Forum Replies Created

Viewing 20 posts - 41 through 60 (of 983 total)
  • Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Property manager – that’s an easy one.

    David Traeger at http://www.dtproperty.com.au – he looks after a lot of my clients properties and personally is an active investor in the Adelaide market.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    You’ll want to chat to your accountant and FP about the best pathway – I’m not an accountant but it looks like you haven’t correctly calculated the CGT component.

    There’s specific rules regarding putting the funds to super etc – with these kind of $$$ figures you’re best getting specific advice for your exact situation, instead of general advice on an internet forum.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Are you sure you’re definitely maxed out with your borrowing capacity for a construction loan through ALL residential lenders? Some have strong niches which can allow you to borrow further than other lenders which may get this over the line.

    If you truly are maxed out at this time, even post construction then you should be still unable to refinance the loan to a mainstream option as you’ve just piled further debt into the mix – which will outweigh any rent received in lenders calculators.

    Adrian in our office is a bit of a wizard with these construction scenarios – feel free to give him a buzz and he should be able to definitively let you know if it’s possible to arrange any finance for your scenario or whether there are some alternatives should you make xyz changes.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Your intuition was right – the bank and broker are definitely being lazy at the expense of your structure/strategy/protection.

    Best thing to do is set these up separately, with an equity release on the PPOR solely to cover the deposit costs and government charges and then a second application for a loan for the remaining purchase amount attached solely to the new purchase. The only reason why either party would suggest against this is because they can’t be bothered completing two sets of forms.

    Depending how much equity is available, it could be a good time to even setup further equity funds from the PPOR if available, so that way the funds are sitting ready and waiting if/when you want to make any further purchases – I generally do this for clients so they can hit the ground running with any further purchases. I’ve written about structuring property purchase deposits before on our blog.

    Hope this explains it – if you need any help let me know.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Hi Hans, I’m in the same boat at the moment and I’ve thrown most of my savings into an ING Savings Maximiser. It’s 2.8% return without needing to lock your money into a term deposit for a similar rate of return :)

    I do see this as a common strategy – high interest saver gives you an OK return whilst not putting it at risk which makes it a no brainer in terms of putting funds away until being used for a purchase deposit.

    There’s no point going crazy chasing returns on your deposit when in reality it won’t make a material difference considering the small amount of funds and shortish investment horizon until you would use the funds. On the other hand, should you mistime/misread what you’re investing in, you could set yourself backwards with your funds available.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Professional loans with LMI waivers are still very much there – medico, lawyers, accountants are the main industries which qualify but there are a few other niches. You’ll generally have to be earning a certain amount to qualify for non-medico based professional LMI waivers.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Interesting to see the advert was pulled – what did you end up deciding to do OP?

    I wouldn’t say Slacks Creek is a market I would necessarily call slow at the moment – Logan and surrounds has shown to be a fairly consistent market at the moment.

    Everything comes down to presentation, price and the professional involved. Yield isn’t important – there are 10% yield properties which won’t ever sell and 2% yield properties which sell before hitting the market. It’s all about comparing your property to others and seeing where it is in line with the market.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    The average interest rate for circa 30 years was near on 7%, however as the economy is maturing in Australia towards a lower inflation environment similar more to the US/EU, I think we’ll see this trend down. I believe a year or so ago the RBA was saying they think we’ll likely see this range dropping nearer towards 6%.

    In the end lenders look at these higher interest rate figures no as they believe they are likely to hit that any time soon, but more that should such a situation arise that you can still indeed afford it.

    Interestingly most lenders also don’t just look at the 7-7.5% servicing rates internally, but will have caveats that they will increase the servicing rate by 2-2.5% above what the borrowers actual rate is if that figure is higher – for example if you were borrowing at 5.25% today, the lender might say they would increase their stress test model from 7.25% to 7.5% to add a cushion of 2.25%.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Thanks Corey… That’s a very helpful article…
    With my next property purchase I am thinking of purchasing run down property, having early access to it prior to settlement for renovation, and then having the property revalued once renovations is completed…
    Ideally I’d like to be able to achieve this via a ‘Lease Option’ strategy to minimise upfront costs of the deposit, the holding costs of the loan, and stamp duty costs.
    Are there any financiers you would recommend over others to achieve this re-evaluation upon completing renovation? Last I heard NAB was the go to bank for this…

    I’d say you’ve probably been reading too many books from ‘property experts’ which are overcomplicating your strategy and for what ‘benefit’ you may believe you might gain, you will restrict yourself in every other way limiting your ability long term to grow.

    If you try to do a val immediately after renovation/settlement you will find the valuers will only note a nominal increase in value, short changing yourself potentially 10’s of thousands.

    If you’re thinking you can renovate prior to settling and use the higher valuation for the purchase to reduce your deposit – think again. The lenders all have rules that they take the lower of the purchase price OR valuation – so they will just revert to the contract price.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    I think step back and look at the investment first – if you could buy this property again based on it’s current price/figures would you? If not then that answers whether you should continue to hold it.

    Sometimes it’s better to pull the bandaid off, taking the short term pain but opening up your ability to make better long term decisions.

