[leaMember@leaJoin Date: 2004Post Count: 26]

March 24, 2014 - 1:24 am

Thanks for your response, Terry. The properties are all in or around Adelaide. I'm not sure that same law applies in terms of stamp duty in South Australia, unless it's been court ordered, so I think he would need to pay stamp duty on the full purchase price.

[leaMember@leaJoin Date: 2004Post Count: 26]

March 24, 2014 - 1:03 am

Thank you all so much for your replies. We have discussed our situation at length, read through your opinions here, and discussed options with our accountant. I'm personally reluctant to pay out so much money to the govt and real estate agents in fees/charges. So here's what we came up with in the end:

1) move into the hubby's monster-overpriced home and focus on reducing debt (with help from +ve cashflow properties into the offset account, of course)

2) rent out my current PPoR in nice beachside suburb for the next 5 years minimum (cashflow positive from day one, plus plenty of capital growth to be had, but considering taking advantage of the 6-year rule for Capital Gains Tax)

3) renovate the oldest property to modernize it a bit, plus raise rent a little more (zero chance of re-development – it's an apartment in a block of 15)

4) sell the next oldest property – there is no hope of further capital growth since the Housing Commission moved into the area. Also, no point in redeveloping, as costs would outweigh gains in that area. Put up with the capital gains tax on this one and use the proceeds of sale to reduce debt on hubby's PPoR substantially.

5) renovate the next in line and hang onto it for a few more years. Still hope for this one long term (and great long-term tenant in there paying +ve cashflow rental)…

6) build a new investment property jointly to start our new 'joint' portfolio rolling in the right direction. Hopefully, this one will be in a better location to replace the one we intend to sell. Decided to build because it's still possible to create some equity in some suburbs in Adelaide by being careful with construction costs, plus cheaper stamp duty, plus rental demand is still strong, plus nice depreciation.

Thank you all once again for your input and opinions. You've helped us enormously with our decisions.

Cheers,

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

July 26, 2007 - 9:45 am

Quote:

"Should be a walk in the park".

Yes. It should be. It's not.

Quote:

"Done deals like this in the last fortnight"

Great. Good for you. I'm pleased you're so well-versed in these matters.
I'm not here just to advertise myself like so many others seem to be. I'm here to learn as well. That's another reason why I asked the question.

Quote:

are you a broker

Yes.  I have been for 8 years. But I've not come across a property quite like this one before. That doesn't make me stupid or unable to learn. It means I haven't seen one like this one until now.

I thought perhaps posting on a forum filled with other investors, somebody might offer some valid, constructive assistance. I guessed wrong, huh?

As all units are under 45sq metres in size in a Category 7 rural location in south Australia – that limits my options
Two of those options both said – "not 6 on one title – they'll only do 3 maximum". The other said "this is a commercial deal".

After checking with the BDM's from quite a LOT of different lenders – who all said NO except one, I got 65% LVR with a 7.39% rate. Commercial deal. That's it.

Everyone else said flat NO.

Thanks anyway for your helpful suggestions. I've learned a lot about asking questions on forums.

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

July 26, 2007 - 4:38 am

RateBusters is owned by the same owners as Assured Home Loans – based in Adelaide's north-western suburbs.

They count on the fact that most people want to refinance (or sell) before the usual 4 years anyway, so you've not covered the exorbitant cost of the set up AND you cop a penalty for paying it out before their 5 years.

Go and barter/negotiate between a couple of bigger banks. You'll get decent discounts without the ridiculous set up and exit fees.

Just my two cents

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

February 12, 2007 - 9:18 am

Hi,

I wonder why Marc thought mine was a negative post? I aimed my post at providing the frustrated cynics something to perhaps turn their negative thoughts into something a little more positive and constructive.

I quote from my own post:

These are not ideal properties and I probably wouldn’t shop this way personally – but the question from the frustrated cynics was “Where can I find any properties returning 10%+ ?”

Someone asked a question. I answered it. Nobody asked about potential capital growth or the percentage of populace on welfare, so I didn’t answer that question.

You wrote:

Ararat is a town that will not enjoy any decent cap growth in my lifetime, and is a hive of welfare recipients, single mums with a half doz kids

Once again, the question was “How do I find any CF+ properties returning 10%+?” I answered that question only.

