Forum Replies Created
Howdy,
This is unfortunately fairly common in regional communities. The first thing I would be doing is find out who the approved valuers are for the lender that you are going with (brokers can do this for you if the bank is less than forthcoming) and get a second valuation because on the numbers you’ve provided this seems like a tough call. Also get hold of the valuers report and see whether it’s been downgraded for a particular reason eg roof about to collapse etc.
Good luck and keep pushing!!
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Mel
[email protected]Hi,
A client and fellow formite is investing successfully in that area at the moment, email me if you’d like his contact details.
It has a lot going for it, but the usual concerns about good and bad areas and lack of capital growth from what I understand.
Happy investing!
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Mel
[email protected]Hi Damon,
For starters I would be going to see another financial planner – I know a few good ones in Brisbane, if you’d like their details email me at the address below.
For seconds neither shares nor property are homogenous markets ie plenty of people loose money on the stockmarket when the index’s are rising (eg NAB!) and plenty loose money on property when prices are rising (eg inner city apartments in Melbourne). It sounds like you have made wise and ultimately financially effective decisions so far, don’t be too quick to doubt yourself based on the ‘wisdom’ of one person.
Happy inveting!
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Mel
[email protected]Hi,
If it is a business with a property then 70% LVR at about 7.5-8% should be attainable, but as UraneHan says, they’ll be quite nosey about the business’ financials.
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Mel
[email protected]Hi,
Bank of Qld has some very good interest rates around 6.82% variable and around 6.89% fixed for three years.
As a broker and ink & paper conservationist I LUV low docs, but they require a lot more homework than your average loan. Beware that there are big variations in level of flexibility, acceptable security (many won’t do PPOR’s), acceptable income sources (many won’t do PAYG), and LVR per postcode variations between 50-80% in this category so rate may not be the determining factor.
Happy investing!
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Mel
[email protected]Hi,
Some loan stats I got recently which show whats happened recently:
Average over 2003 – 9% of all loans were fixed
December 2003 – 15% of all loans were fixedI was surprised that fixed loans are such a small portion of the total, but it’s consistent with my client base’s activities. Even though it appears there was a bit of a panic in December after our first rate rise, personally I think it was driven up by people who’d been thinking about refinancing to capitalise on property value rises and the media’s rapid turn around that property was about to burst and rates were going to skyrocket prompted these people to finally act and refinance plus lock into a relatively cheap fixed rate so that they minimised surprises in the future on their higher debt levels. Not a bad strategy if servicing is tight that’s for sure, although personally I always stick to variable.
Another stat which is still getting mulled over is that first home owners dropped from an average of around 22% of property purchases to around 13% late last year. Again I tend to disagree with the hype and think this is due less to affordability of the deposit and repayments and more because a) there were probably elevated rates of FHO’s getting into the market the previous 3 years while the FHOG was on offer, and b) the media focus on the bubble bursting making parents more reluctant to encourage and assist their children to buy their first home incase the doomsdayers are right. Again only time will tell … here’s hoping they’re wrong!
Whether you go fixed or variable, always always always have a plan for:
when to buy,
when to hold, and
when to sell…. Kenny Rogers springs to mind!
Happy investing!
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Mel
[email protected]Hi,
I know the lady who is running this programme and I have to say she is the real deal – an experienced and very successful property investor. Compared to what other educators are offering I think it’d be money very well spent.
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Mel
[email protected]Interesting site and interesting article, thanks.
I think Mr T is clever enough to personally keep out of trouble but the domino effect for the banks of some of these large complexes are that if they are devaluing due to large no.’s being sold simultaneously and hence cheaply then their security is devalued and any investors or unit trust groups etc that default on their loans leave the banks in bad debt land, and with more banks self-insuring these days (Westpac loans now 100% self-insured as of last week for example) then they can quickly get in trouble. Where external valuers have been involved they too got lined up and shot by the lender mortgage insurers and start pegging back valuation figures to cover themselves … and so on and so forth. [
] [}] []Good to see Vic is still breaking development approval records for multi-dwelling approvals too! [
]Interesting times ahead – I always take heart from the investors I meet who’ve been in the game for 20+ years and just say ‘do your homework and keep going’.
Merry Christmas to all the goers!
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Mel
[email protected]Hi dougdot,
Some lenders will want to see that you will have >70% equity in your PPOR at age 65, but provided you have sufficient superannuation funds or possibly verifiable income from the property (never tested that one myself) then you may be able to waive this requirement.
Good luck – my partner and I dream of owning a little orchard somewhere in the sunshine coast hinterland one day too, but still enjoying inner city too much at the mo’. [^] Cherries, peaches and avocados are personal favourites – not so keen on mango sap and you can’t wear the little plastic gloves because then you spread the sap and ruin the mango skins. Then of course there’s wine … dangerous! I couldn’t have animals, they’d all end up pets.
Have a very merry xmas!
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Mel
[email protected][^] Merry Christmas
Absolutely you can pay him and claim it as an expense – just make sure you have a record eg an internet BPAY record, cash receipt etc as no evidence doesn’t wash with the taxman.
