:21,240 --> 00:38:24,599 you over a barrel like 20 percent my God1006 00:38:24,599 --> 00:38:26,880 like seriously yeah1007 00:38:26,880 --> 00:38:29,339 well like Siri and like before that like1008 00:38:29,339 --> 00:38:31,740 I I know these private financer a little1009 00:38:31,740 --> 00:38:34,560 bit and he's like um he's bragging to me1010 00:38:34,560 --> 00:38:36,540 he's like oh yeah dude like ever since1011 00:38:36,540 --> 00:38:38,040 interest rates have been going up you1012 00:38:38,040 --> 00:38:39,839 can make so much money in private1013 00:38:39,839 --> 00:38:42,240 Finance it's so like ridiculous and I'm1014 00:38:42,240 --> 00:38:43,560 like yeah I'm thinking like yeah we'll1015 00:38:43,560 --> 00:38:45,240 just try and like not make too much1016 00:38:45,240 --> 00:38:47,820 money off you know my van my my self1017 00:38:47,820 --> 00:38:49,200 storage vendor1018 00:38:49,200 --> 00:38:52,020 um you know if you can you know help it1019 00:38:52,020 --> 00:38:53,520 um but yeah so we have to go a different1020 00:38:53,520 --> 00:38:56,640 route because the the the line fee that1021 00:38:56,640 --> 00:38:58,320 you had to The Establishment the line1022 00:38:58,320 --> 00:39:01,740 fee to uh establish the loan and then a1023 00:39:01,740 --> 00:39:03,660 20 interest1024 00:39:03,660 --> 00:39:05,280 um and it wasn't a lot of money it was1025 00:39:05,280 --> 00:39:07,800 only like 135 000 the vendor was looking1026 00:39:07,800 --> 00:39:09,540 at trying to get1027 00:39:09,540 --> 00:39:11,160 um but yeah it was just like it would1028 00:39:11,160 --> 00:39:13,500 have worked out to be close to like 401029 00:39:13,500 --> 00:39:15,180 something thousand dollars of just1030 00:39:15,180 --> 00:39:16,440 interest1031 00:39:16,440 --> 00:39:18,720 um on that's just interest no principle1032 00:39:18,720 --> 00:39:22,040 so it's ridiculous1033 00:39:22,140 --> 00:39:24,720 yeah that is a lot of money they're1034 00:39:24,720 --> 00:39:26,520 there for a solution they know you need1035 00:39:26,520 --> 00:39:28,560 the money and then if banks saying no so1036 00:39:28,560 --> 00:39:30,720 you know they charge for it and like I1037 00:39:30,720 --> 00:39:32,040 was saying you know if you're dealing1038 00:39:32,040 --> 00:39:33,960 with people that are focused on how much1039 00:39:33,960 --> 00:39:35,280 money they're making1040 00:39:35,280 --> 00:39:37,680 well how much of your interest do they1041 00:39:37,680 --> 00:39:40,200 have at home to focus on themselves so1042 00:39:40,200 --> 00:39:42,599 that's why you know you always work with1043 00:39:42,599 --> 00:39:44,940 someone that genuinely cares you know1044 00:39:44,940 --> 00:39:48,000 anytime you make money in any any1045 00:39:48,000 --> 00:39:50,339 um transaction or Venture then it's just1046 00:39:50,339 --> 00:39:51,900 gonna my view is just gonna be fair1047 00:39:51,900 --> 00:39:53,940 right there's a value exchange it's just1048 00:39:53,940 --> 00:39:56,160 gonna be fair that's it if this if it's1049 00:39:56,160 --> 00:39:58,320 skewed with one per person's benefiting1050 00:39:58,320 --> 00:40:01,680 a lot and someone else is losing and1051 00:40:01,680 --> 00:40:03,540 then it's not it's the transaction yeah1052 00:40:03,540 --> 00:40:05,880 definitely not fair but yeah what else1053 00:40:05,880 --> 00:40:07,920 was I gonna say oh yeah I just found out1054 00:40:07,920 --> 00:40:10,260 something cool as well because we first1055 00:40:10,260 --> 00:40:12,300 went to he went to Commonwealth Bank and1056 00:40:12,300 --> 00:40:14,099 I'm helping him because he's you know a1057 00:40:14,099 --> 00:40:15,480 little bit older and he's just you know1058 00:40:15,480 --> 00:40:17,400 we need to get this done so I was kind1059 00:40:17,400 --> 00:40:18,660 of lending a hand1060 00:40:18,660 --> 00:40:20,940 um so we went to Commonwealth Bank First1061 00:40:20,940 --> 00:40:22,800 and they1062 00:40:22,800 --> 00:40:25,680 um knocked backed knocked back