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Thanks guys bt what about the vacant land canyou get 90% LVR on this??
We had a similar scenario with a valuation on our investment property which had been previously valued 1 year prior at $660 000 we expected the latest valuation to be around $600 000 with the downturn but they came back with $525 000. Our biggest problem is that there were no comparable properties sold in the area during the 6 months prior not because they can't sell but because they don't exist. I contacted the valuer who told us that was all he could value a single story 250sqm house for , the only thing is our house is double storey 450sqm. He told us that the valuer generals office has it listed at 250sqm and even thoough I gave him a copy of the construction plans and he walked through it he would not ammend his valuation. Obviously as this is a bank valuation he would also not give me any further info on the value.
So we waited a few months and have employed a valuer who we know is on the panal of most of the banks. He is going through today so i will let you know what he comes back with.
We have the proeprty on the market at the moment but if it doesn't sell we want to know if we have any other options.
Nat
We had a similar scenario with a valuation on our investment property which had been previously valued 1 year prior at $660 000 we expected the latest valuation to be around $600 000 with the downturn but they came back with $525 000. Our biggest problem is that there were no comparable properties sold in the area during the 6 months prior not because they can't sell but because they don't exist. I contacted the valuer who told us that was all he could value a single story 250sqm house for , the only thing is our house is double storey 450sqm. He told us that the valuer generals office has it listed at 250sqm and even thoough I gave him a copy of the construction plans and he walked through it he would not ammend his valuation. Obviously as this is a bank valuation he would also not give me any further info on the value.
So we waited a few months and have employed a valuer who we know is on the panal of most of the banks. He is going through today so i will let you know what he comes back with.
We have the proeprty on the market at the moment but if it doesn't sell we want to know if we have any other options.
Nat
I am frrling more positive now the interest rates have dropped a little. By keeping the high repayments up I am going to make a bit of headway through the high debt levels I have thus buffering for any future hike. I have learnt some interesting lessons in the preceeding weeks.
Lesson 1. The bubble always bursts even if we think it won't.
Lesson 2. Don't refinance loans for lifestyle purposes (yes I have done this a couple of times and am paying for it dearly)
Lesson 3. Don't buy property at the top end of the market that is the first area that falls in tough times and the last to pick up.
Lesson 4. Hold tight whilst the bubble bursts there is always an new one to catch on the horizon.
Lesson 5. Make sure you can afford repayments without relying on rent (thank god this was instinctive for me and I haven't learned this the hard way).
Nat
HI There,
As someone who sells insurance realistically I can confidently tell that you cannot have a valid insurance policy unless you have an insurable interest (usually financial) in the property and this does not occur until settlement.
Covernotes can be taken out as at the settlement date to placate banks but the taking out of an insurance policy on a house which belongs to someone else is actually against the law and will not be valid. Only the person who owns the house can take out cover therefore early access does pose a problem from a vendors perspective as you become their invited guest and their policies may become voided if you are responsible for damage. Also many insurance companies have exclusion clauses when renovations are happening anyway and most domestic insurance companies will not take on your property as new business whilst under renovations and unoccupied. Read the PDS to get a clearer picture on this.
From a common sense perspective if a party without a current financial interest could take out a policy and obviously the owner has a right to a policy also then in the event of a total loss the insurance company would have to pay out both parties on the one house. Building insurance is quite different to life insurance and only one policy is allowed.
Nat
I am a little embarrassed that my name is attached and responsible for this post that has become a soap box for some doomsday individuals.
For the record the few rational posts I have recieved have given me great food for thought and the reduction in interest rates has steadied my nerves and created a little party in my pocket.
enough said
NatHi Foundation,
Yes your figures above look correct and give me some food for thought from an objective perspective. Thanks. The fact is this though, this house would never be sold to an investor it would be sold to an owner occupier as that is what the property started out as and it is what it should be.
Asset yield doesn't really come into the equation in that instance, it is more about whether a person could build a comparable property for less and I can gurantee they can't so from an owner occupiers perspective it would be worth $570 000 as this would be below replacement cost. And before scamp starts raving I know this because I am heavily involved in both the building industry and realestate markets.
Thanks
NatalieHi Tony,
Thanks for your response but just to clarify this property was not originally bought as an investment it was a ppor which we actually built ourselves and I never had the idea i would make shit loads from selling as that was never in my plans. However i did expect modest growth of between 4 and 7% would offset the holding costs of the property.
As a landlord i don't begrudge my tenants enjoyment of the property and I do everything i can to ensure their needs are met by the sometimes lazy and inefficient property managers that i am forced to deal with and believe me I have been through a few.
We actually can afford to hold but my question the experienced people on this forum was quite simply is it worth continuing to hold or in their opinion would they sell.
There seems to be alot of agro out there I am not sure if people are just frustrated at the market themselves but I would have thought this would have been a good time to share experiences and support one another rather than attacking each other.
I disagree with Scamp about massive job losses in the mining industry. The mining boom is underpinned by the asian markets which have esacped the financial meltdowns of the US and Europe virtually unscathed. Australia is indeed a lucky country at the moment as its economy is not underpinned by financial markets like the US and Europe but by the resource sector largely coming from WA where my properties are. We will have a degree of insulation from a complete meltdown due to this simple fact but that is not to say that we will not feel any further retraction in the economy as clearly we will.
