G’Day,

Yza Canja is back with some finance answers for you. Remember to email questions@cmoney if you wish to submit a question.

Q.2 What percentage of my income would the bank want to be towards a home loan that I could sustain in their eyes?
A.2 There is no set percentage that a bank looks at with regards to how much of your income goes to your home loan. Different banks look and assess your capacity to make repayments in many different ways, this is made up by an overall consideration of what you earn and ALL your regular outgoings (any existing debts) plus living expenses. Though in general, the old rule of thumb was that no more than 1/3 of your income should go towards your housing costs, but in this day and age of multiple investment opportunity, and multiple debt opportunities, the rules have been changed to consider a more holistic scenario of your cash flow, and added on to that different lenders have different views of how this would work. Its best that you review where your financial situation sits at the moment and you may be able to maximise your borrowing capacity.

Q2. As a property investor, I have many different company trusts (say 10)
holding at lease 20 properties. At this point, if I am to seek more finance
to buy more properties in a new trust (to be created), do I need to provide
you with all the paper work for each of my trusts?

If so, why do they need these information since there is no relationship
with the newly created trust?

A2. The quick answer to this is Yes, as your
finance strategist it is best that you provide us with all information on
all the trusts that you are involved in. We then go through your
information and determine what information is necessary to provide to the
different lenders, and which information does not need to be shown. To give
you a thorough strategy we need to understand your OVERALL finance position.
This way we can act as a filter between yourself and the lenders and you
need not supply the lenders with information that is not relevant or
necessary.

Different lenders have different requirements, not all lenders require all
the information about your separate trusts, but some do, so it is best that
we map out the strategy first and this includes determining which lenders we
go to, at what time and for what purpose. This all depends on what the
lender’s criteria is and what the new purpose of the loan is (i.e. a
refinance, new property purchase, new development). In this market the
lending criteria is constantly changing so it is best that you get as much
information about the lenders requirements before considering a loan
application with them.

The balance and the key to a successful finance application is by providing
the lender all of their required documents, but also knowing what
information is not required. The only way to successfully do this is by
working closely with your finance strategist to understand the different
lender requirements before you even approach a lender. This is another
reason why we recommend that you work with a broker rather going directly to
a bank.

Cheers
Carly

Great news this week. Finance expert & property investor, Yza Canja has decided to come on board and answer some questions on finance and investing. If you have any queries you would like to get answered contact a member of our CMoney team on 02 9371 4799.

Q1. I have over $400K in equity and the banks are telling me that I cannot access this equity or that the amount that I can access is limited to about $20K, how can I get access my own equity and still maximize the amount the banks will give me?

A1. Recently banks have tightened their guidelines about “cash out” loans, these are loans where you take out the equity from your existing properties and you are able to use this for whatever you please and you may not need to use it till. Not too long ago we were able to tell the banks that the new cash out loan was for investment purposes, or a holiday, new car etc… But now they want evidence of what you will be using the funds for.

Depending on your personal circumstances, it is easier to get bank approval if you are able to get a letter from your accountant or financial planner stating that you are intending to use the funds in investments such as shares, property trusts etc if of course this is indeed what you want to do. If you are looking to access funds purely for domestic or personal purposes such as a holiday, new car etc, your approval from the lender is highly dependant on how much in $ you are looking to take out, if it is below $50K (and as long as you are able to demonstrate serviceability) it is likely to get approved. A tip to remember would be that the more specific you are about what you use the funds for the more likely your chances of approval are.

I always recommend that you should have as much funds made available to you as possible so you are able to invest straight away when the right opportunities come up.

Q2. I am looking to do my first development this year. I have recently enquired about finance for the development and apparently the accepted LVR for a development (capitalized) loan is 70%. I don’t have any equity to put into the project so I am a bit stuck, do you have any ideas? I could possibly use a property of my parents for equity?? Is that possible? Also, what type of income is expected to service a loan of this type?

A2. This is the hurdle that many first time developers incur, which is where do they get the deposit money from. At CCORP we teach several different creative ways to come up with these monies… but in a nutshell you can use your parent’s property to borrow against, however it will mean that they will need to be involved in the project. So instead what you could do is take a separate normal residential loan against your parents property to fund the deposit for the development. This means that the loan is secured against your parents property alone and is not linked with your development. It also means that you will need to make on going monthly repayments on this loan and your parents will guarantee the loan for you because the property is in their names. Your parents will be liable for the loan if you do not meet your repayments on this, so whilst there is a risk on their property, it is limited and kept separate from the development itself.

