No cash – no problem! – Nhan Nguyen

How do you go about getting into property with little or no cash?  Should you even try to do it?  Is this a good time or a bad time?  So many questions that we put to Nhan Nguyen.


Kevin:  So, you’d like to get into property, but the problem is you don’t have the money to do it. Well, how do you go about doing that? There could be an answer for you. Nhan Nguyen from has spoken to us on a number of occasions about getting into the market, how you get in, what are the opportunities?
Nhan, I know you’ve done a number of seminars and you’ve trained a lot of people all around Australia about getting into the market when they have a shortfall of cash. Hello, and welcome to the show.
Nhan:  Thanks, Kevin. Thanks for having me.
Kevin:  Now, tell me about some of these strategies. How can we do it?
Nhan:  When I started out, I bought my first property and I ran out of money, so I had to figure out a strategy on how to buy more property. This was back in the early 2000s. I had $4000 saved, I maxed out my credit card, and bought a property for under $100,000 when you could do that in early 2000. And the strategies I came up with, there were two actually.
One was the typical joint venture strategy. I like to call this the money partner strategy. You basically find someone to put up all the cash and all the funding. So, you might find a deal. Let’s say you’re out there, you’re talking about agents, doing market research, going to open homes, putting in offers, and you may not have enough cash or enough borrowing to do a project. This is one way you can do it. You find a money partner who funds everything.
One of my first money partners was a guy named Simon. He worked for an airline, and he earned about $65,000 a year. Back in 2000, that was a substantial amount, and he could borrow significantly. Another partner I had for the last few years was a guy named Dr. Lee. He’s a cosmetic doctor, owns medical centers, has substantial income, substantial serviceability, substantial cash, and he funded approximately $2 million of my projects back in the early 2000s. That’s really one way you can do it.
Another way you can do it, and this really depends on if you can borrow or not. I call this getting the cash partner only whereby if you can borrow… Let’s say a property is $500,000, you can borrow $400,000 from the bank. You have that serviceability, you have that capability, but you may not have all the cash.
So, the other opportunity is to find a partner who just tips in the cash for, let’s say, the deposit, stamp duty if you’re doing a development, if you’re doing a renovation, those particular costs. Effectively, the bank is putting up 80% of the purchase price, the investor puts up the balance of the purchase price, and the investor puts up the rest of the required funds as well.
Kevin:  I imagine with all of these things, you have fairly solid agreements that you go into with these people. Because it’s a joint venture, it could quite easily go wrong, Nhan.
Nhan:  Yes, absolutely. Look, I’m giving you just the broad strokes and the bigger picture, that 30-second summary of how you can do it. There are many sophisticated instruments you can use, whether it’s unit trusts, joint venture agreements, shareholders agreements. And I do suggest definitely talk to your accountant, definitely talk to your solicitors and finance brokers, actually.
Those three key parties are very, very important just because each has their own requirements, and there is an overlap. Sometimes the advice you get from your accountant might conflict or not address some of the issues that are required by your finance broker.
So, definitely talk to some professionals about that, but that’s just a concept on how to do that. I know it’s very easy, especially in this APRA environment, you can run out of deposit very quickly. After two or three loans, you can run out of servicing very quickly. You have to prepare yourself for the future, especially if you want to ongoingly do deals.
Kevin:  That first strategy you mentioned to us in this chat where you obviously had the expertise and you wanted to find people who were probably too busy to do it themselves but wanted to get involved in it, that’s a matter of what you bring to the table and what they bring to the table, isn’t it?
Nhan:  Yes, absolutely. For some of you, you might be starting out and you might think “Gee, I don’t have much skill or much knowledge,” but what you do have is you may have time. You may have to be able to fulfill on doing market research for a particular investor, and the investor may not have the time or the interest or the geographical location. He or she might be close to town. He or she might want to be looking at a property out of town in a particular suburb, in a particular zoning, with a particular development opportunity or development factor.
So, you really want to talk to other potential time-poor, cash-rich with a lot of disposable income so that you can create opportunities for yourself, as well.
Kevin:  There are always opportunities out there, that’s for sure, just if you need to go looking for them.
Nhan Nguyen has been my guest. Nhan is from and a very clever man. Nhan, thanks very much for your time.
Nhan:  Thanks, Kevin. I really appreciate it.

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