Property investing is not all peaches and cream.
When you get it wrong…you can get it really wrong.
For example, Todd Polke shares a story of a bloke that had all the loans for his big portfolio with the one bank.
He sold a few properties to get some ‘cash out’ for his retirement.
He wanted to give the bank manager the heads up before he went holidays.
So he rang his ‘friend’ the bank manager, and said ‘there’s a million dollars coming into the account because I’ve sold some properties’.
When he got back from holidays he found that around $550,000 wasn’t in his account.
Turns out the bank had reassessed his ‘Loan to Valuation’ ratio across his portfolio, and put the money against other properties.
A nasty shock for a guy preparing for his retirement.
In fact, I believe it ended up delaying his retirement by years.
This guy made a common – easily avoidable – mistake that many people make in structuring their property finance.
And the truth is there are plenty more big finance mistakes that people make – I hear the horror stories all the time.
But you don’t need to make mistakes like that if you get educated.