[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 27, 2014 - 12:51 pm

Settled on a property which is currently being renovated, another property under contract which is settling in 1 July (another reno project).

Chugging along as usual. :)

Corey Batt | Precision Funding
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Investment Focused Finance Strategist - servicing Australia-wide

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May 26, 2014 - 7:39 pm

superAndrew wrote:

Hi Corey

Good question.

According to the agent it’s $900 per quarter and includes water and electricity (apparently it’s already under contract too).

My rental estimation is conservative since the median rent for this area, for 1bed, is $300pw. Given the fact that electricity and water is included the rent will be higher than $300pw.

Also given the fact that it’s located in Alice Spring I would think that the electricity cost would be high due to the required air con usage.

Andrew

There’s three other units in that complex available for rent at $310wk including the free rent, so that’d definitely be the ceiling for rent, most likely lower to get it tenanted.

The strata units are always deceiving when it comes to yields, especially in certain locations such as QLD with their high Body Corp and council rates.

Corey Batt | Precision Funding
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 26, 2014 - 3:46 pm

Try to estimate how many hours you would spend a year chasing up problems, understanding current tenancy laws etc vs. how much you will save.

I personally don’t self manage any problems for this reason! :)

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 26, 2014 - 2:54 pm

superAndrew wrote:

One thing to point out. It wouldn’t be advisable to use an IO loan for positive cash flow property. A better strategy would be to use the rent to pay down the principle as soon as possible. This will not only increase your equity in your property but will lower your interest expense and hence increase your cash flow.

Andrew

I completely disagree. :)

This leaves little flexibility and causes potential tax issues moving forward. A more appropriate strategy would be to have an Interest Only mortgage with full transactional offset. The same reduction in interest applies, however you can access that increase in funds for both investment and personal usage. By paying P&I, if you were to use the funds for a non investing purchase the loan will be ‘polluted’ and accountant will need to apportion the deductible and non deductible portion, minimising tax deduction and increasing accounting costs.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 26, 2014 - 2:00 pm

Dwight wrote:

Is Don is good!

You need to begin with the end in mind. I hold 8 +CF properties right now and the plan is to sell them if and when the yield drops from the current 9-10% to less than 7%.

Nigel is also right. I don’t think a 6% return is really going to be positive cashlow in the medium to long term.

Best of luck,

Dwight

If you sell out of the assets at sub 7% yields, what would your plan be from there?

I’d say the opposite re; 6% yields, unlikely to be CF+ in the short term, but long term growth will make the investment CF+.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

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May 25, 2014 - 9:14 pm

If it’s a topup of the existing loan it would increase to 270k. However in the case of a PPOR, you would generally setup a separate equity access with a balance of 30k.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 25, 2014 - 7:44 pm

Generally the main issues people find with display homes is LVR restrictions + insurance issues. Not to say they are all lemon deals, but there certainly is a reason why the yields are provided as high as they are.

Some of the deals I’ve seen with them however have ‘make-do’ clauses, where they repaint, refit carpet etc too at the end of lease, as some of these display homes are incredibly worn by the end of their terms.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 25, 2014 - 6:43 pm

Bank policy isn’t always logical, which is the bane of many a brokers existence. In the end they are the king makers however, as they control the money and the rules.

Risk matching obviously tells certain lenders that reliance upon rent is a higher risk factor than a salary, likewise AMP believes owners with 10+ properties are a higher risk to their business.

Sometimes this may be due to larger secondary issues, for instance on the rental reliance issue lenders consider a ‘worker’ to be able to replace their incomes without too many issues, whereas extenuating circumstances for an individual with a portfolio and no income, may come undone (ie, divorce, litigation perhaps).

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

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May 25, 2014 - 4:34 pm

superAndrew wrote:

http://positivecashflowproperty.net.au/positive-cash-flow-properties/3626-palm-place-ross-nt-0870/

Price: $165,000
Rent: $290pw

With the pool and public facilities, I wonder how much of that cash flow is lost to strata?

Corey Batt | Precision Funding
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 22, 2014 - 9:20 pm

So long as you can meet the lending criteria, I can’t see what restriction you may have. If you have sufficient deposit funds and serviceability, you just need to add a suitable property into the mix and you’re on your way.

Will you be investing in an IP by yourself, or with your partner?

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 22, 2014 - 12:20 pm

Be wary of affiliated brokers, as there have been many cases of the developers/brokers/conveyancers etc stitching up the buyer by skimming over issues (poor valuations, trying to stop clients exiting OTP contracts using sunset clauses etc).

It is much more beneficial that you enlist the help of independent advisors who’s interest is in serving you, not the parent/affiliate company.

• This reply was modified 9 years, 11 months ago by  Corey Batt.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 22, 2014 - 12:14 pm

The issue is related to split contracts and the Australian Property Institutes view that there is a $0 value to land with common walls/construction until it is completed, as it could not be sold into the open market. This would be the stumbling block which the purchaser would be facing.

As such these forms of developments are being sold on as OTP.

http://www.rk.com.au/insights/funding-issues-with-split-contracts-in-residential-developments/

• This reply was modified 9 years, 11 months ago by  Corey Batt.

Corey Batt | Precision Funding
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 22, 2014 - 12:03 am

Lenders look at base income as the most reliable form, with bonuses, overtime etc being treated differently by various lenders. Bonuses generally need to be shown over 12-24 months to be considered by most lenders as income.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 21, 2014 - 2:58 pm

As Jamie has suggested, if serviceability is tight, purchasing this as an investment property may get this over the line. If you haven’t already got a broker, I’d suggest contacting one, as they will be run through the plethora of scenarios and lender combinations which can be used to meet your needs.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 20, 2014 - 8:09 pm

Steve McKnight wrote:

Interesting post…

As all credit checks are tracked and logged, too many could raise eyebrows.

That said, so long as you have an explanation you should be okay.

Beware the new changes though, were more information is tracked and defaults treated more harshly. Read more here.

I would recommend getting a copy of your credit record annually and making sure it is accurate.

You can pay if you want it quickly, or else you can get it for free: instructions how here.

– Steve

Too many credit checks can raise a lot of eyebrows indeed. I’ve had clients who were originally using mobile bankers, who would put them through perpetual pre-approvals, applying for a new pre-app after each expiry. Add in a lender switch through the process, they had 6 pre-approvals over 12 months.

Needless to say the incoming lender for the new purchase wanted to know what was going on – broker notes and letter from clients resolved this quickly however.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 20, 2014 - 6:37 pm

Deal of the week:

Purchase Price: $230,000
900sqm subdividable into 3 blocks
Rent: $440wk (duplex)

Gross yield of 9.95% – CF+ certainly does exist out there. :)

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

May 17, 2014 - 8:38 pm

Torrens title with a party wall?

Are these joined garages?

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

April 22, 2014 - 12:34 pm

The sale funds can be used as a deposit to purchase land and build an investment property. If you have a contract signed for the sale of your property, you can use a deposit bond to be able to put the investment under contract if timing is tight.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

April 19, 2014 - 5:26 pm

I’ve got a 325ci, but looking at going for a Sedan soon just to be a bit more practical.

Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide

[Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010]

April 19, 2014 - 3:26 pm

It’s nice to see an update from a purchaser of these specialised commercial properties, a rare situation indeed. Even nicer to see that it’s been working out well for you all. :)

How have you found the occupancy rate since taking it over?

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

Investment Focused Finance Strategist - servicing Australia-wide