Forum Replies Created
Hi James,
I would get quotes for the work and look to reduce the price. Most vendors don't want to be bothered with repairs unless they're minor.
Good luck
Carlin
Thanks Scott no mates. With excellent advice like that you must have plenty of mates.
We're on to it! If you think of anything else, please let me know. We've a small window of opportunity here but it won't last long.
cheers, and happy Chrismas,
CarlinHi everyone,
We're looking at a potentially good commercial property deal at present. We're new to commercial investing, but one thing we know we need to do is to checkout the property's history. We have a fair idea of what this means, but would really appreciate someone spelling out just what they do – ie: what specific information do you seek and where do you go to get it?
All advice gratefully received.
Carlin
Surely we can get "an intimate knowledge of how each lender calculates our servicing capacity" without having to go to a broker. Just a case of giving lenders (that we're considering going with) the relevent figures ie: incomings, outgoings, existing debt.
And we want to know the maximum we can borrow – we don't want to go to them with a specific figure we want to borrow (that's not to say we plan on borrowing the maximum, but there's no point in us switiching if the other lender's not offering to lend us much more.
Haven't ruled out going to a broker though – but as you say, Richard, it's hard to find one that's investor orientated, doesn't have a problem with Trusts (not that we have a Trust – explored that one and didn't seem worth the cost/effort), with a service level that's acceptable and with specials that last beyond today.
thanks for all tips,
CarlinHi there,
Our problem with brokers is that every broker just has a limited stable of lenders. We want to explore more widely, without the vested interest in directing us to a certain lender.
As far as variables go, not sure what exactly you're after. Without divulging our personal financial details on a public forum, we're dual income, no kids, lots of equity in PPOR and one of the IPs.
Our question is just a general one – who have you gone with and why? Did your lender offer something special? Are they good to deal with? Are they investor-friendly and – if so – how do they show this?The reason why ME is no good for us is that they have a policy of not lending for serviced accommodation ("ineligible security") – and that is exactly the accommodation we offer, with a solid track record of success. But not even that will make them sway on their policy, meaning that they do their sums based on what our properties would achieve as standard rentals.
cheers,
CarlinWent to an auction in leafy inner Adelaide suburb last week. Place advertised for 400+, sold for 492. Went to look at another property after auction and had chat with agent there about what had happened. He said "don't these people (paying high prices for places in Adelaide) read The Advertiser?". Said that the paper's full of places to rent, admitted that there's no shortage of rentals in some areas. Suggested that "WA mining money must be behind it all because Perth went through the roof a while back".
His view (with some uncharacteristic honesty for an agent!) was that, with the state govt opening up so much land north and south, vacancies will skyrocket in Adelaide as renters are suddenly able to afford their own place.
Adelaide probably looks great, price-wise, when compared to Perth, but best to do those sums on returns – and always get independent advice about what rent you can achieve + rental demand in that area.
cheers,
CarlinHi there – we have a place that we rent out by the room. Is working OK, but you do need to have the time (and energy) to do more work (ie: maintenance, gardening, sorting out household "issues" etc). We manage it ourselves, so priority if doing this is not only to have it somewhere where people want to rent by the room, but also somewhere close to your home.
Anyway – we've struck a snag. We want to buy another place and do the same thing BUT our lender has told us they won't lend for a serviced apartment or serviced house – classified as "ineligible security". This is despite us having a 2 year track record of making this work. All our loans (PPOR + 3IPs) are with this lender. I was told that – had they known we were going to turn one of our places into a serviced house – they would not have approved the loan. They base their sums on what the house would achieve as a standard rental.
Has anyone else encountered a lender with this policy of not lending for serviced accommodation (or have we just got a very conservative lender)?
We plan to refinance, but want to know if we're likely to strike the same problem with lots of other lenders.
thanks for any help on this.
Carlin
Many thanks for all the advice. We will definitely get a solicitor to look at what we draft.
best wishes,
CarlinThank you Mortgage Hunter. Clinical depression must never be trivialised by using terms like "sadness". It is a treatable medical condition, but both the sufferer and those around them don't always recognise the symptoms until it is too late.
The treatment's these days are very good, with a range of options that will suit all conditions and not affect your intrinsic personality. They will just help you to get up each morning and see things in perspective. I am not pushing drugs here, as the management of depression requires a tailored approach for each individual that most likely also includes professional counselling.
A huge chunk of the population suffers from clinical depression at any one time. I know I did some years back, and I was very lucky to have people who cared enough to get me the help I needed.
Please, PLEASE, do not suffer needlessly or feel alone. The beyondblue website is a good start , not just for getting the help you might need but also for running through a checklist that can confirm that you are indeed suffering from this common and treatable medical condition.
Carlin
Whatever you do in regards to researching the SA market, do NOT rely on articles in the local rag, The Advertiser. This paper is so far in bed with the real estate industry it's not funny. As soon as I read (yet another) article about how high rental demand is and/or how the market's starting to boom again, I know the market's actually slowing down.
Also, make sure you're buying where there are renters, not just first home buyers. All these new housing developments happening in the boom docks of Adelaide (Buckland Park is about as park-like as the Simpson desert) can easily end up in oversupply. No matter what the RE industry tries to tell you, SA is not experiencing a population boom and if there is a resources boom, then the only property that's going to benefit will be that located near the mines.
Anectodally, it seems we've got an influx of WA investors due to their market's downturn – but they should be wary. SA does not have all the factors that lead to WA's boom so you need to research well and not just assume you'll get the same capital gains. Just checkout the rental columns and you'll see many properties being advertised week after week – so much for that rental shortage.
And, yes, Xenia's right. A developer offering a rental guarantee is a sure sign you're looking at a rip off. Good properties don't need rental guarantees to help sell them.
good luck!