Thanks to those people who have remained rational and tried to give a balanced view
Natalie
Can someone pass scamp his medication!!
HI,
Thanks for the feedback. We owe 530 000 realistically at the moment we could expect between between 550 000 and 570 000 to sell but whether it would sell is a problem as it is at the top end of the market for the area and there are not alot of buyers around a the moment. The house was originally our ppor so it was never bought with investment in mind it just turned out that way. At the height of the boom the value was 700 000.
I couldn't say we even come close to covering the debt of the property outgoings per month are about $5000 and incomings about $2500 (taking into account the tax deductions and depreciaiton as well as rent)which is a pretty significant shorfall.
We have a depreciation schedule which gives alot of deductions as the house is only 6 years old. My husband works in the mining industry and has a high income so the negative gearing is ok although unfortunately the house is in joint name so we don't get the full benefits. We are covering the costs fairly comfortably at the moment but there is no room to move. I just don't see any up side for at least three years and then it will be a couple of years after that before there is any real gains.
Thanks
NatalieWe already have another house which we are claiming as a PPOR so this one will be subject to capital gains.
Thnaks
NatalieThanks everyone for your comments. We have an appointment with an accountant hopefully they can shed some light on whether this property is a viable one. I think it really all depends on how slow the Perth market is going to be now that the boom is over and for how long. Anyone know where to buy a good quality "Crystal Ball".
Nat
HI there,
I work in insurance and my company has a landlords product , $20,000,000 is becoming the norm for this type of insurance.
Nat
The last rise on a loan of $500 000 increase repayments by close to $100 a month.
Hi there,
I am also in Perth. What suburb are you in and which valuer did you use. I am looking to get a valuation done soon and I know some pockets are not doing as well as others. Maybe if I choose a different valuer and get a better result I can let you know who I used, Otherwise if I get a low Val as well we will know it is the market.
Nat
HI Jeff,
The house is one of the most expensive in the suburb about $50 a week over the average. But it is valued about $200 000 over the average as well which will make selling more dificult I guess. Being an outer suburb probably not the best scenario for an investment as the value is largely in the building (which a tenant can damage) and not the land. I am particularly jittery about it at the moment as our tenants are moving out and I am not sure if we will be able to get new tenants at the same price and then the issue of how well they look after the property is looming.
We designed and built the house to be our perfect home and planned to stay there forever but of course life had other things in store for us which is great we have started on new journey but letting go of this house is difficult. I can rationalise based on what I have read and learned about property investing why not to sell ie "Never Sell" "The bigger the asset the better" etc but I am not sure how much of the rationalisation is skewed by emotion. Then I can also see good reason to cut losses and move onto something else ie financial burden and better yields elsewhere.
Unfortunately some properties are not just bricks and mortar.
Nat
Hi there,
I have been very interested to read this post as I to have been thinking about Lasik surgery as I have astigmatisms which cause shortsightedness and I believe can be corrected by this procedure.
It occurred to me when reading the posts that as I am 35 if my eyes are going to deteriorate in my 40's due to weakening of the muscles which I believe generally causes longsightedness in people whose eyes were otherwise normal, does that mean that my shortsightedness will become longer and perhaps self correct with age.Just a thought
NatHi Jeff,
Thanks for your comments. It is my understanding that as we lived in the property for 5 years prior to it becoming an IP then we can continue to claim it as our PPOR for a further 6 years and not be subject to CGT. As for the stampy duty for selling into trust that is probably what I am trying to weigh up at the moment it will be around $30 000 but will allow for unhindered claiming of the interest and by being in the trust the asset is protected ( we are in a high risk group for litigation) So I am trying to weigh up do I sell outright which would incurr further selling costs as well as stamp duty on new IP but one that is performing better growth and rentwise. Do I sell into trust and make an immediate loss in terms of stamp duty which will lead to gains later on as this property wil be negatively geared for a long time, or do I just sit and hold and ride it out.
My gut and my crude attempts with the figures tell me the property is costing me money but I am attached to it emotionally which means my judgement is clouded. I know if I wait long enough it will make money but I can't decide if it is worth the lost opportunities in the meantime.
NatHI there,
As the others have mentioned if the house is incorrectly priced then it is unlikely you will achieve your price at Auction either unless there is something very unique about the property.
I am more concerned that you are feeling coerced into an auction situation that you are clearly not comfortable with. Perhaps take the property off the market for a while at least a few weeks make some cosmetic improvements then decide if you want to put it up for auction at least then the stock of genuine buyers may have changed and not be aware of what the asking price was in the private sale.
If you go to auction now the buyers have the upper hand as they know what the asking price was at private sale and are likely to be hoping to get it for less than that at auction as they sense your desperation.
Take a breath, Take some time and take stock and don't be forced into anything that you are not comfortable with.
NatHi there,
It is my understanding that if you have a principal and interest loan and pay the basic monthly repayment which include interest and enough principal to pay the loan off over a specified number of years (25 or 30 usually) then there will never be a redraw amount. If you have a loan which allows for a redraw facility then you need to make extra repayments over the basic monthly principal and interest payment to accrue an overpayment which can then be redrawn. Not all loans allow for this. Also it can happen that the loan will show a redraw amount if you look at it directly after the monthly payment has been made but before the interest for that month has been allocated. If you were to redraw this amount then you would be in arrears.
In order to accumulate redraw funds you need to make extra repayments.
Hope this is usefull to you.
Nat