Other creative ways of financing the deposit is by getting investors in to fund the deposit through a Joint Venture agreement. Vendor financing the deposit is also an option.

Q.3 As I intend to buy a property in the USA, can you advise if I can finance my mortgage in Australia? Jack

A.3 With regards to financing a purchase in America, Aussie lenders will not allow you to use the property in the US as security, thus your option here is to use existing equity from a property based in Australia. You can draw out the equity from an existing home or investment property for the purpose of purchasing another investment property, which so happens to be in the US.

Some lenders will not find this purpose acceptable, they may consider this a pure “cash out“ circumstance which means that you are drawing on your equity and will use the funds for almost anything. If a lender feels that you are merely taking “cash out” they could be very hesitant to lend you the monies or they will limit the amounts that they give you access to. To get around this, you must be cautious and meticulous of how you present your loan purpose to your lender. The loan purpose must be presented in such a way that you provide evidence of what you will be using the funds for, and you must be able to display evidence of a financial benefit to you (i.e. evidence of rental returns etc). It is important that you carefully structure your loan to do this and you have clear communication with your lender before lodging your loan application.

Yza will be answering more of your questions in the coming weeks. To get your questions answered, email questions@cmoney.com.au.

Cheers
Carly

G’Day,

I have some exciting news to share with you. You can now be involved in CCORPs Property Development projects and share in some of the profits – as you know, we are currently involved in many developments throughout Australia with returns of up to 70% in some of them. Now you are able to invest in these projects and personally share in the profits.

Over the past few years I have been inundated with requests from people to invest in my developments so that they can share in the profits from them. Up until now I have only ever involved my direct team of select students in any of my projects. But for the last year I have been working hard to create a way for just about anyone to get involved, to join the team and to indirectly become a developer, to continue to learn and have a birds eye view of the development, without having to do it all on your own and to still be able to share the profits. Now, for the first time ever, I am very excited to announce the launch of CCAPITAL and which gives you that opportunity to invest in CCORP’s Property Developments. You literally get to see your money grow through these development projects. You get an overview of the development, get to see how the process works and get a regular update on where the development is at and what strategies are being applied. It is your chance to get involved in property development where before in previous situations you may not have been able to.

For more information or to register your spot in the prospectus please call 02 9371 4799 or email norrie@ccorp.com.au for a copy of the prospectus.

Cheers,
Carly

Hey guys,

Just a quick update to fill you in on where our Toronto deal is at.

As you may know, on January 15th we settled on this amazing deal in Toronto NSW.

The site is for 17 townhouses of which 10 have already been built. The site has not been under construction for 2 years. We have confirmed with the original Architect who handled the original Construction Certificate (CC), that they are willing to stay on as consultants. We have also confirmed this with the Engineer and Private Certifier so we are off to a good start.

Our builder Tony is on site this week completing a detailed inspection report of the existing units and firming up construction estimates for the project. A full Building schedule will also be completed and we feel we are still on track with our original estimates.

This goes to show if you see a stopped development site, where construction is no longer in progress, always look into why it has stopped. There could be a very good reason and you never know you may come across a good valuable site and at the same time be helping someone out who may be having difficulty completing it.

Cheers
Carly

Hey guys, well I’ve just been reading an article where an RBA official has reported that Australia is facing an undersupply of housing!

However Queensland reports a vacancy rate of 3.8% in their housing which does not confirm what the RBA official has advised, so what does this mean?

As a whole Australia does have a shortage in housing, however if you were to look at this in a micro research and breakdown where the shortage is, you will soon realise that certain areas of Australia have an undersupply of housing, and some areas are still coping well and do not have an undersupply, these are the areas where demand for housing is much less.

As investors the best thing for people to do when investing in property is to look at the rental demand in the area, find out where people want to live, find out how much people can afford to live in that area and purchase an investment property to cater for that need. It’s not about us as investors, it’s about tenants and their needs.

Keep in the loop about what is going on in your area or the area you want to invest in. This is the best way to make sure your investment will be a profitable one with a small amount of risk. Have a chat to one of our investment property consultants at CProperty on 9371 4799 and arrange a free consultation or check out www.cproperty.com.au

Last issue I showed you how to go about finding a development site so hopefully you have taken some time to look for some possibilities. But how do you know if they are anything more than possibilities? Well as I said, Property Development is a matter of applying seven simple steps. So now you know how to go about Step 1 – Finding a Development Site, it is time to learn how to do Step 2 - Site Analysis.