The question was not “Is this a good investment” or “How do I attract professional young couples with no kids or pets who aren’t on welfare?” or “How do I achieve 425% capital growth in 6 months?”. They are different topics.

The question was “How do I find CF+ properties returning 10%+?”. A search on RealEstate.com.au provides that simple answer. Next question.

At worst, this is reckless and dangerous advice.

It’s not advice at all. It’s simply showing that the negative nay-sayers really don’t have an argument – unless they are looking for more reasons to avoid beginning with investing.

I made it clear in the previous examples in my post that I don’t advocate shopping this way – in fact my own investments are derived from either sub-division/demolition and/or construction. I prefer new homes. I prefer to create equity where there was none before. But that’s my own personal investment choice. Where in my post did I ‘advise’ anyone to do the same?

Every home (or block of land) is different. No two investments are alike.

I also made it clear that following everyone else’s investment decisions makes a person into a sheep or a lemming. I strongly advocate investing for your own circumstances and your own personal tastes in the state in which you have chosen.

I am sorry you found my post to be negative. I do hope others out there may see by my examples that investing is not as simple as doing a quick search on the net – or just reading a book/forum post and copying the results of others.

Have a lovely day
Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

February 11, 2007 - 4:40 am

Hi all,

To all those frustrated cynics who believe CF+ properties are impossible or too hard or can’t be done – there is no such thing as a magic button to press and BAM instant easy money. You really have to work out what’s important to you. It’s not impossible. It’s not even that hard. It just depends on what your mindset is like right now.

So here’s a couple ideas to help those frustrated cynics start thinking about some opportunities that are right under their noses.

ONE:
I’m 35, female and I work full-time-plus in my own business – which includes plenty of evening work in client’s homes. I also have a cute little part-time e-commerce business going on the side (I love my hobby!). I also have 6 investment properties – all cashflow positive and am currently building 4 more.

I hate hearing how people don’t have enough time to invest because they work “Full Time”. That’s eight hours a day. You also sleep eight hours a day. What do you do with the other eight? [angry2]

Turn off the TV. Turn off the computer. You’re not missing anything anyway (except maybe some great deals).

TWO:
What’s your aim? Cashflow positive income or capital growth to reinvest in more CF+ properties? You need to know where you’re heading with each deal before you can get anywhere!

Example: I am currently building four new homes on two blocks I subdivided. Two of these will be sold (because the capital gain is worth my while! I’ll reinvest the profits and do another project). The other two are immediately CF+ so I’ll keep these.

To anyone else the deal above would have looked like an old 40’s crusty on a semi-disgusting block of land on two titles. It’s now 4 beautiful courtyard homes.

I spent $7,000 of my own money to make the above deal happen, so don’t give me negative feedback about how you can’t afford it.

THREE:
Look outside the square. Following everyone else only makes you a sheep (or a lemming). Do your own thing.

Example: everyone I know is into flipping or renovations. So in May 2006 (not the 80’s like everyone is ranting about), I decided to buy a cheap little block of land in a new estate 25 minutes south of Adelaide that the agent couldn’t sell. The asking price on the land was $78,000. I offered $67,000 and got it. I set a six month settlement date on it and went shopping for a house to put on it. After haggling hard, I was quoted $89,500 to build a very nice courtyard home. Closing fees: $3,967. During the settlement period, the land values shot up (I love to be first in before the ‘rush’).

At land settlement date, the bank valued the entire property at $245,000 (it cost me $160,467 remember). Rental appraisal from agent = $250 per week.

Gee. Am I happy with this deal?? You bet.
Is it CF+? Not quite. Not yet…
The mortgage payments are fully covered by the rent. I have to cover the rates and insurance – but only until the rent goes up in April this year [biggrin]

FOUR
Just to prove that CF+ properties CAN be found easily enough and that it’s not impossible, I did a simple search on realestate.com.au to see if I could locate any 10%+ deals or not. After reading all those negative posts, I thought this would be a little harder than it really was….

These are not ideal properties and I probably wouldn’t shop this way personally – but the question from the frustrated cynics was “Where can I find any properties returning 10%+ ?”

Here are some I found with no effort on a Sunday morning from EACH state

South Australia:
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103724486&f=30&p=30&t=res&ty=&fmt=&header=&c=18947880&s=sa&tm=1171156984
2 bedroom cottage in regional SA within township (around 2 hours from Adelaide) rents for $100 per week on TWO titles. Asking price $47,000.

