The 4 C's of Lending

Did you know the game of property investing is not a game of real estate, it’s actually a game of finance and numbers? So how is it you’re going to be able to secure finance to make sure your 80 of property investment portfolio can grow safely?

Most people have heard of the 4 C's to diamonds - Cut, Clarity, Colour and Carat. Successful investors also know the 4 C's of lending.

What Are The 4 C’s? 

Let’s pretend that you’re at traffic lights. You’re going to need four green lights, no red, no amber. How do you stack up as far as the finance goes? Because you can have all the intent in the world, but if the numbers don’t stack up: it ain’t happening. 

Every single coaching session we do with our clients, we do this little war game – it’s a little stress test. 

Step-By-Step Process 

The first thing you need to be able to demonstrate to the banks is that you have a deposit and casts set aside, and that is capital, which is cash, or collateral which is equity. 

So you need to be able to basically say that when the banks you up to 80 or 90% you can tip in the other 10 or 20%, as far as the deposit and costs go.

You also need to have the right employment, be the right age, have the right spending habits and ‘online character’ as they call it. Banks love Defence members. As long as you’re not having Uber Eats, or going to the casino – then you should be fine about getting that element of your four C’s sorted out. 

The next thing you need is credit history. Make sure you pay your bills on time there so you’re not stuffing a few things up.

The last one, I suppose this is when it really matters. If you can’t have the capacity to borrow the money and service the debt, because maybe you’ve got a couple of credit cards, you’ve got a high purchase loan, you got a couple of kids, the Mrs. is not working anymore, whatever it’s going to be, then basically you’re going to be stuck at the top here.

As we said at the start, you need four green lights. No amber and no red. Get your finances in order, and you will be successful. Let me step you through it now, so that you know how the banks work which will ensure you are prepared. 

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