getting1063 00:40:25,680 --> 00:40:28,560 more lending so bringing up the loan1064 00:40:28,560 --> 00:40:30,480 like topping it up to a certain amount1065 00:40:30,480 --> 00:40:33,060 and then they also knock back allowing1066 00:40:33,060 --> 00:40:35,220 for a second mortgage to be placed a1067 00:40:35,220 --> 00:40:37,619 registered second mortgage to be placed1068 00:40:37,619 --> 00:40:39,780 on that particular property1069 00:40:39,780 --> 00:40:41,339 um and so we're like okay what are we1070 00:40:41,339 --> 00:40:42,420 gonna do then1071 00:40:42,420 --> 00:40:44,520 um but I found out that you can actually1072 00:40:44,520 --> 00:40:46,920 still put a second mortgage on any1073 00:40:46,920 --> 00:40:49,320 single property it's just not registered1074 00:40:49,320 --> 00:40:51,660 so it's not a registered registered1075 00:40:51,660 --> 00:40:52,800 position1076 00:40:52,800 --> 00:40:54,180 um so it doesn't matter who you are1077 00:40:54,180 --> 00:40:55,920 either in the bank or that has lending1078 00:40:55,920 --> 00:40:58,440 on it says no you still actually can1079 00:40:58,440 --> 00:41:02,300 place a second mortgage on that property1080 00:41:02,400 --> 00:41:05,640 yeah it's usually an unregistered second1081 00:41:05,640 --> 00:41:08,400 mortgage and a caveat yeah is what they1082 00:41:08,400 --> 00:41:09,180 do1083 00:41:09,180 --> 00:41:12,060 yeah so the caveat can be registered1084 00:41:12,060 --> 00:41:14,040 without uh the first1085 00:41:14,040 --> 00:41:16,920 mortgage lender mortgage uh giving1086 00:41:16,920 --> 00:41:18,480 consent1087 00:41:18,480 --> 00:41:20,460 um so that's protecting them to get1088 00:41:20,460 --> 00:41:22,380 their money back and the unregistered1089 00:41:22,380 --> 00:41:24,240 second mortgage is it's you can still1090 00:41:24,240 --> 00:41:27,720 use that I guess in court right to say1091 00:41:27,720 --> 00:41:30,119 hey they signed a mortgage I'm eligible1092 00:41:30,119 --> 00:41:33,240 for x amount of money so yeah1093 00:41:33,240 --> 00:41:36,660 that's true there's always a way1094 00:41:36,660 --> 00:41:38,579 all right mate so what are some of the1095 00:41:38,579 --> 00:41:41,160 common loan terms and conditions that1096 00:41:41,160 --> 00:41:45,320 investors should pay close attention to1097 00:41:46,380 --> 00:41:50,040 uh so I touched on this earlier uh about1098 00:41:50,040 --> 00:41:52,200 the if you went to a big Bank1099 00:41:52,200 --> 00:41:56,820 the loan term would usually be shorter1100 00:41:56,820 --> 00:41:59,520 one two three years1101 00:41:59,520 --> 00:42:02,280 and the conditions would be to do an1102 00:42:02,280 --> 00:42:03,960 annual review so they want to make sure1103 00:42:03,960 --> 00:42:06,300 your taxes are paid on time uh they want1104 00:42:06,300 --> 00:42:07,740 to check their most recent rental1105 00:42:07,740 --> 00:42:09,420 statements to see that you're collecting1106 00:42:09,420 --> 00:42:11,579 the rent on time same amount that you1107 00:42:11,579 --> 00:42:14,280 declared and that they approved it on uh1108 00:42:14,280 --> 00:42:16,680 they want to see that you know you've1109 00:42:16,680 --> 00:42:19,680 um you know lodged your tax returns uh1110 00:42:19,680 --> 00:42:21,480 and then no more maybe want to revalue1111 00:42:21,480 --> 00:42:22,920 the property as well so there's another1112 00:42:22,920 --> 00:42:24,480 cost that you're going to cover and1113 00:42:24,480 --> 00:42:26,280 you'll hopefully it hasn't gone down in1114 00:42:26,280 --> 00:42:28,320 value in that time1115 00:42:28,320 --> 00:42:30,359 um the1116 00:42:30,359 --> 00:42:35,820 terms uh loan terms for other Banks you1117 00:42:35,820 --> 00:42:37,680 can get you know typical commercial loan1118 00:42:37,680 --> 00:42:39,839 is usually 15 year long term sometimes1119 00:42:39,839 --> 00:42:42,780 20 but I can go up to 25 with one of my1120 00:42:42,780 --> 00:42:44,280 my Banks1121 00:42:44,280 --> 00:42:47,460 um and usually interest only is sort