I wonder what else I could do with TWO titles and two street frontages….

Queensland
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=101882768&f=60&p=10&t=res&ty=&fmt=&header=&c=70937157&s=qld&snf=rbs&tm=1171158861
3 bedroom cottage in regional QLD within township rented at $120 per week. Asking price $47,000
Curious.

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103410824&f=40&p=10&t=res&ty=&fmt=&header=&c=70937157&s=qld&snf=rbs&tm=1171158861
Cottage rented at $70 per week in regional QLD within township. Asking price $35,000. Curious again.

VICTORIA
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103104684&f=10&p=10&t=res&ty=&fmt=&header=&c=67497325&s=vic&snf=rbs&tm=1171159366
2 bedroom double-brick unit in regional Vic within township rented at $80 per week. Asking price $50,000.

NEW SOUTH WALES
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103104684&f=10&p=10&t=res&ty=&fmt=&header=&c=67497325&s=vic&snf=rbs&tm=1171159366
2 bedroom cottage regional NSW within township. Asking price $45,000. Rented at $90 per week.

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103661049&f=100&p=10&t=res&ty=&fmt=&header=&c=86707227&s=nsw&snf=rbs&tm=1171159594
2 bedroom, 2-storey cottage regional NSW on outskirts of town. Asking price $45,000. Rented at $85 per week.

TASMANIA
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103668333&f=0&p=10&t=res&ty=&fmt=&header=&c=2442981&s=tas&snf=rbs&tm=1171160402
Really cute cottage in Queenstown. Asking price $39,000. Rented at $85 per week.

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103739146&f=0&p=10&t=res&ty=&fmt=&header=&c=2442981&s=tas&snf=rbs&tm=1171160402
Regional TAS – 3 bedroom home. Asking price $40,000. Rental $85 per week

WESTERN AUSTRALIA
http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103605707&f=10&p=10&t=res&ty=&fmt=&header=&c=3446667&s=wa&snf=rbs&tm=1171161040
2 bedroom house on large land in regional WA. Asking price $47,500. Quick phone call to agent confirms asking rental of $95-100 per week easily.

http://www.realestate.com.au/cgi-bin/rsearch?a=o&id=103748637&f=10&p=10&t=res&ty=&fmt=&header=&c=3446667&s=wa&snf=rbs&tm=1171161040
3 bedroom house regional WA. Asking price $50,000. Rented $100 per week

WHEW!! That was a really exhausting 25 minutes worth of work. What a shame I have to go to the office now. Imagine what I could have found if I was really looking HARD instead of a quick state-by-state search.

Next time you hear yourself saying “It’s impossible” – close your yap. Turn off the TV. And do something about turning that negative attitude into some really nice investments

Have a lovely weekend!
[biggrin]
Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

December 5, 2005 - 3:49 am

Xenia,

Where in Adelaide are you?? I’d be happy to chat to other Adelaide investors! I just can’t seem to find too many right now!

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

December 5, 2005 - 3:46 am

Xenia, I never received your survey! Want to send it over again please??

[email protected]

Thanks

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

November 21, 2005 - 3:04 am

I’m in Adelaide too! I’d be happy to chat!

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

November 21, 2005 - 3:02 am

I’d be happy to be part of your survey

[email protected]

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

November 21, 2005 - 2:32 am

I don’t know if this tale will help your question or not – but here’s what happened to me.

I had my own properties before I got married. He had only one run-down thing that he lived in. We got married and built the ‘dream family home’. He promised right from day one that he was never interested in taking what was already mine before we even met. I trusted him and no mention of pre-nup entered into it. Of course, we were never going to break up.

But we did.

Then he got nasty. Three court battles later and I **eventually** got back what was mine before we met, plus 50% of the equity in the dream family home. Some bright spark mentioned that we should have just split everything 50/50 and moved on. Wrong. I’d spent 10 years building my own safety net. I wasn’t going to hand it over just because we weren’t staying married. Unfortunately, it cost me a huge amount in legal fees.

Now I’m divorced and happily investing alone with my own properties again and my own money – but now I’ve met someone with just as much as I have.

We’re both cynical and fearful of the other becoming nasty financially if something goes wrong.

Does pre-nup come into it? No.

What it comes down to is the fact that I can prove that my properties were my own before we met and his properties were his before we met. Those things remain untouched – even in court.

