All Topics / Help Needed! / advice needed

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  • Profile photo of Ko_starrKo_starr
    Member
    @ko_starr
    Join Date: 2004
    Post Count: 17

    I'm a young investor 24, live in Brisbane single and work as an electrician. I own an investment property at Redbank plains QLD and a taxi license which I am running as a business.  So I owe far amount of money as it is.  The Redbank plains property I bought in 2005 has gone up about 75000 and it’s close to positive gearing.  the taxi I bought January this year had a lot of expenses at the start but its making profit for me now the value is still roughly the same as when I bought it, its a lot more hassles and stressful then the investment property and every now and then I do the occasional shift when the cab is vacant and I’m not working my other job.  My goal is the same as what Steve’s was when he first started investing.  To creative a passive income.

    Now just recently I looked at some property in the Gold Coast area because it’s always been a dream to own some property down there.  I had a look at a few units mainly because couldn't afford to buy a house.  Made a low offer on this one place wasn't expecting to get it but they signed.  this place is a unit has 4 bedrooms and the two sellers want to stay on as tenants, they are currently letting the two rooms out to mates and plan to keep doing this. So they put in the contract a one year lease at 540 per week.  This is higher than usual rent.  This is what attracted me to the property as and investor.  With that rent I am sitting just under the border line of positive gearing.

    I am now unconditional, but I am worried about a few things here.  There was a bit of an unplanned meeting between me my parents and the tenants. My parents wanted to see the place because they haven’t seen it before.  I rang the real estate to organise a time for a Sunday.  They couldn't get in touch with them so I went down anyway just to show them the outside.  The tenants were home so I rang back the real estate and they tried again to contact them with no success.  They came to the conclusion of me approaching the seller telling who I am and explaining what has happened putting them on the phone to the real estate to ask whether we can go in and have a look. When I met these people I wasn’t too happy with there manner.  They weren’t very inviting at all.  The seller who was on the phone to the real estate was angry at them for this situation and kept repeating how this was unexpected. My parents at this stage got the point they didn’t want us to go inside which is fair enough because there was no notice so we left.  Now the thing that bothers me is the way they went about it and just there nature.  I not sure whether I want these people as tenants.  Both my parents were giving me a lot of negative thoughts on the way home.  Not liking the tenants my dad keeps telling me I’m going struggle with these people they’re not going to pay the rent they’ll trash the place. I should have looked for a house not a unit.  Houses go up more in value, I have trouble selling it.  He is no real estate expert but I’ve respected his advice. The other day I spoke to the property manager who will be looking after the place. Again I got some negative thoughts from her as well.  I asked her my main questions.  What will happen If the tenants want to leave, what will be the rent. And what she thought of the tenants. She told me if they leave the place will be just rented a as unit bringing in 320-340 a week, and that they can’t rent each room out separately to achieve high rent.  I asked is there are other places that do this, she said not many.  Now this is a big problem because that is a big gap I would have to fill with my own money and I’m not comfortable enough to negative gear that much especially with all the other loans I have.  And like everyone else the interest rate rise made me feel even more uneasy and worried about the future. She also told me that she properly wouldn’t put these tenants on because they are very untidy.  They basically have all the stuff all over the place.  I do have the lease for one year.  This is pretty much guaranteed 540 a week.  Although I’m still worried whether they’ll do a runner.  Or they become such bad tenants they don’t pay the rent on time or whatever that I would want to get rid of them myself.  And what happens after that year they want to leave.  If that is the case I’m hoping that the value goes up so that can sell and hopefully make a profit. Another worry is how hard would it be to sell, I mite end up losing money on it. 

    Am I worrying too much here, what are your opinions and advice?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Ko

    When i first started buying + cash flow properties some 13 years ago I had the same concerns as you are having but what you have to remember is to trust your instinct and due diligence> If you have carried ths our correctly ten you will not have to any problems along the way.