of1122 00:42:47,460 --> 00:42:50,940 between three years uh up to five years1123 00:42:50,940 --> 00:42:54,720 not much longer than that and1124 00:42:54,720 --> 00:42:57,599 the repayments as well so say you got a1125 00:42:57,599 --> 00:43:00,119 short-term loan with a big bang1126 00:43:00,119 --> 00:43:02,520 they're going to make calculate your1127 00:43:02,520 --> 00:43:05,400 repayments over a 20-year term1128 00:43:05,400 --> 00:43:07,319 so they're still going to work out can1129 00:43:07,319 --> 00:43:10,260 you afford a 20-year loan term but then1130 00:43:10,260 --> 00:43:12,540 they're going to renew your loan every1131 00:43:12,540 --> 00:43:14,880 couple of years and extend it out for um1132 00:43:14,880 --> 00:43:16,619 you know another two years as long as1133 00:43:16,619 --> 00:43:18,060 you pay everything on time and the value1134 00:43:18,060 --> 00:43:19,619 still Stacks up1135 00:43:19,619 --> 00:43:21,599 and then1136 00:43:21,599 --> 00:43:22,680 um1137 00:43:22,680 --> 00:43:24,420 yeah the other thing I mentioned was1138 00:43:24,420 --> 00:43:26,400 early exit costs so that's something1139 00:43:26,400 --> 00:43:28,319 that if you were to get out of the loan1140 00:43:28,319 --> 00:43:30,359 in the first two or three years you1141 00:43:30,359 --> 00:43:32,280 could be up for you know potentially1142 00:43:32,280 --> 00:43:33,660 even up to three months worth of1143 00:43:33,660 --> 00:43:36,119 interest to break that loan1144 00:43:36,119 --> 00:43:39,359 and so I just want to clarify as well1145 00:43:39,359 --> 00:43:41,040 um you've mentioned a couple of times1146 00:43:41,040 --> 00:43:44,220 that you can get a 25-year loan that'd1147 00:43:44,220 --> 00:43:46,319 have to be on a specific type of1148 00:43:46,319 --> 00:43:48,180 property a commercial property right1149 00:43:48,180 --> 00:43:50,099 it's not just any single property you1150 00:43:50,099 --> 00:43:52,440 can get that on what type of property1151 00:43:52,440 --> 00:43:55,619 would be eligible for a 25-year Loan in1152 00:43:55,619 --> 00:43:58,160 your opinion1153 00:43:58,920 --> 00:44:01,440 it's pretty much a standard a standard1154 00:44:01,440 --> 00:44:03,480 uh commercial property like a industrial1155 00:44:03,480 --> 00:44:05,339 property with a good lease like it'd1156 00:44:05,339 --> 00:44:06,900 have to be something like that it would1157 00:44:06,900 --> 00:44:09,300 not it's not just like your your corner1158 00:44:09,300 --> 00:44:11,520 shop down the road that's a retail shop1159 00:44:11,520 --> 00:44:15,380 that's vacant all the time surely1160 00:44:16,859 --> 00:44:19,260 couple of conditions on that it doesn't1161 00:44:19,260 --> 00:44:22,680 have to be industrial it can be uh you1162 00:44:22,680 --> 00:44:26,220 know a little retail space or an office1163 00:44:26,220 --> 00:44:28,619 but it has to have at least 12 months1164 00:44:28,619 --> 00:44:30,240 remaining on the lease1165 00:44:30,240 --> 00:44:32,880 at least right if you come in you can't1166 00:44:32,880 --> 00:44:36,060 come in with an with a uh a vacant1167 00:44:36,060 --> 00:44:38,880 possession property to get that1168 00:44:38,880 --> 00:44:40,500 um that particular product that I'm1169 00:44:40,500 --> 00:44:42,720 talking about you can go to a non-bank1170 00:44:42,720 --> 00:44:44,339 though so something to keep in mind that1171 00:44:44,339 --> 00:44:46,079 if you did really want a property vacant1172 00:44:46,079 --> 00:44:47,880 position you could go to a non-bank pay1173 00:44:47,880 --> 00:44:50,880 a higher interest rate higher fees as1174 00:44:50,880 --> 00:44:52,560 long as you can show serviceability with1175 00:44:52,560 --> 00:44:55,319 your income after your own liabilities1176 00:44:55,319 --> 00:44:57,420 and expenses they will let you buy a1177 00:44:57,420 --> 00:44:59,280 property vacant position and then you1178 00:44:59,280 --> 00:45:01,500 can go out and get tenants in but then1179 00:45:01,500 --> 00:45:03,599 obviously you buy