Should we buy or build a joint family home – well of course that would become dividable 50/50 in the event that something goes wrong. As would any other asset bought jointly from this point onward.

Just my two cents
Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

May 9, 2005 - 1:23 pm

Thanks everyone. You’re all great. I’m glad I asked on the forum rather than listen to my family.

I got the property I wanted. I paid $81,450.(gotta love those daggy Adelaide prices, huh?) The tenant signed a 12 month contract at $140 per week. Settlement is 31st May.
[biggrin]

The rental agent provided me with a print out of the rental history for this tenant. She’s been there for 21 months. Every payment made. One payment 2 days late through January 2005 (she was giving birth the week prior, so probably a fair excuse!)[blink]

My loans have been amended to match some of the suggestions made on this forum topic previously. Thanks for the tips.

I’m really pleased I asked now. Thanks very much once again. You’re all great
[thumbsupanim]

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

May 8, 2005 - 2:31 am

Originally posted by The Mortgage Adviser:

The idea behind interest only and using offset accounts to park anything above the interest expense is mainly to provide flexibility. The effect will be exactly the same as if you were paying principal and interest including the taxation benefits if you do not spend the money sitting in the offset accounts.

Okay – so I got online and altered my investment mortgages to interest only. I understand now what you mean about leaving the excess in the offset account. I can use it later. Good point.

My original logic was, if I pay off some principal, then it increases my equity (coz house prices aren’t going anywhere here, so I can’t rely on capital growth – yet). But the offset should have the same effect – right?

You must ensure not to mix up investment and personal expenses in the offset account though.

I knew this one. My personal mortgage has an offset account, too. I pay no interest at the moment, just a payment. I have equal funds in offset as I do in debt, but this house will become another rental when I’m ready. So I understood why it was set up that way. If I redraw the funds from my offset as a deposit on another home, then the remaining mortgage becomes fully deductible.

The biggest benefit is when it comes time to buy your next investment property – you will have a lot more cash available for deposits and expenses without needing to ask for a loan increase or other change on every loan. If you use the money from these investment loan offset accounts, it will still all be deductible.

okay. valid point. I guess I was focused more on reducing the level of debt (thus the principal repayments) so that I’d still have equity as well. But the extra cashflow into the offset accounts provides the same benefits, doesn’t it?

Excellent. Thanks heaps for that.

By the way – I put the offer in on that house i wanted. It looks as though I’m going to get it after all [biggrin]

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

May 7, 2005 - 8:04 am

I read an investing book somewhere years ago (I think it might have been Anita Bell) and she suggested rewarding good tenants on a regular basis.

I started this a couple years ago and WOW!! It really works!

Basically, every Christmas, I take them all nice little baskets of goodies with a “Thank You” Card – not a christmas card. I thank them for being great tenants. I do the same at Easter.

The beginning of July sees another thank you card and a personal visit from me. I tell them “it’s beginning of financial year time – what would you prefer I concentrated on the rest of the year til June”. They tell me. I work on it. All happy.

The results are that I’ve had no missed payments from any tenants, no vacancies for several years now and two homes have had the tenants completely re-landscape the rear yards for me! Thanks guys!

[thumbsup2]
Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

May 7, 2005 - 7:53 am

Thanks heaps everyone. The people around me are a mix of investors and non-investors. Everyone without exception is saying don’t do it. I have no idea why they’d be jealous of anything I do. I’m just a regular nobody.

So you guys are the only ones saying ‘go for it’. Thanks.

Originally posted by The Mortgage Adviser:

People are generally negative regarding things they do not understand or find ‘difficult’. If you are happy with your due diligence, don’t let the ‘don’t be’s’ put you off.

I’m basically happy with my due diligence. I believe that the area will be redeveloped in a couple years when the housing trust (housing commission to you easterners) move on. They’ve recently done this in the surrounding areas. The area I’ve targeted will be next.

Unfortunately, I don’t know any agents in this area. I’m from south of the city and my other properties are all south as well. I’ve been talking with and visiting some. They all say it’s easy to get tenants in that area. They call them “professional renters” – people never likely to purchase their own homes.

Just regarding your loan, why are you going with 78% principal and interest? I would recommend 80% interest only regardless of your other structuring. Get your whole portfolio looked at and you may find you can make additional investments at a quicker pace.

