BANKS FACING COLLAPSE AFTER SIGNIFICANTLY LOWERED RETURNS POST NEGATIVE GEARING POLICY CHANGES

# BANKING AND LENDING INSTITUTIONS ARE THE UNDERLYING ENTITIES THAT WILL MAKE LOAN ELIGIBALITY MUCH HARDER DUE TO LOWERED PROFITABILTY FOLLOWING REMOVAL OF NEGATIVE GEARING BENEFITS

INVESTMENT EXPERT WARNS INVESTORS TO BUY CASHFLOW POSITIVE ONLY IF NEGATIVE GEARING CHANGES ARE ANNOUNCED IN TONIGHT'S BUDGET

# EXPECTED GRANDFATHERING POLICY WILL PROTECT EXISTING INVESTORS ONLY

# NATHAN BIRCH OUTLINES THAT THE BORROWING POWER OF INVESTORS WILL LIKELY BE SEVERLY DIMINISHED POST BUDGET

# BIRCH'S OWN PORTFOLIO OF OVER 350 PROPERTIES ARE ALMOST ALL CASHFLOW POSITIVE

# HE HAS ASSISTED OVER 20,000 INVESTORS BUY INTO THE LOWER END OF THE MARKET TO REMAIN CASHFLOW POSITIVE 

Investment expert and founder of B.Invested who regularly uncovers sub $300,000 properties for his clients so that their investments remain cash-positive, has warned that banking and loan institutions face collapse due to vastly lowered revenue from borrowers if tonight's Budget announcement changes negative gearing policy for future investors as is widely tipped to occur.

Birch explains, "banks factor in negative gearing in order to lend higher amounts, when they can no longer do this, what may have previously resulted in a one-million-dollar loan to an investor, will become $750,000 or less, resulting in less return to banks. Further, this will also lead investors to compete with new home buyers at the lower end of the market with cheaper stock, so they remain cash positive on their investment."

"I'm not sure the Government has factored this into the equation, as this policy has been floated and is very likely to be announced shortly, with its sole purpose being to provide first home buyers with an easier step onto the property ladder, and home ownership"

To investors, Birch has the following advice, "Grandfathering - that is leaving all current investment property owners safe to able to continue negative gearing - is also expected to be announced tonight, however my forthcoming advice is purely to new investors going forward."

"Unfortunately, you will no longer have the same borrowing power as banks and lending institutions factors in negative gearing when deciding how much you can borrow.

"Unless you buy positive cashflow investment properties where the rent entirely services the loan, you will end up losing money year on year"

According to Birch, this is going to have dire knock-on effects on everyday renters as fewer investors will enter the market due to this expected change, which means fewer rentals will be available in an already contracted market.

"We have had a record number of 57,000 migrants coming into the country in January alone, and they all need somewhere to live. Everyone will be competing for a diminishing pool of rental properties and those that are available will raise rents up to 30% to try and recoup losses otherwise absorbed by negative gearing," he argued.

Birch has over 350 properties in his own personal portfolio with that vast majority being cashflow positive, so says he won't be affected, however everyday Aussies looking to get ahead by investing, will.

Birch is also the owner of Australia's largest affordable property management firm, Blink Property, with around 7,000 rental homes under management - 90% of which are entry level rentals in the poorest areas across the country with rents averaging around $400 per week.

He also owns Zinger Finance, which helps everyday investors buys affordable homes starting with a $30,000 - $50,000 deposit.

He confirms that over the past month, landlords have informed him they will increase rent on their investment properties by 30% should negative gearing be repealed.

TO INTERVIEW BLINK PROPERTY AND B.INVESTED FOUNDER NATHAN BIRCH, email marta@marksonsparks.com or call Marta Wiacek on 0409 291 785 or email max@marksonsparks.com or call Max Markson on 0412 501 601.