Quick Calculation
Once you have found a site you need to be able to do a quick calculation so that you can assess whether or not it is worth spending more time on. You will need to know your basic costs in order to do a rough calculation such as land purchase cost, building costs, retail value once built, consultant costs. These costs are relatively easy to approximate and at this stage you are only jotting down estimates to see if is something worth pursuing. For example if saw a development site with approval for 6 Townhouse you would do a quick calculation to see if it may be profitable:

6 Townhouses

Income = $3,000,000
Land costs = $900,000
Building costs = $1,200,000
Consultant costs = $50,000
Stamp duty = $16,000
Selling fee’s = $90,000

Profit = $744,000

Check out the local council
Once you have done a rough costing and you know that there is profit potential in the development then it is time to take other matters into consideration such as council guidelines and zoning. The local council is a great source of information. If the site is already DA approved then a lot of the work has been done already. The architect and engineer who did the approved plans may be able to provide valuable information.

Another area that you will need to research is any environmental factors that may have an impact on the success of the development such as access to water, sewerage, telecommunications and power. These can be costly if not already provided. This is the stage where you will have to take a look at the actual site by visiting it so that you get to see anything that may not be visible on aerial maps or drawings such as power lines that may run through the site. You will need to look for such things as are there any heritage issues in the area, is the site liable to flooding, are there any easements on the land, is it going to be easy to drill into the ground or is it made of rock.

* Water
* Sewerage
* Telecommunications
* Power
* Flood issues
* Easements
* Caveats
* Soil type
* Rates or taxes owning
* Heritage issues

Demographics of an area are really important
Demographics of the area will also have a huge impact on the development. You will need to know who will buy in the area, what type of housing is needed, is there a shortage of certain types of dwellings, is the area predominantly single people or couples, families or elderly people? These answers will all have an impact on what you build, how many bedrooms you will need, what size houses are most likely to sell, and therefore have a huge impact on your profits as you need to be selling something that the area requires.

What is happening in the area?
Whilst it is important to check the current market it is also important to check out anything that may affect it in the future such as planned infrastructure. This will give you a better idea of what to build. By finding out the demographics and the future planned infrastructure you are then able to build properties that you will have no problem selling and as this is where your profit lies. Doing a site analysis is one of the most important steps in property development. You want to make sure that you project suits local requirements and therefore targeted at the right market. Continued market research will allow you to see what areas are experiencing a growth and which area is experiencing a decline so that you are not developing in an area that it is going to be difficult to sell. By checking out the local real estate market, you will be able to see how long it is taking properties to sell in the area you are looking to develop in. This will give you a good indication on how quickly you will be able to sell and again, how quickly you will make your profits. But I will focus more on selling at step 7 – selling.

What are my choices?
The main two types of sites are DA approved or Raw. A raw site has no planning approved and based on local council zoning guides, is up to you to research and decide what you can put on the site. A DA approved site has a lot of the work done already and with plans approved, there is a lot less that you need to do as architect and engineer plans will have already been drawn up. If you wish to make a slight variation to the DA then this is possible and may be accomplished by applying to the local council.

This is the stage where you fully analyse and get acquainted with the site. You will also need to look for anything that may be owing on the site such as rates or taxes. Council will have a big impact on what you can build so you will need to familiarize yourself with the terminology. Jump on their website and browse around the different planning maps and zoning guidelines for the area. You will be able to find out from council, information such as the minimum size per site, any street frontage requirements, any specific building materials that must be used, and the development plan for the area. Once you have determined through a quick calculation that the development is worth looking into further and you have done your market research on the area and researched the site, then the next step is to run a detailed feasibility with actual cost of everything involved to see what your profits will be. Negotiating is a key and a major influence on the profitability of any development but I will be telling you more about Step 3 – Financial Feasibility, in the next issue.
Log onto www.cdevelop.com.au to download free reports and find out more about the courses we offer on Property development. Call 02 9371 4799 or email info@ccorp.com.au for more information.

This year Ccorp is going to be massive!!
You can either watch the hype or you can get involved! We are having several free events this year, check these out and come down to any that are in your area.