vacant possession you1180 00:45:03,599 --> 00:45:06,720 also got to pay GST as well uh because1181 00:45:06,720 --> 00:45:10,579 it's it's not sold as a going concern1182 00:45:10,619 --> 00:45:12,660 um but Banks don't want vacant position1183 00:45:12,660 --> 00:45:15,119 they won't take it on they'll want to1184 00:45:15,119 --> 00:45:17,579 see that lease in place and they'll want1185 00:45:17,579 --> 00:45:19,079 to see at least 12 months remaining on1186 00:45:19,079 --> 00:45:21,720 it and options as well so usually1187 00:45:21,720 --> 00:45:22,920 they'll want to see at least another 121188 00:45:22,920 --> 00:45:25,079 months of options so there's two years1189 00:45:25,079 --> 00:45:26,880 but this other bank that I mentioned1190 00:45:26,880 --> 00:45:28,920 they're happy with 12 months so but if1191 00:45:28,920 --> 00:45:30,660 you come in at 12 months it's too tight1192 00:45:30,660 --> 00:45:32,760 you want to have like 13 14 months1193 00:45:32,760 --> 00:45:35,040 remaining when you apply but what I1194 00:45:35,040 --> 00:45:37,200 usually do for my clients is I actually1195 00:45:37,200 --> 00:45:39,599 check with the bank up front I send them1196 00:45:39,599 --> 00:45:42,660 the deal I say this is a property this1197 00:45:42,660 --> 00:45:44,520 is the tenant this is the lease terms1198 00:45:44,520 --> 00:45:47,040 this is the price this is the rent is1199 00:45:47,040 --> 00:45:49,560 this property acceptable to security and1200 00:45:49,560 --> 00:45:50,819 they'll check it they'll do a quick1201 00:45:50,819 --> 00:45:52,140 searches and they'll say yeah it's fine1202 00:45:52,140 --> 00:45:54,060 or they'll say no we don't like it1203 00:45:54,060 --> 00:45:55,980 because you know this we've checked this1204 00:45:55,980 --> 00:45:57,480 tenant I've had one recently and they1205 00:45:57,480 --> 00:45:58,859 did an ABN search and they said the1206 00:45:58,859 --> 00:46:01,920 tenant they register their ABN uh in1207 00:46:01,920 --> 00:46:03,839 2020 beginning of the year so we won't1208 00:46:03,839 --> 00:46:05,579 take it we need a brand new lease with1209 00:46:05,579 --> 00:46:07,380 an entity that1210 00:46:07,380 --> 00:46:09,480 is registered I'm like okay that's fine1211 00:46:09,480 --> 00:46:12,119 and another one they they picked up that1212 00:46:12,119 --> 00:46:15,300 the mezzanine uh wasn't Council approved1213 00:46:15,300 --> 00:46:18,060 so the property itself was great but it1214 00:46:18,060 --> 00:46:19,920 had a mezzanine put in and it wasn't1215 00:46:19,920 --> 00:46:21,359 Council approved1216 00:46:21,359 --> 00:46:24,200 so they didn't accept that as security1217 00:46:24,200 --> 00:46:27,000 so I always check that for for my1218 00:46:27,000 --> 00:46:28,980 customers because if they go down the1219 00:46:28,980 --> 00:46:30,839 path and they pay1220 00:46:30,839 --> 00:46:33,420 um you know a solicitor to do contract1221 00:46:33,420 --> 00:46:36,119 review to do a lease review potentially1222 00:46:36,119 --> 00:46:38,460 even pay for evaluation1223 00:46:38,460 --> 00:46:40,079 um and then they've or you know start1224 00:46:40,079 --> 00:46:41,760 due diligence find this out and the bank1225 00:46:41,760 --> 00:46:44,040 comes and says no well they've just1226 00:46:44,040 --> 00:46:45,740 spent you know a few thousand dollars1227 00:46:45,740 --> 00:46:48,359 unnecessarily so if I can get them an1228 00:46:48,359 --> 00:46:50,640 indicative okay up front1229 00:46:50,640 --> 00:46:52,440 it could save him some money and1230 00:46:52,440 --> 00:46:53,880 increase the chances of the loan will be1231 00:46:53,880 --> 00:46:55,680 approved as well1232 00:46:55,680 --> 00:46:57,660 all right so we're loan shopping here1233 00:46:57,660 --> 00:46:59,700 this whole episode is about loan1234 00:46:59,700 --> 00:47:00,839 shopping1235 00:47:00,839 --> 00:47:04,140 can you in no particular order can you1236 00:47:04,140 --> 00:47:07,619 give me some of your favorite lenders1237 00:47:07,619 --> 