10 BINVESTED PROPERTY MYTHS BUSTED
Sometimes people get the wrong idea about what we do here at Binvested.
Let’s shine the light on 10 Binvested property myths to examine the truth behind the confusion.
MYTH 1: “BINVESTED GETS YOU INSTANT EQUITY UPON SETTLEMENT.”
This is not true. In fact, there is a difference between value and equity that needs to be cleared up.
Value is how much a property is worth. Equity is the amount the borrower owns on a property. In other words, if you have paid off $150,000 on a $600,000 loan, then you have $150,000 worth of equity on the property. If that property has increased in value over the course of the loan, then that increase will add to your equity. So, if the property is worth $50,000 more than what you paid for it, you would potentially own $200,000 in equity.
The thing with equity is that not all lenders will let see equate value with available equity. Depending on your finance arrangement, the policies and property assessment processes of your lender, you may need to wait before withdrawing equity.
So, while Binvested may get you value by sourcing good growth properties below market price, whether or not that value translates into accessible equity is up to your mortgage lender.
MYTH 2: “YOU CAN BUY 10 PROPERTIES WITH ONE DEPOSIT.”
In theory this is true. You could purchase one property with a starting deposit, then use the equity from that property to purchase a second investment. As each property goes up in value, you could use that equity to buy another, and so on.
In the current market, this would take a looong time. If you want to build a portfolio of ten properties as quickly as possible in order to reap more out of each market growth cycle, then saving will help you greatly.
It’s no secret that back in the day Nathan was a bit of a miser. We aren’t trying to put him down, but he started his investing journey as a tight-ass – and for good reason. He saved every cent he could muster and put it into property. This helped him build his property portfolio at a much faster rate than he would have managed if he relied solely on equity to fund his next purchases.
MYTH 3: “YOU WILL BE ABLE TO BUY 19 PROPERTIES IN ONE YEAR.”
We have seen this happen before for some of our clients, but realistically speaking, very few people would be able to achieve this now.
The lending environment, post 2015, has become very restrictive. It is much more difficult now for investors to get the finance they need to build such a large portfolio in such a short time frame.
But’s that not a reason to throw in the towel! Even today our investors are buying as many as four properties within a few months.
Any ground you gain today, will springboard you when finance eases up in the future. It’s essential to put yourself in the best position to take advantage of opportunities when they come your way.
It is essential to speak with a finance strategist at the start of your investing journey in order to set up the best structure to support your portfolio – whether you want to build it over one year or one decade.
MYTH 4: “BINVESTED ONLY BUYS EX-HOUSING COMMISSION PROPERTIES OR RUN-DOWN REGIONAL UNITS.”
First of all, we focus our investing on metropolitan areas that offer good growth. We absolutely steer clear of areas that are dependent on one industry, such as mining towns or small rural areas.
Secondly, we buy regular houses, units and semis – both new and old.
There is a misconception that you can’t buy under market value unless the property is not worth buying. Wrong. Nathan has access to a wide network of selling agents – and, he is also one hell of a negotiator.
As a result, we regularly source modern properties, in excellent condition that are within metro areas. And these investment properties get great results.
MYTH 5: “BINVESTED ARE JUST LIKE OTHER OFF-THE-PLAN SELLERS.”
While we occasionally source new properties nearing completion, this is not our mainstay. When we do it’s only because they are heavily discounted below retail value.
We do engage in bulk purchases of land or real estate for our clients. By using our group buying power, we are able to buy land under market value. This enables our clients to purchase at a wholesale price. We don’t earn commissions on these deals.
This contrasts to regular off the plan property deals, which are sold at inflated prices, and selling agents pay themselves big commissions.
MYTH 6: “IT’S ONLY WORTH PAYING FOR A BUYERS’ AGENT IF THEIR FEE IS LESS THAN THE DISCOUNT THEY MAKE BY BUYING BELOW MARKET VALUE.”
A buyer gets peace of mind that they have purchased a good property that is in line with their goals. They also get access to properties not yet listed on the market. And, they save themselves time and stress while also saving money on the purchase price.
A buyer’s agent working on your portfolio injects the benefit of expertise, knowledge, experience and skills which would take decades to develop yourself.
MYTH 7: “THE OWNERS AND STAFF AT BINVESTED KEEP THE BEST DEALS FOR THEMSELVES.”
At Binvested, we have a policy of always reserving deals for our investors first.
In fact, our founders and staff have passed up deals that would make them hundreds of thousands of dollars in order to give our clients priority. Just look at the deals that we showcase in the Binvested property vault – our clients are the ones making money on those properties!
MYTH 8: “NATHAN BIRCH IS BINVESTED.”
If you have followed Nathan’s property adventures on YouTube for years, you may be mistaken in thinking that Binvested is a one man show. In reality, Binvested is a team of property investment specialists. It is also a community of property investors.
As a co-founder, Nathan oversees the property sourcing team while continuing to play a key part in locating, negotiating and matching properties with investors.
Binvested’s other co-founder, Daniel Young, is the strategic powerhouse behind Binvested. He manages the operations team and runs MAP Sessions, to educate investors on investment strategy.
There is also a family of companies under the Binvested umbrella to help with finance, legal, financial planning, accounting and property management. Nathan may be a super property negotiator, but he’s no superman! Just like in investment, in business, he also relies on the support of an expert team.
That expert team are all on their own property journey and they are all at different stages. We really do understand what you’re going through, because we’re going through it too. The frustration of not being able to save quick enough, the fear, the excitement, the sense of pride, the conversations with other people who all have some sort opinion about what we’re trying to achieve – yep, we get it!
MYTH 9: “BINVESTED MAKES PROPERTY INVESTMENT RISK FREE.”
All investing carries risk – However, risk can be managed. This is where Binvested comes in.
Binvested helps investors develop strategies that are in line with their goals, financial positions and risk appetite. We also educate our investors about the types of properties they should buy in order to achieve those goals.
A wealth protection strategy should be part of any wealth creation strategy. We help our clients create exit strategies and contingency plans to cover any unforeseen circumstances.
This includes financial planning and building appropriate insurance cover.
We want to make sure that nobody ever hurts themselves. That’s why we don’t pressure people into a particular strategy or type of property. In fact, we even turn people away who we feel have not properly considered their decision to buy.
MYTH 10: “YOU CAN BUY PROPERTIES WITH ONLY A 5% DEPOSIT.”
A few years ago, 95% loans were commonly used by investors. Today it is still possible to buy a property with a 5% deposit.
Getting the loan, however, is another story. It can be difficult to attain a 95% lend on a property in the current finance environment.
Repayments on these loans are also much higher. A loan to value ratio of more than 80% attracts lenders mortgage insurance – which you have to pay for.
This puts you in a ditch in terms of serviceability. It will take you much longer to be in a position where you can withdraw equity or access more finance.
This is why we are always adapting the tactics we teach to our investors to match the environment.
MYTH 11: AMAZING RECORD OF RESULTS.
Believe it or not, this one is true!. The RESULTS we get are NOT A MYTH.
Our founders Nathan Birch and Daniel Young have acquired over 270 properties between them. Even some members of our team have over 20 properties. Our clients also get incredible results.
We built high performing property portfolios that let people live life on their terms. We help create financial freedom through growing net worth. That is a fact!
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So there you have it. There are some of the biggest Myths busted! Is there anything else about Binvested you would like cleared up? Let us know below.