I chose Principal and interest because then the place can pay itself off. It’s still positively geared with P&I and I know it would be more so with Interest only, but I like the idea of my debt getting smaller without needing to use any of my own money. All excess funds from the existing rentals sit in an offset/redraw account to wait until it’s time to pay their own rates and expenses. It seems to work so far and I’m in no real rush.

What’s the benefit to me of NOT paying off my houses? Just keeping the cashflow? Can you explain this idea a little further? Thanks.

[biggrin]
Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

May 7, 2005 - 1:00 am

It’s northern Adelaide metropolitan suburbs. Lending maximum is 90% there according to my bank, however, I only need to use 78% (I have deposit for remainder and fees)

I’ve been pre-approved for a mortgage for this intended place for a principal and interest loan with an interest rate of 6.62%

Thanks for the tip, though.

Lee

[leaMember@leaJoin Date: 2004Post Count: 26]

April 14, 2005 - 10:14 am

Hmmm… I’m still learning here, but these are some things I’ve done to get the rental incomes up in the past:

— built a pergola/outdoor entertaining area
— upgraded air conditioning unit
— replaced old carpets
— installed a dishwasher
— replaced tired old blinds
— re-planted easy-care conifers around perimeters where previously was lawns to fence lines
— repainted walls
— installed security doors

I’m always happy to hear other tips from other people! More rental income can only be a good thing!

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

April 14, 2005 - 9:57 am

Hi Angel,

Is there any way to can restructure your mortgages to suit your situation?

I recently got divorced and managed to keep only two of our rental properties (plus another one for me to live in). Because of my new single status, I restructured my mortgages to still be able to pay the principal down on each loan, but reduce the payments (and the interest rate) dramatically.

No, I did not refinance. I simply “switched” products over the counter at my existing bank. Of course, I asked around and researched quite a lot to be sure that my new mortgage structures weren’t going to be a bad thing. In fact, it was quite easy!

My point is – the restructure gave me a much bigger positive cashflow than I had before and lowered my interest at the same time.

Anyway – I live in Old Reynella right now, so if you wanna email me, maybe we can catch up for coffee and chat about saving our rental properties? Obviously, you live somewhere around this area. I’m happy to chat with another single girlie investor if you are!

Lea

[leaMember@leaJoin Date: 2004Post Count: 26]

February 5, 2004 - 8:02 am

Stuart Wemyss wrote:

I’m a bit confused.

You say “his income + rentals no longer services the full debt“.

Don’t you have a legal and ethical responsibility to ensure your client can afford the debt before helping him?

Yes, Stu. I do.

His 2002 financials show that his taxable income is not as high as his 2003 financials will be. As the servicing calculations are being done by the lenders using these 18 month old figures, of course the numbers show that he couldn’t afford the repayments using those figures.

His accountant has not completed his 2003 financials as yet – but when he does, my client will more than clearly be able to service this debt without problem.

I hope this eliminates and alleviates your resultant confusion.

Lea
(who is very aware of her legal and ethical obligations to her clients at all times)

Remember: This post is just my ‘two cents’ and should not be construed as legal, financial, investment, taxation or even general advice in any way. Always seek independent advice pertinent to your OWN situation before jumping into the deep end.

[leaMember@leaJoin Date: 2004Post Count: 26]

February 5, 2004 - 7:33 am

Originally posted by Terryw:

You’re not going to get too far with standard low docs. GE has a maximum lend or $800,000 per borrower and PMI $750,000 per borrower for total loans when using a low doc.

I’m in South Australia. GE and PMI have lower limits for us than for you guys in the eastern states. I’m maxed at $700,000 GE and $600,000 with PMI

Then there is ING, who do low docs without LMI at 75%, but no companies or trusts. Adelaide Bank also do Low Doc loans without LMI at 75% or less.

Used both ING and ABL already – but thanks!

There are the other lenders such as Magney Mortgages etc, generally LVRs are around 66.6%. Then there are many private and other lenders who will lend up to 80% LVRs at higher rates (8 to 12%), without too many questions.

Finalised and submitted last parts of this loan this morning, using two private lenders, two non-conforming lenders.

But thanks heaps to all those who responded. I appreciate it.
[]
Lea

Remember: This post is just my ‘two cents’ and should not be construed as legal, financial, investment, taxation or even general advice in any way. Always seek independent advice pertinent to your OWN situation before jumping into the deep end.