00:47:11,480 right now just off the top of your head1238 00:47:15,180 --> 00:47:19,079 Westpac uh ANZ1239 00:47:19,079 --> 00:47:21,900 um Bank of Queensland1240 00:47:21,900 --> 00:47:22,680 um1241 00:47:22,680 --> 00:47:26,300 Bendigo Adelaide Bank1242 00:47:26,640 --> 00:47:27,359 um1243 00:47:27,359 --> 00:47:29,700 suncorp1244 00:47:29,700 --> 00:47:33,000 and then in a non-bank space we've got1245 00:47:33,000 --> 00:47:37,200 pepper money Liberty Financial Latrobe1246 00:47:37,200 --> 00:47:40,079 and uh even a new lender I'm dealing1247 00:47:40,079 --> 00:47:44,220 with called wealth wlth so these are the1248 00:47:44,220 --> 00:47:46,500 main sort of players in this space that1249 00:47:46,500 --> 00:47:49,079 I'm dealing with regularly so in terms1250 00:47:49,079 --> 00:47:51,900 of like um like Bendigo bank or like a1251 00:47:51,900 --> 00:47:54,060 bank of Adelaide1252 00:47:54,060 --> 00:47:55,740 um or Bank of sa I think it's called1253 00:47:55,740 --> 00:47:57,000 maybe1254 00:47:57,000 --> 00:47:59,520 um if you are buying an asset in their1255 00:47:59,520 --> 00:48:01,440 particular location their geographical1256 00:48:01,440 --> 00:48:04,680 location are are they more likely to be1257 00:48:04,680 --> 00:48:06,839 your best funder because they're in the1258 00:48:06,839 --> 00:48:08,460 geographical location they understand1259 00:48:08,460 --> 00:48:11,160 the area they want to invest in their1260 00:48:11,160 --> 00:48:12,180 own1261 00:48:12,180 --> 00:48:14,280 um you know their own state or at their1262 00:48:14,280 --> 00:48:16,859 own little town or Regional town1263 00:48:16,859 --> 00:48:18,300 would you think that is that something1264 00:48:18,300 --> 00:48:20,700 to put together and like try that as a1265 00:48:20,700 --> 00:48:23,720 as a as an option1266 00:48:24,180 --> 00:48:26,220 not necessarily1267 00:48:26,220 --> 00:48:27,900 um they look at every deal in its own1268 00:48:27,900 --> 00:48:30,359 merits so you know just because it's in1269 00:48:30,359 --> 00:48:32,400 their own backyard doesn't make it mean1270 00:48:32,400 --> 00:48:35,339 it's a better performing asset1271 00:48:35,339 --> 00:48:37,560 um what they will do though is look at1272 00:48:37,560 --> 00:48:39,960 your location as a borrower so if you're1273 00:48:39,960 --> 00:48:42,119 going to a big Bank you'll need to deal1274 00:48:42,119 --> 00:48:44,579 with a local business Banker based on1275 00:48:44,579 --> 00:48:45,960 where you live so if you're in Victoria1276 00:48:45,960 --> 00:48:47,640 you need someone in Victoria if you're1277 00:48:47,640 --> 00:48:49,680 in Queensland you need someone please so1278 00:48:49,680 --> 00:48:51,119 you can't deal with business Bankers1279 00:48:51,119 --> 00:48:52,560 from different states even if you're1280 00:48:52,560 --> 00:48:53,940 buying in that state1281 00:48:53,940 --> 00:48:56,099 that makes sense so you can buy1282 00:48:56,099 --> 00:48:58,440 Interstate but you're going to deal with1283 00:48:58,440 --> 00:49:00,900 a banker in your location if it's a big1284 00:49:00,900 --> 00:49:03,839 bank and if if it's not a big bank and1285 00:49:03,839 --> 00:49:05,400 they don't have branches and you know1286 00:49:05,400 --> 00:49:06,839 you're dealing with myself as a broker1287 00:49:06,839 --> 00:49:08,880 then you can literally buy anywhere and1288 00:49:08,880 --> 00:49:10,560 you can live anywhere it doesn't matter1289 00:49:10,560 --> 00:49:14,160 in Australia that is okay yeah fair1290 00:49:14,160 --> 00:49:16,020 enough sounds yeah I've had that1291 00:49:16,020 --> 00:49:17,880 experience as well where I've I've been1292 00:49:17,880 --> 00:49:19,260 talking to someone and they're like oh1293 00:49:19,260 --> 00:49:20,819 where are you located and like I'm I'm1294 00:49:20,819 --> 00:49:22,200 in Sydney and like oh you've got to go1295 00:49:22,200 --> 00:49:24,240 talk to this guy I'm like why like it1296 00:49:24,240 --> 00:49:26,220 doesn't matter like does it really1297 