Hi Roben,

  I see you have recently joined us – Welcome !! 

  Sorry, I can't help with "one paint type", but your post prompted me to ask a couple of questions that may (or may not…) help somewhat.

  What I know of as "cladding" is often metal with a kind of colourfast surface (i.e. meaning "never needs painting").  Is that similar with the vinyl?   I don't know the stuff – the fact that it "doesn't need painting" would not preclude the point that it "may be possible to paint it".  I just don't know.  Do you have a local friendly paint shop that can help out?

  Maybe try three or four "local paint shops" until you find one who has "been there, done that" or has seen/heard of it happening.  Where a business operates for many years, the owners do collect a lot of "war stories" that might help in your situation.

  Can't think of much more than that right now, but good luck with your search,

Benny

Hi JP,

  What an awesome position to be in.   Congratulations !!!  

  Do you have preferences re the future? Are you looking for +ve geared IPs, those needing a reno, developments, new in Growth areas?   With your situation there is a whole world of choice (could even include shares, etc). 

  Anyway, that's great having such a good goal to aim for.   Go for it,

Benny

Hi NewGuy,

  Hey, great news above – well done !! 

  Just one thing I wanted to run by you – I think I recall you saying that you had borrowed against the IP to purchase your PPOR (at least, that is how I read this) :-

  OK, but what do the actual loans say?  Does the IP actually have $374k in loans against it, and not $274k?

  All I am cautioning is that you confirm with your broker/lender/accountant the complete situation.   See, if the $100k IS against the IP, then that $100k is NOT tax deductible (as the purpose of the loan was NOT for investment).    Of course, I may have misinterpreted your writings too…..

  Just a thought, as now is the time to clear any such things up prior to moving forward,

Benny

Hi Kurt,

The numbers will tell you. e.g. if you can spend $2000 or so, and it lifts the rent by just $10 a week, then you are receiving a 25% pa return on your money.  It also (may) lift the value of the unit for finance, allowing you to buy another IP a bit sooner… 

Also, think laterally  – once tenants are in place, ask what would they like to see in the unit.   e.g. would they accept paying an extra $10 a week to have air conditioning?  This could generate more income even as they enjoy living there.   That might create another 25% return or better.    As Steve says (and WIlko reminded us in another thread today) "Buy a problem and create a solution and you will be paid for it".  Not verbatim, but you get the idea…..

And, as you said, the Depreciation benefits add a little something too.   Then, when you come to sell, another quick reno may be in order, or maybe a full reno – that choice will depend on "What is happening in the area in 10 years time".    Cross that bridge later I say……

Benny

Hi again,

  Well, I am gobsmacked !!!   I just did a quick cruise thru units for sale on the Gold Coast, and the results stunned me.   Of course, there are some "top of a tower" apartments in the $millions, but many small-block 2/2 units that were in the mid-high $2's.  Sheesh, any unit in East Brisbane is now way higher than in Surfers?????  Who woulda thunk it?

  IF this is right, maybe another option would be to check out airbnb or similar.   But first, is there a market for families wanting to spend a few days in Surfers???  (Yes, I am kidding…  so it could be a goer).   Then, take out a Mastercard or similar that allows you to finance furnishings on a "Pay nothing for 2 years, Interest free for 4 years" or similar – you see them on the TV.

  Furnish the place on the card, and rent the space to short-term guests.  Airbnb is the one I'm familiar with.  It works GREAT when you have a location that everybody wants.  Of course, this adds a bit more to your "list of things to do", and that would include arranging for cleaning/laundry in between guests – either do it yourself, or hire someone.

  Again, the NUMBERS will tell you if it is feasible.  

Benny

Hi CH,

  I think you have already tried one option by posting.  Good start – who knows who might have an answer for you.  Right off, I'd say "Don't be in a rush" but at the same time, if that is a goal that you think may be possible, then work back from 12 months out…..  Map out just how you might either bring in extra cash, and/or cut expenses. 

  Since you have started saving a Deposit, keep on going.  Is it in an Offset account?  (I hope so).   If not, that one little change could make a big difference within 12 months.

  I note that you are paying 6.65% – is that a rather high IO?  Or are you paying P&I?  If the latter, look at changing to IO and save the Principal component in your Offset account.

  Do you have any clues what the value of the unit is?  What was your purchase price?  

  Meantime as I said earlier, there may be others who might have "little time and lots of money" who may want to partner with one who has not much money, but has a plan to make it – so look out for JV deals on here.   Who knows just what might pop up.  

  Re the Offset account, look at plonking all of your wage in there, and live carefully on your credit card for a month.  Then, when the cc statement arrives, draw the amount out that squares the cc completely.  Rinse and repeat next month.  

  This will have you pay 0% on your credit card (some can have up to 55 days interest free) and, for most of the month, your whole wages are offsetting the Interest payable on your mortgage, thus saving 6.65% (interest free too) on those dollars over a year.   Little things like that can have you saving even more than you thought you could.  There was a book out about ten years back that spoke all about this (a little blue book – if anyone knows the name of, please post it… thanks).  It had some pretty radical ideas, all of them money making (or saving) ones – worth a read.

