I Was Approached In A Bar By An On Property Listener!

[arve url="https://www.youtube.com/watch?v=FDIiQVwU8tQ" mode="lazyload" align="center" /] I was out for drinks the other night and a listener of the show came up and said hello and we had an awesome chat. In this video I talk about that chat as I feel our discussion may be useful to some people out there. 0:00 - I got approached in a bar by an On Property listener 1:00 - They were a bit stuck trying to buy an investment property 2:00 - Sometimes a mortgage broker will only give you one solution to a problem but there are other possible better solutions 4:35 - They had the potential to build a granny flat on their existing property 9:07 - If you ever see me out feel free to come and say hi 10:25 - Maybe we can do a property meetup in future Recommended Videos: Property Investing As An Insurance Policy - https://www.youtube.com/watch?v=E-66pdMRtoc Financial Freedom Won't Happen Unless You Take Action - https://www.youtube.com/watch?v=a5lp9Tf_uCU Transcription: Sells out having drinks the other night. And someone came up to me and said, Hey Ryan, I know you from online and I know you from on property. Can I sit down and have a chat? And it was really awesome to have a chat with this person about their financial situation, about what they're trying to do. And I kind of wanted to share this with you guys cause I thought it was a really interesting conversation. Now I won't say who it is because obviously I want it on a privacy and things like that. But I'm sure if you're listening to this, you'll know who you are. If you guys ever see me out in public, feel free to come and say hi. I always love to meet people and have conversations. As I've mentioned in other videos, I love talking about money. So if someone comes up to me and they're like, I know you from on property and we get to talk about property, we get to talk about money, we get to talk about finance, then that's just gonna make my day. So if you see me, feel free to come and say hi. So basically having beers, we sat down and chatted for about 10 or 15 minutes and just this person laid out their situation with me about how they are looking to purchase an investment property, but they got stuck in order to get lending. So they already owned one property, they own their own home and they're on this journey where they want to do the two properties to financial freedom strategy or they want to do a version of that and then want to start building up their passive income through investing in property. But they were kind of stuck in terms of getting lending. They had just had a child as well. And so obviously as you have kids and it makes it harder, but what was really cool about this situation was how we're able to look at some ideas of potential ways that they could move forward. Maybe not right this second, but when the partner goes back to work, then they may be able to get lending despite the fact that the mortgage brokers said they couldn't borrow money unless they earn x amount of dollars. And this I think is really important for everyone out there to think about as well, because sometimes you'll go to a mortgage broker and you'll lay out your situation and you'll lay out your goals. They will then interpret that and tell you a yes or no, yes you can borrow or no, you can't borrow. It's often very important at that stage to say, what do I need to do in order to be able to borrow? And they were given an answer that is who you need to earn x amount of money that exceeded what they were able to do. And so they felt stuck, but there was actually other things that they could try as well. So it's very important that you find a good mortgage broker and that you looked down different avenues as well. So you kind of mortgage brokers don't really give you the answers into all of the different things that you could do that might give you the most obvious one that is not actually achievable. But yeah. So let's talk a bit more about this conversation. So they owned, they own their own home that they were living in at the moment and there were actually looking to purchase another property that was going to be another home that they were going to live in. So they were moving towards actually moving house into this new property. So the first thing to look at when you speak to your mortgage broker is to assess whether or not lending requirements or how much money you can borrow is going to be different, whether you're borrowing to buy your own home versus borrowing to buy an investment property. So given the APA guidelines, it can actually be harder for investors to borrow money rather than poor people borrowing money to buy their own home. So you need to speak to a mortgage broker about this. I just got something in my eye. He need to speak to a mortgage broker about this because they will know the ins and outs of it, but it can be very different looking at purchasing your own home and turning your existing home into an investment property versus actually looking to buy an investment property. So I have heard of people doing this where they kind of home hop in the fact that they will buy a place as their home. They will live in it for whatever the minimum required time is. Maybe it's six months, maybe it's 12 months, maybe it's longer, and then they will move out and then turn it into an investment property. So speak to a mortgage broker about whether this is possible for you, but for this person, that was one of their options. First, let's go back to the mortgage broker. Let's talk to them about buying this as our own home because when they did the assessment originally they were just talking about buying an investment property. The other option they had is that they had the ability to potentially build a granny flat on the property that they were living in. Now this can be beneficial when it comes to getting alone just because it's going to improve your cashflow situation quite dramatically, especially being in Sydney. I'm not sure if the property was in Sydney or not, but building a granny flat for around $120,000 and then being able to rent it for around three or $400 per week is a significant rental yield for that property and it's going to boost the rental yield of your overall property as well. And that is income that the banks are going to take into account when it comes to deciding whether or not they can lend you money. So they will look at the income from your investment properties. And so if you have income coming from a granny flat, you have income coming from the property as well, you're going to have a higher yield on that property and that may be what you need to push you over the line. This person in particular I think had some profit share in a company as well. So banks don't necessarily identify that as income, but that profit share could have been used to help build that granny flat as a deposit in order to get the loan. And I'm not sure whether they could get a loan for the granny flat or not. Probably be somebody to talk to a mortgage broker about. But if they have a significant amount of money, uh, in terms of profit share that they could use as a deposit for the construction line on the granny flat, then there's a good chance that they could probably get that over the line. So if you can't get lending for your next property when you're talking to your mortgage broker, talk to them about getting a loan for a granny flat. So generally that's probably going to be a construction line and talk about how much of a deposit you need, whether you could get lending for that. But then it might also be useful to go through the scenario of, okay, let's say that we built this granny flat. Let's say that we have x amount of rental income coming in from this granny flat, how does that then affect our borrowing capacity and would that allow us to jump into another property quicker or would they actually hold us back? So if you have a good mortgage broker, they could go through this with you. Obviously you don't want to mortgage brokers and who knows? This may change with the findings of the Royal Commission that just happened, but this may change. But mortgage brokers and they get paid when they actually provide you with alone. And so you don't want to be super annoying to your mortgage broker, but if you're an honest and up front person, you're trying to get loans, then they should be able to help you run through these scenarios and work out what's going to be best for you. So yeah, looking into building that granny flat, we could have been a good option for this person. Even if they can't, let's say it doesn't help them be able to borrow. Let's say they're in a position where they go back, they talked to the mortgage broker, they run through the scenarios of whether or not they can borrow and they could do a granny flat, but that won't help them move into a second property in might actually be worth doing the granny flat anyway because you're going to get the rental yield from that property. So that's going to give you more of a buffer in terms of rental income and in terms of cashflow that might push your property into being positive cashflow or it could just help your life in general because you've got extra money coming in on top of the expenses of owning that property. And so that just could help your overall financial situation allow you to pay off debt quicker, allow you to save a deposit faster as you move towards being able to buy your next property. Yeah, or it could just help you pay off debt. So even if they can't move forward into the next property or maybe you can't move forward into your next property, it might be worth looking at whether or not it's worthwhile to build a granny flat because getting a 10 1112 maybe even 15% rental yield and being able to use that to pay off debt and pay off debt faster could be a really smart thing for you financially.