00:49:26,220 --> 00:49:27,359 matter where I live I could live1298 00:49:27,359 --> 00:49:29,940 anywhere you know um the asset is where1299 00:49:29,940 --> 00:49:33,660 you are so you know anyway1300 00:49:33,660 --> 00:49:35,640 um I know I found that odd to so mate1301 00:49:35,640 --> 00:49:38,280 what are some resources or tools that um1302 00:49:38,280 --> 00:49:40,560 investors can utilize to help them1303 00:49:40,560 --> 00:49:42,960 educate themselves further1304 00:49:42,960 --> 00:49:45,420 um about the loan options and and make1305 00:49:45,420 --> 00:49:48,859 well-informed decisions in future1306 00:49:54,660 --> 00:49:56,280 I've mentioned in a past episode I've1307 00:49:56,280 --> 00:50:00,200 created a guide which is um a commercial1308 00:50:00,200 --> 00:50:02,900 property guy if you go to1309 00:50:02,900 --> 00:50:05,460 lagosfinancial.com free guide you'll be1310 00:50:05,460 --> 00:50:06,960 able to download that1311 00:50:06,960 --> 00:50:08,160 um and it just gives you a bit more1312 00:50:08,160 --> 00:50:09,660 information on what it kind of looks1313 00:50:09,660 --> 00:50:11,700 like you know buying a commercial1314 00:50:11,700 --> 00:50:14,339 property uh and the lending around that1315 00:50:14,339 --> 00:50:16,079 versus a residential1316 00:50:16,079 --> 00:50:18,420 and then in terms of tools1317 00:50:18,420 --> 00:50:20,280 look it's there's actually not that much1318 00:50:20,280 --> 00:50:22,319 tools out there I'll be honest uh it1319 00:50:22,319 --> 00:50:24,119 looks like the uh commercial buyers1320 00:50:24,119 --> 00:50:26,819 agency uh policy property has created a1321 00:50:26,819 --> 00:50:28,619 few tools and and I think some of them1322 00:50:28,619 --> 00:50:30,720 are great I use them as well so if you1323 00:50:30,720 --> 00:50:33,300 jump on their website and uh you you'd1324 00:50:33,300 --> 00:50:35,280 be joining policy properties this month1325 00:50:35,280 --> 00:50:38,160 so are you just joined them yeah so it's1326 00:50:38,160 --> 00:50:40,500 a bit of a plug for you1327 00:50:40,500 --> 00:50:41,700 um1328 00:50:41,700 --> 00:50:44,040 but those tools are really helpful uh to1329 00:50:44,040 --> 00:50:46,020 to look at your cash flow position and1330 00:50:46,020 --> 00:50:47,400 you know what it looks like if you were1331 00:50:47,400 --> 00:50:48,780 to borrow1332 00:50:48,780 --> 00:50:50,579 um you know higher lvrs and you can plug1333 00:50:50,579 --> 00:50:52,260 around with different interest rates and1334 00:50:52,260 --> 00:50:54,059 what does that look like on your on your1335 00:50:54,059 --> 00:50:56,339 cash flow but on my website as well I've1336 00:50:56,339 --> 00:50:58,079 got some calculators which you know1337 00:50:58,079 --> 00:51:00,900 determine your your stamp Duty as well1338 00:51:00,900 --> 00:51:02,940 as your p i repayments so if you plug in1339 00:51:02,940 --> 00:51:05,640 higher higher interest rates uh you can1340 00:51:05,640 --> 00:51:06,900 sort of see what that's going to cost1341 00:51:06,900 --> 00:51:09,540 you pni or interest only so then you can1342 00:51:09,540 --> 00:51:10,500 kind of know what your cash flow1343 00:51:10,500 --> 00:51:13,319 position is based on the net rent and1344 00:51:13,319 --> 00:51:15,420 and how much you borrow1345 00:51:15,420 --> 00:51:18,240 um yeah and then of course the the stuff1346 00:51:18,240 --> 00:51:21,420 that I uh share with my clients look1347 00:51:21,420 --> 00:51:23,700 they are custom and tailored and and I1348 00:51:23,700 --> 00:51:25,619 base that on their circumstances so I1349 00:51:25,619 --> 00:51:28,020 run a borrowing capacity and a buying1350 00:51:28,020 --> 00:51:30,780 power so at the same time so it's a bit1351 00:51:30,780 --> 00:51:33,119 of work to figure that out to look to1352 00:51:33,119 --> 00:51:34,740 and also take into account future1353 00:51:34,740 --> 00:51:37,680 lending if they need equity so then I'll1354 00:51:37,680 --> 00:51:39,000 put the future lending