March
13th – 14th Massive Property Results – Melbourne
20th – 21st Massive Property Results – Brisbane
27th - CDevelop One day workshop – Adelaide

April
18th - CDevelop One Day workshop – Brisbane

May
15th – 16th Massive Property Results – Adelaide
22nd – 23rd Massive Property Results – Sydney

Check out these links for more info on these spectacular events
Www.massiveresults.com.au/property
Www.cdevelop.com.au/onedayworkshop

Dates are prone to change, however, if you are interested in coming along to one of these free events and have any questions, email them through to info@ccorp.com.au or call us on 02 9371 4799. Hope to see you there

I don’t know about you, but after recovering from our first Massive Results Bootcamp in Sydney, I am really excited about our upcoming one in Gold Coast. Were you there? I’m incredibly proud of what we were able to achieve over those 2 days. This is what one person said, “I was only there for a few hours and I felt so activated that I went out and took action on the business ideas I’ve had germinating for years.” There are so many examples of this and I’m so excited to hear all the stories that will come out of that weekend years into the future. The highlight of these events whether it’s property development or business, it’s the REAL DEALS that get put together on the day that are always the most amazing. Can’t quite put my finger on it, but I think it has a lot to do with showing people how easy it can be to turn a dream or idea into a reality. So what’s the key to turning something into reality? Well I’d argue that it’s all about Joint Ventures.

Massive Results showed that there’s lots of people out there with a vision but it can be quickly realised when they tap in to the potential of others ­ it might be marketing, websites, a database or a 100 other things. Who’d have known that a whole business could be put together in 15 minutes purely from a group of strangers in a room. But I bet the guys who had an idea for an Asian Education company, the gentleman with a passion to raise $10 million to protect Australian land and the woman who¹s going to help mothers through her online network are now convinced that proximity to more communication or individuals and turning that into JVs is definitely a powerful thing when wanting to turn an idea into a reality.

It’s basically networking on the next level. It’s not about finding people who are going to be useful to your wealth aspirations, but seeing what value you can add to what they’re doing. I’m sure that the deals we did on stage weren’t the only conversations that were had at Cresults ­ but I know the potential is even higher. I know that there are deals to be put together on CCLUB!!! It might be property, you have a piece of land or you want to invest in a deal that has a 20% margin, it could be that you have the next best internet business or solution to a major problem in the world - DONT WAIT! There will always be more CCORP events, but why wait, do something TODAY. Let us know your idea! Tell people what you’re looking for! Reveal your skills for everyone to see! See results on business you’ve been sitting on…YOU CAN DO IT!!

Cheers
Carly

This is one of the single most asked question when purchasing property….
The question that people should actually be asking themselves is… Which area has the best growth for me to invest in?

The thing is, it doesn’t matter when, how, who, or why, it is a question of growth. Believe it or not, most of you will actually ask your friend, aunt, uncle, mum or dad for advice on where to invest, instead of finding out which area is going to have the best growth in the near future… I mean, your friend or family may have brought their investment property 3 years ago and their property increased in value ten folds, however this may not be the case now! This is exactly why growth is very important when investing in property… Not House and Land or Land or Off the Plan, it is all about growth… Growth in population, growth in development, or growth in infrastructure, this is the key to investing in property. When you learn this, you will find yourself heading in the right direction… Fast!
We base our seminars around this information and we are always open to you coming along and experiencing this for yourself!

Check out our website for further information on our upcoming Advanced Property Investment & Finance tour now…www.cmoney.com.au/events. We are launching this amazing event in Adelaide this week followed by Brisbane, Melbourne and Sydney.

Cheers
Carly

G’Day,

Just wanted to let all our fantastic CCLUB members know some exciting news about our Massive Results Bootcamp coming up in September (www.massiveresults.com.au). I’ve booked one of my favourite conference venues in Sydney – it’s the Convention Centre in spectacular Darling Harbour (not too far from our new office actually )

It’s such a great venue, and really sets the stage for this more business and coaching orientated event. I’m putting a lot of my time at the moment into making sure that what I communicate during those 2 days is going to be really applicable, and help you guys to take more ACTION than ever before. I can’t wait to hear the stories!!!

I was also hanging out with entrepreneur extraordinaire Dale Beaumont the other day and we were chatting about my new book that I’m writing and explaining the vision for the Massive Results Bootcamp. Such a great guy and I know that what he’s gonna bring will seriously inspire your socks off!!!

Remember to register for your FREE spots by clicking on our website www.massiveresults.com.au or alternatively call my office on 02 9371 4799.

Why not bring your family, friends and business partners along to this event and show them what they’ve been missing out on! I’m hoping that this is going to be the biggest event I’ve ever done!

See ya soon,

Carls