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Network and align yourself with related industries which may have clients looking for the type of stock you have available. Accountants, financial planners, brokers etc.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
I think you’ll find most of metro Perth will be negatively geared, but obviously the higher the purchase price the larger the negative gearing generally! Clients have been finding mostly yields <5% across the metro areas, with some inner suburbs floating around the 2-3% mark.
In any case if you make a purchase be sure to have your loan setup correctly, otherwise you’ll have a costly mistake when it comes time to purchase your PPOR. Setup your loans as interest only with an offset account attached for any extra repayments, so when time comes to make your dream PPOR purchase, you can access all your offset funds for your deposit, minimising your non deductible PPOR loan, whilst maximising deductible debt.
Have a chat with a savvy finance broker specialising in investment properties if you haven’t already so they can make sure your finances assist with your future goals.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Generally above 4 units on one title lenders it enters into commercial lending. There are some niche options out there however.
Have a chat with a commercial savvy broker if you haven’t already, who will be able to run you through your options across *multiple* lenders than just what any one lenders multi-units policy.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Is the intention to generate an increase in total asset value from titling each unit? Determine how much it costs to achieve, any increase in ongoing costs and whether this justifies the increase.
I’ve had some clients achieve fantastic results in metro areas doing this, achieving 80-100% increases in value, but these were purchased well before the popularity of unit blocks set in, so didn’t get slugged with the premiums which can be found on many blocks today.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Factor in the lost value of time with a subdivision, I’ve seen a few deals where developers have locked away significant equity/cash for 12+ months which could have otherwise been used to leverage into greater returns over the same period.
Repeated purchase/reno/reval can be a profitable venture if you do this consistantly in a cookie cutter manner. You can always have your cake and eat it by buying corner blocks which can be subdivided and front house retained.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Get the tenants to pay property manager until end date, then agent can provide statement of accounts for hand over.
Good luck to your father self managing, switch over is the least of his worries!
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Something definitely doesn’t stack up. It’ll be interesting to see what the banker comes back with.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Jaryd be sure to have a strong look over the strata details. Some apartment blocks have run-away strata fees which keep rapidly rising, eating away any profit. Naturally these usually are complexes with gyms, pools, spas etc.
I’ve seen apartments advertised as 7% yields, only to decrease to 3.54% after all costs are taken into consideration.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi Guys
I think I am beginning to understand so using a similar example if my property is 600k and I have 300k paid off and the banks will lend me 100% LVR than I will have access to the whole 300K to invest in another property? if the bank will only lend me 80% (600,000/0.8= 480,000) 480,000 – 300,000 = $180,000 equity? Is this correct?
Thanks guys
And depending on the scenario you can even increase the accessible equity up to 90%.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi Tracey,
How many units in the block?
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
It varies widely. Depending on the purchase price, security type, tenancy etc.
You can easily find some properties which are 10-12 with tenancies not worth the paper they are written on, likewise you can find blue chip national tenants with multi mil tenancies for 5-6%.
In general however I’ve found clients are achieving near on 10% yields if they are buying in the 2mil-3.5mil bracket, as it removes a lot of smaller investors, but too small cap for some of the institutional/private equity investors.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
That’s a common problem when you look at multi level sites with shares pools, gyms, saunas, tennis courts etc. Strata costs will only go one way too, up.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
I would assume it’s a company spruiking overpriced negative geared properties, which is the common theme of companies which spruik the ability to ‘decrease taxable income’.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Has the property declined in value since the purchase? For LMI to be liable on a refinance in that scenario the LVR would need to have increased and or $ value of the loan in the meantime.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
I won’t get into the Trust vs. Personal name debate, but it’s worth noting that VERY FEW lenders are willing to lend to hybrid trusts, compared to Unit Trusts, Dicretionary and personal names.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
If you refinance before an official maintenance figure they will factor full expenses for your children being covered by yourself.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
You’ll need to complete the constructions prior to settlement, as the purchasers will struggle to gain finance for split contract deals, let alone mid construction. :)
Whats your experience with development, is this your first? With these variables you may have difficulty gaining the desired rate, LVR AND facilities.
Have a chat with a broker regarding your specific deal so they can go through the options available. There may be options available to get you a decent deal depending on certain specifics.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Unfortunately this is a type of scenario that I (and I’m sure a lot of brokers) get to deal with quite often. Your situation may be tight but your ability to service any payout will largely depend on the lender. Have a chat with a broker who can look at your scenario and provide you with options. In the meantime be sure to keep your payment history clean, a single missed payment on a mortgage in recent history can unravel some of the simplest deals.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Development wise I know a few guys who place development sites under option, get DA approval and then onsell the site for a profit.
Financed a deal recently for a client who purchased off a party who onsold a contract from a company who puts contracts on properties about to be repossessed.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Hi Maddy,
Make sure you build yourself a good team of related professions, including finance, solicitors/conveyancers/accountant etc. Get your finance in order if you haven’t already. A good broker will be able to set out a plan for your finance structure to make sure you first purchase helps the 2nd, 3rd, 4th and onwards by being placed with the right lender from the start. Remembering that interest rate isn’t the most important thing with portfolio finance. :)
And great work taking the effort to enter the market at a young age, I’ve got a lot of younger clients who are building their property portfolios in leaps and bounds, it’s great to see!
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