into the1355 00:51:39,000 --> 00:51:41,099 serviceability on the right that they're1356 00:51:41,099 --> 00:51:43,200 borrowing it at and then I'll work out1357 00:51:43,200 --> 00:51:46,200 okay based on that uh and a potential1358 00:51:46,200 --> 00:51:47,760 rent of say six or six and a half1359 00:51:47,760 --> 00:51:50,280 percent net rent what does that look1360 00:51:50,280 --> 00:51:52,319 like in cash flow what does that look1361 00:51:52,319 --> 00:51:54,059 like serviceability and then what's1362 00:51:54,059 --> 00:51:55,980 their contribution that they need to put1363 00:51:55,980 --> 00:51:58,200 in so I do that for my clients and I1364 00:51:58,200 --> 00:52:00,000 don't I don't charge for that1365 00:52:00,000 --> 00:52:02,400 um and I just send it out to them and1366 00:52:02,400 --> 00:52:03,599 that helps them make an informed1367 00:52:03,599 --> 00:52:05,940 decision yeah awesome man and just the1368 00:52:05,940 --> 00:52:07,380 listeners know1369 00:52:07,380 --> 00:52:08,940 um you know Victor actually does car1370 00:52:08,940 --> 00:52:10,500 loans as well1371 00:52:10,500 --> 00:52:12,420 um which he's he's been doing one for me1372 00:52:12,420 --> 00:52:14,880 just this week um and I was super1373 00:52:14,880 --> 00:52:16,380 surprised1374 00:52:16,380 --> 00:52:18,420 um how quick and easy it was it was1375 00:52:18,420 --> 00:52:21,119 basically all done in a day and a half1376 00:52:21,119 --> 00:52:23,280 um literally from organizing it putting1377 00:52:23,280 --> 00:52:24,839 it all through the portal1378 00:52:24,839 --> 00:52:26,460 um getting the approval1379 00:52:26,460 --> 00:52:28,319 um and you know basically1380 00:52:28,319 --> 00:52:29,460 um we're going to be picking up the car1381 00:52:29,460 --> 00:52:31,619 hopefully tomorrow so I will when this1382 00:52:31,619 --> 00:52:33,480 uh podcast airs I should have already1383 00:52:33,480 --> 00:52:36,720 picked this car up so um yeah Victor's1384 00:52:36,720 --> 00:52:38,940 you know the way that he does things is1385 00:52:38,940 --> 00:52:40,980 is awesome he's also done refinancing1386 00:52:40,980 --> 00:52:42,240 for me as well1387 00:52:42,240 --> 00:52:45,000 um so yeah big plug for for Victor1388 00:52:45,000 --> 00:52:47,040 um top mortgage broker and mate working1389 00:52:47,040 --> 00:52:49,559 the listeners go to find out more about1390 00:52:49,559 --> 00:52:52,339 you and your business1391 00:52:52,859 --> 00:52:55,079 so the best place to find me is my1392 00:52:55,079 --> 00:52:58,520 website which is uh lagosfinancial.com1393 00:52:58,520 --> 00:53:01,020 and I do have a new tool that's been1394 00:53:01,020 --> 00:53:03,839 built into the front page so when you1395 00:53:03,839 --> 00:53:05,819 when you land on the front page you have1396 00:53:05,819 --> 00:53:06,900 different1397 00:53:06,900 --> 00:53:08,819 um icons that ask you whether you need1398 00:53:08,819 --> 00:53:11,339 uh you know a residential loan a1399 00:53:11,339 --> 00:53:12,900 commercial loan1400 00:53:12,900 --> 00:53:15,240 um even a car loan or a personal loan or1401 00:53:15,240 --> 00:53:17,339 a business loan and uh there's there's1402 00:53:17,339 --> 00:53:20,220 actually some technology behind them uh1403 00:53:20,220 --> 00:53:22,319 which you used which is a loan matching1404 00:53:22,319 --> 00:53:23,700 technology I've partnered with another1405 00:53:23,700 --> 00:53:25,859 company that's that's built this it's1406 00:53:25,859 --> 00:53:28,020 very powerful and it looks at your1407 00:53:28,020 --> 00:53:29,700 individual circumstances it looks at1408 00:53:29,700 --> 00:53:32,339 what you're actually trying to achieve1409 00:53:32,339 --> 00:53:33,540 what you're trying to borrow what you're1410 00:53:33,540 --> 00:53:35,400 trying to buy and it will then load1411 00:53:35,400 --> 00:53:37,200 match that and find the the lender1412 00:53:37,200 --> 00:53:38,760 that's going to1413 00:53:38,760 --> 00:53:42,119 um you know 99 chance approve