Carlin
We've got ourselves cross collaterised badly with our PPOR and 3IPs. We didn't have enough to fund deposits so didn't see any other way to be able to purchase. Elkam, I didn't know we could have increased the loan on our PPOR and used that money as a deposit for the first IP. Is that a common way of avoiding cross collaterising?
Anyway…I thought that, as your property's value went up, you could get a revaluation and get the lender to reduce or remove the security it's got.
Anyone able to enlighten me?
thanks,
CarlinWe have a PPOR and three IPs, all on interest-only, var rate loans.
We are looking at setting up an offset account to simplify our currently complex network of accounts and loans.
We’ve got a split loan on our PPOR, and are thinking of attaching an offset account to the variable portion. We then want to have the monthly deductions for our 3 IPS made from this account, + have our tenants pay rent directly into this account (and direct a portion of our salaries into this account, as well as covering the payments on the fixed portion, of-course, fixed until Nov 08 at 6.69%).
We also plan to make all IP-related payments (ie: council rates, water etc) from this offset account.
Does all the above sound like a good plan?
The current rate on the variable portion of our PPOR is 7.49%, but the offset account rate is 7.79% so it will be costing us a bit more. But we are thinking that it is worth it for the increased convenience as well as the potential to reduce interest repayments (just a little) by having more money sitting against the var portion of our PPOR loan.
Thanks for any advice,
CarlinI think just before Christmas is a great time to put out offers. There are people who just want to start the new year fresh, so do the research – and I don’t just mean knowing the area inside out.
Find out how long the place has been on the market, has it gone to auction, if so what price did it get passed in at, what’s the vendor’s situation (how much does he/she want to sell, and why?). Know EVERYTHING you can about the place so that you can make an offer with confidence. And tailor it to suit the vendor – do they want a quick sale? Then make it a short settlement period. Do they want to stay on and rent it back for a while? Then let them.
If you want a building inspection, get it organised to be done during the cooling off period. And make sure your finances are well in order – I know many people will say “always make your offer subject to finance”, but I disagreee. If you know you can get the money and you know it’s a good deal, why put this unnecessary hurdle in the way of your offer being accepted?
And when you put in that offer, back it up with evidence. The agent can use this to persuade the vendor to sell. For example, find some other properties in the area, and sale prices (RP Data is the place to go for this), find out what rent you can achieve – what kind of return can you expect? What work needs to be done? Get some quotes to back up the immediate costs you’ll be up for.
The more you can show that the figure you’ve come up with is based on sound research (and not just plucked from the sky) the better the agent can work for you in getting the vendor to accept.
There is no replacement for solid research, so once you’ve chosen your area stay focussed on it to the point where you can look at any house and put a dollar value on it. Then, when that great opportunity comes up, you’ll recognise it immediately, act quickly, and hopefully come up trumps.
Oh – and always leave a little room to go up with your offer. And DON’T EVER go higher than your top price.
all the best,
CarlinHi again,
Forgot to mention (in case it makes a difference) – we’re in SA and we’ve been married for 3 years.
thanks,
CarlinThanks Terry. Just want to check I’ve got this right –
Assume you had a PPOR with alot of equity, and the outstanding home mortgage was set up with a principal and interest loan with offset account.
Could you therefore pay the minimum amount required into the mortgage, and make extra payments into the offset account (thereby reducing interest repayments)? Then, when you found a suitable investment, could you withdraw from this offset account to fund the deposit?
Is this what people commonly do?
And if the above scenario is possible, why then do people bother with LOC loans as a means to access extra funds ?
Thanks Terry – but how do you approach a bank to ask them to lend you extra money on an existing investment property loan? And do they really not care that you plan to take this money to a different lender as a deposit on a different with them?
I’m just not clear about the stages in all this.
Hi there,
We’re managed to cross-collaterise to the hilt with the one lender. Serviceability not an issue, but want to undo the knot we’ve tied. But only way to borrow from another lender with next property we buy(without swinging loans on current properties across) is to come up with sufficient deposit for a stand-alone loan.
That’s what I find hard to work out. When people are setting up a different loan with a different bank just about every time they buy a new property, they clearly can’t access the equity in their existing properties because it’s tied to that lender. So where are they getting the money to make deposits??
Carlin
My two cents worth – personally, I’m a big believer in karma and the old adage that what goes around comes around.
Treat others as you would like them to treat you, and you can’t go wrong – with them or with your conscience. And often you can get the results just by really understanding what’s going to make the deal work for the other side.
You could be after very different things and can work great win-win situations just by asking the right questions.
cheers,
Carlin (after a lovely drop of red)Thanks Cata.
Yes, the ability to transfer funds into a super fund is all the more attractive now that Costello has agreed to give us all our super money tax-free after 60 (though by the time we’re 60, of-course, the !!!***$$ rules might have changed).
Now need an accountant who not only understands structuring for property investing but also has his/her head around our super fund (PSS Defined Benefit Scheme).
Currently getting info ready for accountant number 1 on the recommended list.
thanks again everyone. If you’re interested in hearing the advice I get, let me know (tho’s perhaps this is only interesting to us, given that it will be tailored to our situation).
cheers,
CarlinThanks Cata.
Yes, the ability to transfer funds into a super fund is all the more attractive now that Costello has agreed to give us all our super money tax-free after 60 (though by the time we’re 60, of-course, the !!!***$$ rules might have changed).
Now need an accountant who not only understands structuring for property investing but also has his/her head around our super fund (PSS Defined Benefit Scheme).
Currently getting info ready for accountant number 1 on the recommended list.
thanks again everyone. If you’re interested in hearing the advice I get, let me know (tho’s perhaps this is only interesting to us, given that it will be tailored to our situation).
cheers,
Carlin