    Ask yourself what is the open market rent for the property if the tenants move out and I have to re-tenant the property.
    Talk to the managing agent about te rent and ask his feelings. Remember this will be entirely different to what the selling agent has to tell you who is after the sales commission. 

    Talk to your broker and ask him what the Bank's valuer assessed the rental assessment to be. Again a good valuer will have had a look at the lease agreement and made comments as to whether it is likely the rent your are receiving can be maintained when the property has to be re-tenanted.

    Either way be positive you are unconditional so cannot go back on the settlement so go forward and trust your judgement.

    Good luck and let us know how you go. 

    Richard Taylor | Australia's leading private lender

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Ko

    When i first started buying + cash flow properties some 13 years ago I had the same concerns as you are having but what you have to remember is to trust your instinct and due diligence> If you have carried ths our correctly ten you will not have to any problems along the way.

    Ask yourself what is the open market rent for the property if the tenants move out and I have to re-tenant the property.
    Talk to the managing agent about te rent and ask his feelings. Remember this will be entirely different to what the selling agent has to tell you who is after the sales commission. 

    Talk to your broker and ask him what the Bank's valuer assessed the rental assessment to be. Again a good valuer will have had a look at the lease agreement and made comments as to whether it is likely the rent your are receiving can be maintained when the property has to be re-tenanted.

    Either way be positive you are unconditional so cannot go back on the settlement so go forward and trust your judgement.

    Good luck and let us know how you go. 

    Richard Taylor | Australia's leading private lender

    Profile photo of evadevad
    Member
    @evad
    Join Date: 2006
    Post Count: 6

    Hi All
    I just wanted to ask a question.
    I have a 2 beroom unit in Townsvile i paid abround $175,000 for about 1 year ago.

    Slowly i have been doing a few things up like the back area and a paint job, a few light fittings and stuff. 

    What i want to do now is get the property revaluated and acces the equity to buy another. ( just starting here )
    So to buy my second.

    For arguments sake lets say it comes in at $200.000 can i then get a separate $25,000 loan in a separate account to use at my will, for say a deposit.
    Can i find a second home, place the deposit on the home and get a completely separate mortgage for that IP which hopfully the tenants will cover + my origional $25,000 loan and expenses of coruse to make it CF+

    What i want to achieve is to avoid having the bank use my first PPOR as security.
    I have spoken to them and they are sure i will have to use my PPOR as security and that i cant get a separate $25,000 because it will be tied to my origional mortgage.

    Is this the case and if not how do i approach the bank and tell THEM excactly what i want.

    I guess that is more than 1 question but any help would be highly apreciated
    Thank all

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781

    A lot depends on your current loan size.

    But you can probably access 80% of the growth in a seoerate LOC which you can use for investing.  This may be enough to help with a deposit on a similar priced property.

    If you choose the right lender they may even value it higher than you suggest.  Always estimate it a little higher on the application.  No point in putting a lower figure into the valuers head if he is thinking it is worth more.  It is easy to just agree than try to make it higher,

    I would be considering $210K – $220K esp if you can find similar sales nearby that might support this.

    Cheers,

    Profile photo of evadevad
    Member
    @evad
    Join Date: 2006
    Post Count: 6

    Yes i did borrow %100 with no deposit.
    The sale price was 175 and i owe about 166 or something<br /:)” title=”>:)” class=”bbcode_smiley” />

    Profile photo of Ko_starrKo_starr
    Member
    @ko_starr
    Join Date: 2004
    Post Count: 17

    Thank you richard for your reply

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Evad

    Yes try and avoid cross collateralising the 2 loans.

    Your existing lender will push for this but it is the time to go elsewhere.

    As has been mentioned try and raise the deposit and acquisition costs against the valuer of your existing security and then use these funds for the first IP.

    Whilst 100% finance is available for an IP purchase if you can reduce this to say 95% plus Lmi the range of lenders will be greater. 

    Richard Taylor | Australia's leading private lender

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