you and1414 00:53:42,119 --> 00:53:43,680 then give you some indicative interest1415 00:53:43,680 --> 00:53:45,359 rates and fees so you know what that1416 00:53:45,359 --> 00:53:46,980 looks like based on who will lend you1417 00:53:46,980 --> 00:53:49,380 the money and then if you follow through1418 00:53:49,380 --> 00:53:52,079 and and complete an application you'll1419 00:53:52,079 --> 00:53:54,119 get a phone call very quick from someone1420 00:53:54,119 --> 00:53:57,240 in my team who reach out to you and if1421 00:53:57,240 --> 00:53:59,640 you're self-employed like Andrew being1422 00:53:59,640 --> 00:54:01,319 over here then you can get a loan1423 00:54:01,319 --> 00:54:03,359 approved in a you know same day or next1424 00:54:03,359 --> 00:54:05,339 day and you don't have to provide any1425 00:54:05,339 --> 00:54:07,619 financial statements no no tax returns1426 00:54:07,619 --> 00:54:09,960 nothing like that and you can literally1427 00:54:09,960 --> 00:54:11,760 drive that car away in a couple of days1428 00:54:11,760 --> 00:54:14,700 so self-employed you need the car for1429 00:54:14,700 --> 00:54:16,740 for business use1430 00:54:16,740 --> 00:54:18,540 um good to go1431 00:54:18,540 --> 00:54:20,160 um that's where you can find me yeah I1432 00:54:20,160 --> 00:54:21,480 couldn't believe how low the the1433 00:54:21,480 --> 00:54:23,640 repayments were too I mean like we were1434 00:54:23,640 --> 00:54:26,099 like holding holding off1435 00:54:26,099 --> 00:54:27,420 um because obviously we're you know1436 00:54:27,420 --> 00:54:29,640 rather save money for real estate and1437 00:54:29,640 --> 00:54:31,619 and put it into um you know real cash1438 00:54:31,619 --> 00:54:33,839 flowing assets not at a depreciating1439 00:54:33,839 --> 00:54:36,180 asset like a like a car which is just1440 00:54:36,180 --> 00:54:38,040 you know a really really bad investment1441 00:54:38,040 --> 00:54:39,780 obviously1442 00:54:39,780 --> 00:54:42,839 um but I can't believe how how little it1443 00:54:42,839 --> 00:54:45,660 costs per week to to buy you know a1444 00:54:45,660 --> 00:54:47,940 really nice family car like a nice1445 00:54:47,940 --> 00:54:50,040 secondhand family car I'm not you know1446 00:54:50,040 --> 00:54:51,960 I'm not a really big car guy or a flashy1447 00:54:51,960 --> 00:54:54,059 guy I'm not a cargo all obviously just a1448 00:54:54,059 --> 00:54:57,119 real estate guy but yeah if I hadn't1449 00:54:57,119 --> 00:54:58,920 known it was this easy and like quick1450 00:54:58,920 --> 00:55:01,440 and and cost this little1451 00:55:01,440 --> 00:55:03,480 um I would have done it a long time ago1452 00:55:03,480 --> 00:55:06,180 but I just didn't I have no idea how to1453 00:55:06,180 --> 00:55:09,359 you know buy a car put it up for finance1454 00:55:09,359 --> 00:55:11,160 for a car like it's just something I've1455 00:55:11,160 --> 00:55:13,079 never even thought about because I just1456 00:55:13,079 --> 00:55:14,760 don't care about cars1457 00:55:14,760 --> 00:55:16,559 um but yeah if I had known1458 00:55:16,559 --> 00:55:18,240 um how easy it was I would definitely1459 00:55:18,240 --> 00:55:20,160 would have jumped on it earlier so um1460 00:55:20,160 --> 00:55:22,020 yeah I talked to Victor if you guys are1461 00:55:22,020 --> 00:55:23,880 looking to get a new family car uh1462 00:55:23,880 --> 00:55:27,059 anytime soon but mate that looks like uh1463 00:55:27,059 --> 00:55:29,940 that's a wrap uh this has been a1464 00:55:29,940 --> 00:55:32,640 financial expert Victor Lagos and Andrew1465 00:55:32,640 --> 00:55:34,740 Bean on the Financial Freedom series1466 00:55:34,740 --> 00:55:37,579 cheers everyone1467 00:55:37,579 --> 00:55:40,619 thanks everyone thanks Andrew see you1468 00:55:40,619 --> 00:55:41,940 next time1469 00:55:41,940 --> 00:55:45,000 this is the Financial Freedom series1470 00:55:45,000 --> 00:55:48,059 designed to show you how to cash flow1471 00:55:48,059 --> 00:55:52,859 your way to Financial Freedom