Quote:
Originally posted by skier
Hey great thread nosoup! I hope you can help me with my question.
I'm currently an 18 year old student with a full year of university under my belt, and no debt, but no credit either. I have become aware of an investment opportunity that will appreciate at about 10-15% every year. Obviously this is a great chance that I do not want to pass up. I have one year until the market stabilizes and then begins to climb at this new rate. What can I do in this single year to maximize my loan amount I can get from a bank, or credit union? I will be exploring other avenues for obtaining capital as well, like offering private investors a fixed 7-8% rate for the period, but would appreciate if you can think of any other ways to get some capital for this opportunity. Also my parents hold a lot of property, and will be investing as well- should I try and go through them, in a way leeching off their credit rating? Any help you could give me would be appreciated.
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Hmm... well, a couple of things to point out, then I'll answer your question
From your post, I am going to assume that this investment opportunity will not last forever, although there will be a period of maybe 3-5ish years where you will be earning that return. If I am incorrect in my assumptions, please let me know.
"...an investment opportunity that will appreciate at about 10-15% every year"
Well, the word "will" implies that there is absolutely no question as to whether or not your investment will increase or decrease, and if there is no risk of loss at all. If this is truly the case, congratz on finding a once in a lifetime opportunity. If it isn't though, a word of caution - It may not be wise to borrow funds to invest when there is a possibility of losing the investment.
However, that aside, I would recommend that you immediately apply for 2 credit cards (if you are unable to qualify for the first one that you apply for, then get secured cards or have your parents cosign) Also, obtain a secured loan of some type, with a low balance. A small savings/cd secured loan should do. Do not allow the balance on your credit cards to exceed 40% of the credit limit at any time, and make sure all the bills that you have are paid on time every month. Also, you can pay your credit cards off in full each month if paying a little interest bothers you, but make sure that you wait until the bill comes and you do it only once per month, to ensure that it did report a balance to your credit report. Make sure you obtain credit ASAP, as you want it to report as many months as it can before you apply for the other loan.
Now, if you really have a guarenteed investment return of 10-15%
with absolutely no risk of loss I would save ever penny I could get my hands on until you invest it. Picking up a second job, ect. would not be a bad idea either. Also, borrow as much money as you can from your parents to invest with. Depending on their rental property, and how quickly it is appreciating, and also how much equity they have in the properties, they may want to consider taking out additional mortgages or even selling the properties to put as much into this opportunity as possible.
If this is not too good to be true, here are some figures to get you hyped up & help you realize that this could potentially be a once in a lifetime opportunity...
At 10% (the minimum in your example!) you'll double your initial investment in less than 7 years. At 15% it would take less than 5 years to double your money. If you can get individual investors involved and pay them a flat %, I would do so, as long as the % paid is less than the minimum earned. The same side of the coin however, if you can borrow money from whereever for a lower % than the minumum earned, I would do that as well. However, putting as much "free and clear" money, money that is yours, is where you will see the greatest return.
Good luck, and if you have any more questions, please ask