  Good luck – let's see what other thoughts might be around.   Oh, and at 25 you don't need to be striking out so hard – but of course if you WANT to, that's different !!  Good to just look long and hard at ways to improve your money situation anyway.  Go hard !!

Benny

Hi John,

  No, you'll probably borrow 105% ( the extra being to cover such costs).   Assuming of course that your future goals include "growing your RE portfolio". 

Benny

Hi Sampson,

  Typically, buildings devalue while land appreciates – at some point, both houses will be knocked over and replaced (could be MANY years away however….)   

    A lot depends on the area and the Council.  e.g. if the older house is in an area with many other old homes, a Council "might" want to keep the heritage look of the area, and will be less keen to have anyone knock it down.  In Brisbane, this is called a Demolition Control Precinct, and it leads to much difficulty with getting approval to demolish if the area is of heritage significance.  We own one in East Brisbane that is under this Control.  

   Depending on the area you are in, there could be several possibilities :-

1.  The older house (if part of such a precinct) could even grow faster in value if neighbouring homes are having $$ spent to "gentrify" the area.  Of course, the 20yr old house could also be in a nice area where similar pride is displayed and the 90 yr old might be in a street where "nobody cares"…..   In that latter case, Mum may well be right. 

In short, in BOTH cases, are the houses you are looking at "the worst house in the street, the best, or somewhere in the middle?"

2.  Older homes tend to have larger bedrooms and smaller living areas – the larger bedrooms might suit the student market where they can spend time in the peace and quiet of their own room without going stir-crazy.  

3.  When reselling later, many buyers might "think like your Mum" – like, "Oh, we wouldn't want to buy that old place – it will cost too much to maintain!"  That could be why the current price is lower than the 20 year old…..   Can you get it for an even lower price perhaps?

4.  Re location, is the newer house perhaps closer to – shops, transport, schools,etc.   If so, this could also make the 20 yr old home more desirable, even to students.  They won't want to carry their groceries too far…..  

5.  Developers (including you, a few years on?) would want to get demolition approval as easily as possible.  What are each of the surrounding areas doing in that way?  Maybe they are not yet knocking down 20 yr old buildings, but does its location lend itself to more apartments (shops, transport, schools, etc) meaning that development into the future may well be easier.   Not too many Councils are concerned about "20 year old" districts (little heritage value) – but then, the 20 year old "might" be in an area with other 90 year old homes….    (gasp!!)   Is it?

  Sorry Sampson, no quick answers – just more food for thought, things to check, research to be done…..  

  Keep it up though – this is called due diligence (finding answers to questions that you may not have otherwise considered).   Go for it,

Benny

Hi Matt,

  As one who is not a Mortgage Broker, let me say that I have found it to be a very good move to involve one. 

  As Richard says, a bank will not tell you that your circumstances would be better suited by another bank's product.   A Mortgage Broker is able to take an overall look at YOUR situation and tailor a loan for YOUR benefit, as they have hundreds of possibilities at their fingertips.

  Richard is one who is spoken of highly within the forums, and there are several others right here who are also able to assist you (check their sigs as they reply).   Their replies give a very good idea of their expertise – as you read them, ask yourself if any bank lender would be able to provide similar in-depth answers.

  I say do yourself a favour, and check out what a MB can do for you.

Yeah, don't ask a barber "Do I need a haircut?"   An agents role is to sell you a property, and they are expert in closing deals.   Remain level-headed (perhaps even take someone else along with you who can give some cool and calm advice).  

Think of it like a Sale at a store – if you find an appliance that you like, appear interested yet mildly un-convinced, and can walk away even after they lower the price, and then go check out other appliance stores for better, you are ready to deal with an RE agent……   

Especially with your first buy, do be sure that you have your solicitor inspect the contract PRIOR to your signing it.   That is a very sensible way to give yourself time to relax and REALLY consider if this is the house you want.   

And have your finance in place (i.e. you have already seen your Broker) prior to buying.  Good luck,

Benny

Hi Christine,

  While talking to your Banker, do check out the "break cost" of any/all of your Fixed Loans.  Depending on what Interest you have locked in, and the lending rates today, you may be up for a huge cost, or nothing at all.   I would think right now, the break costs would be huge.   As I understand it, if they can finalise your Fixed Loan and then re-lend those freed-up dollars at a HIGHER Interest Rate, then the break cost may be very little, or even free…..

  But if your Fixed Loan is (say) at 7% and they are only getting 6% if they lend it out again, then the break costs can be exorbitant.   Better to know upfront where you would stand with those.

  Perhaps an extra loan can be created over and above a Fixed Loan e.g. using Shahin's example (value $500k, current loan $300k) perhaps you can borrow an extra $100k as a separate loan without "breaking" the Fixed Loan.   It is worth asking the question of your banker/broker. 

  Oh, and check any LMI cost – I suspect it could be factored on the total borrowings, and not just on a new $100k loan.   Again a banker/broker would know this.

Benny