The 6 Month Rule
Back when our property pioneer, Samuel Leeds first started his empire his first deal was a ‘no-money-down' one which means he purchased it and refinanced it immediately. However, after this, the government changed the rules so that refinancing could only take place 6 months after a property had been purchased. Investors were despondent and the strategy seemed to be a dead duck. Everybody was talking about it.
Something that didn't spoken about was the fact that the law was reverted recently. The 6-month rule no longer applies which means you can buy a house and refinance it straight away. In this video, Samuel names a few mortgage brokers who he has worked with to make this happen for his own deals. Watch and take notes!
What's The Deal?
So, imagine a bank said they'd give you 100% of the money to buy a house and then you could rent that property out. The bank's interest rate would be around 3% which means as long as your ROI from rent was higher than 3%, you'd make a profit. The bank is funding it, it's your house and you're earning money.
In reality, banks won't pay 100%, they'll offer more like 70-80% which means you have to come up with the 20-30% to secure the property. You could then add value to the property by improving it in some way or fixing it up, causing the value to rise. You then, get a new mortgage based on the new valuation! This is how you recycle money through refinancing.