    Obviously compare this against getting the IP loan to a cost effective option – so that way you’re accurately comparing apples with applies, but as you’ve noted it’s very unlikely to get the cash flow position anywhere reasonable anytime soon, so you will want there to be strong potential capital growth to offset this.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    I think you’ll find you’ll get better responses if you also note:

    *what you will bring to the table for the JV
    *why you can’t do the deal by yourself (hence what you’re needing from your JV party)

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Let’s say I’m a real estate agent. I’ve got 5 houses to sell at any one time.

    One of them is a guy who thinks I clearly can’t get the best deal for him and has another guy to also market it.

    I can either spend my time trying to sell that guys house whilst potentially have the other agent find a buyer first – or I can focus on my other listings where I know the effort I put in definitely will translate to getting paid.

    Most agents I know would laugh at a lead trying to get a ‘dual exclusive agreement’ – aka a general agency.

    They don’t split it, it’s generally the agent who sells gets paid – hence why the agents will generally not bother as they’re there to spend their time making money, not ‘maybe’ getting paid.

    These concepts come up in many seminars/books by supposed big names to try make the concept of property investment seem more complex or fancy so they can justify their courses, books, seminars, training material etc, when in reality is that true wealth is generated through property by getting down to the actual reality of buying good quality property at the right time.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Good way to get two agents who don’t really care about selling your property as they know another party might sell it before them so won’t invest the effort.

    I know quite a few agents and have spoken with them on this exact subject – they’ve all said the same. Only desperate subpar agents would bother with this for a residential house.

    This is a little more different in commercial where multilisting can happen due to the different time requirements/greater reliance on your database than physical inspections/internet listing.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Nice, detailed write up Corey :)
    Renting as opposed to purchasing a PPOR can increase your borrowing capacity depending on your individual circumstances taking into account your short, medium and longer term goals.
    Rent is taking at actual repayment in a banks serviceability calculator where as PPOR debt will be calculated at between 7-8% depending on the lender.
    To see what is better it would be advisable to seek the assistance of an investment property savvy mortgage broker before taking the plunge.

    Indeed – this is where renting early on generally makes the calculators look a bit healthier than if they have a PPOR with mortgage. What I’m noticing more and more however is that many who rely on this then are wanting to buy a PPOR only to find out they no longer have any capacity and either have to sell down some IP’s or just not buy.

    The medium/long term is where the PPOR ownership comes into the sweet spot – where an active debt recycling strategy has meant the non-deductible debt is low/gone, no rental liability and equity to boot.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    ^my concern with taking use of these options is that the market will be artificially inflated and may contract once these options are no longer available to the market

    Considering most 2nd tier and alternative lenders have been around for 40+ years if not longer I’d say the market is already priced in – this isn’t exactly a new thing.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    ^my concern with taking use of these options is that the market will be artificially inflated and may contract once these options are no longer available to the market

    Considering most 2nd tier and alternative lenders have been around for 40+ years if not longer I’d say the market is already priced in – this isn’t a new thing.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Yes you still can get a lot with a 457 visa – there are some lenders who won’t take this visa type or have recently pulled away from it, but there are still options available.

    Re; the bad credit – very unlikely that your previous UK credit file will be picked up in Australia.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    This is the very definition of being lead down the garden path.

    The accountant is just making money off the referrals which in turn are funded by selling you overpriced rubbish apartments.

    A quick look at poor rental growth, declining values of constructed apartments and huge supply issues with apartments should give you more than enough information to understand whether the accountant was giving you advice for your benefit, or theirs.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Thx Terry. Yes the LVR is 80% so will lend 80% of the valuation result. Say the As If Complete result = $2.5mm & the In One Line = $2mm (20% discount). I can get over the line on the 0.8×2.5mm val but probably not the 0.8x2mm val so do you think banks would weigh it up and confirm unconditional approval or is it a hard rule that in one line val must be used for construction of multi units on one title even though you will strata?

    If they used proposed end values post strata (GRV) – they would generally only lend 65% of the amount in commercial so you’d be worse off than this being financed resi @ 80% of the lower val.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    There’s a few pathways you could go down depending on:

    *whether the property would potentially be a PPOR or an IP one day
    *what you would like to keep the funds liquid for
    *what your plans are for future investing potentially
    *where the current PPOR is
    *borrowing capacity/personal scenario

    You could:
    -release equity on your existing PPOR and use this to cover 100% of the deposit costs for the new PPOR
    – use some equity and some cash towards new PPOR
    – use all cash towards new PPOR and then release equity after settlement

    Depending on what your longer term plans are will dictate what is the best pathway. Whatever you do – do not provide your existing PPOR as additional security to guarantee/cross secure your purchase – this is incredibly poor structuring which can leave you stuck with the lender and having to follow what they decide they want you to do in the future with your funds instead of you being in control. A lot of people who work directly with banks/some lazy brokers get caught out with this and can’t always untangle the mess.

    Best bet would be to call/email an investment focused finance broker who can listen to your plans and formulate a strategy which will fit not only your needs in terms of buying the next PPOR, but also what flows on from then.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

Viewing 20 posts - 41 through 60 (of 983 total)