Forum Replies Created
Thanks Martin,
Your experiance confirms what I've heard. I have also read that this level of interest is most pronounced at the $300k price point, and things calm down a bit as the price rises. Chermside is a bit more expensive than Ipswich so maybe the buying won't be as frantic. But I guess the days of the buyers market are disappearing.
Cheers
AdrianHi there,
Regarding the new v's old, imagine that you are buying a car. Is it better to buy a new car, or an old car.
We could use my car as an example. When new, it cost $50,000. It is a 1998 model HSV Commodore. I am now selling it, and would like to get $15,000 for it. So over time its value has dropped from $35,000. But this didn't happen evenly, it would have dropped the most the day it was driven out of the new car lot. The previous owner (I bought it second hand) payed a premium to be the first to own the car.
An old car is not much value either. The running cost get higher as the car ages. So the best car to buy is a near new one, one that has taken the big hit when it was no longer brand new, but hasn't aged enough to need major repairs.
Houses (not the land) behave in the same way as cars. A new house will have a premium, a near new house will be good value for money, and an old house will require more expensive upkeep.
Now as for finding a good deal. I subscribe to the fair deal ethos. What is the harm in paying fair market value? If you buy in a good area you will make money anyway. In a rising property market the time spent finding that good deal will cost you more than the money you save.
Good luck
AdrianHi Tia,
I am not an expert in this field, but I can my recent experiance.
My bank allowed me to use the rent (reduced by a vacancy factor). Then for the servicability test, they deducted a fixed percentage of my gross income for taxes and living expenses. Then the remainder had to be able cover the repayments at an inerest rate 2% higher than the current variable rate.
Under those conditions, then a property that is made CF+ wouldn't have increased my borrowing capacity.
But, lending is getting more competitve these days. So there is still hope.
The ATO will allow you to claim a tax variation for investment properties, through PAYG, so you get your deductions through out the year, not at the end of the financial year. If you made this claim, it would increase your net salary. Then all you would have to do is find a lender that uses your net salary (mine used gross) and that would increase your borrowing capacity.
A mortgage broker should be able to help you. A good one will know which banks are keen to increase their loan book and which ones that will allow you to use your net income. They don't cost any extra and save a lot of time.
cheers
AdrianHi JimmyD,
I would be interested in some of those reports, as well as the Midwood report, but first, is such a thing ethical. Is there a copywrite that would prevent us form sharing them around?
Anyone know anything about this?
Cheers
AdrianHi there,
Although I haven't been in your position, I can offer my opinion.
I am a believer of the buy and hold strategy. If you buy the best located property you can afford, and hold it long enough (though more than 3 years you outlined) it will become cf+. You said that the outgoings are $16K. At a yield of 3% (the best locations have low yields) , the property would have to increase in value by approx $500k to cover that $16k outgoing. Now $500k might seem like a lot of money to some of you, but well located property in Australia's capitals doubles every 7-10 years. So if you buy such a property for $500k, it will be worth $1M after 7-10 years.
Some people resist this idea, but it has been happening for ages. And it will continue. You need to have an abundance mentality to believe this and unfortunately a lot of people don't have this, but it is essential to becoming truly wealthy.
Of course, if you have bought in an area that doesn't have excellent long term capital growth, you should sell. Then next time you buy, make sure it is in an area where you would be happy to own that place for ever.
Good luck
AdrianHi,
I agree with Richard, the ATO will look at the purpose of the loan.
Unfortunately a lot of people end up in this scenario because they pay of their home loan for many years, then borrow to buy a new home and rent out the existing home. Hence the investment property has had the loan payed down and the new property has quite a substantial loan. One way to access the equity is sell the house with the equity. Buy a new house and use all the equity to minimise the loan. Then borrow 100% of the money for the investment property against this new home. This will incurr a lot of stamp duty etc so has to be weighed up agains benefits.
The other thing you can do is pay the principle off your home as much as you can, and interest only on the investment property with your cash flow. This way reduce a non tax deductable debt and not teh tax deductable one. There are many books and magazine articles that deal with these topics.
There are several sources and the numbers proclaimed by each can vary a little. I use Australian Property Monitors. Their website is http://www.apm.com.au Residex, state REI and others also track median house prices.
Hi,
Your real estate agent will generally guide you through the process if your unsure. But regarding the deposit and settlement, the deposit and settlement dates are part of the contract. You don’t need approval from the bank to pay the deposit. You don’t even need a deposit, but you offer a token deposit to show the vendor you are serious. Likewise with settlement, you could have settlement in 2, 3 or any months. But to encourage the vendor to accept your offer you can put a shorter settlement.
There is a fair amount of paper work involved but if you make sure you provide everything required as promptly as you can, you won’t be holding up settlement and everything should go smoothly.