Have a fab Xmas,
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Mel
[email protected]Hi Matt,
As a borker, I think your example shows why it is important to go to a broker in the first place!
Kay – regarding financial institution – which one? Several of the larger Credit Unions flirt with broker introduced loans so I’m guessing it’s one of them.
Like any profession there are good and bad operators but I personally think it’s a fantastic service, not the only solution mind you and I have sent several people back to their current banks to meet their needs because they really didn’t need me to switch them into anything else.
To give you a snap shot of the industry’s position: WA people use brokers for 55%+ of their lending, in VIC only about 15% and national average is around 30%. In the more mature US & UK markets brokers introduce around 75% of all loans now and all signs are we are following that trend. Brokers have been around for 20+ years in Oz, but yes it has only been since the mid-90’s that most lenders have realised what a great almost-free marketing team they are and how much business they can bring in without much effort.
My advice is shop around for a good one or two and keep them up your sleeve like all your professional investing contacts to help you achieve your investing goals.
Happy investing & Merry Christams!
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Mel
[email protected]Hi,
From what I’ve seen valuers are human and WILL value a house higher if it looks well cared for without half-done repair jobs everywhere – unless it’s in the middle of a SHORT renovation period of course. Bad/messy tenants are the worst. Valuers are pitching the price at what they think it would sell for in less than 3 months.
Having a bare dog-friendly yard shouldn’t be a drawback as long as the rest of the property is of a consistent high standard. I also think it’s very beneficial to be present when the valuer comes through, and point out to them all of the improvements you’ve made since you purchased the property, including some of those little cosmetic things like ‘cleaned the roof tiles’ and new lights/curtains/carpets/screens etc. If you’ve got a wooden deck, oil it, if you’ve got some tatty furniture, store it out of sight, if the doors squeak, oil the hinges. A few dollars and a bit of effort could add many thousands because it’s ‘sale ready’.
Historical sales aren’t everything – I’ve recently seen a $360K+ house valued at $280K because of lazy tenants and a $320K house valued at $350K because of care and attention.
Good idea about 3 independent valuations too.
Good luck and Merry Xmas!
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Mel
[email protected]Sounds like a lovely ambition Martin.
I wish I did know how to help, but have you tried any of the big groups like Community Aid Abroad or AusAid to see whether they could direct you?
Good luck & Merry Christmas!
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Mel
[email protected]Hi Boo Boo,
I’d start ringing around to commercial real estate agents too eg Ray White Commercial, Frank Knight etc as this won’t be a straight residential property and most RE Agents won’t attempt to sell it.
Lending as a residential purchase will be tricky too – St George may do it along with a few others but all at fairly low LVR’s.
Good luck!
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Mel
[email protected]Hi Ben,
Agree with Simon – lenders are all different, but for a quick check I would get onto the CBA and Westpac web sites and add 70% of gross rental income to your other income in the input screens. These two banks have fairly lenient servicing criteria and this will at least show you whether you are in the ballgame or not.
Also – get thee to a broker. For this type of regional purchase you are going to encounter a huge range of lending ratio’s (LVR’s) from different lenders, let a broker do the legwork.
Good luck!
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Mel
[email protected]Hmm – did not know that, very int.
Welcome aboard Rodders – that was a crack-up, in a twisted cynical kind of way! Sounds like you’re in the right place and I’m sure can answer heaps of questions about all the other stuff that goes with investing.
SMTM – where do you live? I know someone in SE QLD who would be able to advise you.
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Mel
[email protected]Hi,
This sounds like a very do-able proposition.
Some advise from another broker for straight buy and hold option (although I like some of the suggestions above too!) – find a lender who would look at this deal, I know a few but they are rare, then pay approx $750 to get their approved valuers to do a valuation before proceeding with anything like refinancing other properties to extract equity for deposit etc.
If your broker is unable to find anyone who’ll do the deal at an acceptable LVR (ie may be 70% max) AND/OR it doesn’t value up, you could waste a lot of time and effort for nought. Serviceability is probably the least of your concerns given the rental return should be good and most lenders will accept 70-80% of the rental income towards serving.
Do not cross-collaterise this property if you can possibly avoid it, because even though this gives you access to 100% of available equity instead of the standard 90% on a refinance, if this 6-pack property goes pear shaped for any reason, you can bet the lender would want to sell the standard property first ie your house.
Good on you for trying, a lot of these types of property are very profitable. Will be keen to hear how you go.
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Mel
[email protected]You forgot the ‘credit rating destroyed and no lender willing to look at you again for less than about 3% above standard rates’ bit [
]… if anyone is ever in this situation, sell or move out and rent to keep from mortagee in possession phase.If you’re about to encounter problems eg due to an unexpected pregnancy, pending job loss etc it pays to contact your bank upfront ASAP as many of them will let you reduce your repayments by around 50% for up to 6 months. RAMs for example state this as a ‘twice during the life of the loan lifestyle feature’ to cover these tight times. Taking a pro-active approach to the problem helps all parties involved.
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Mel
[email protected]“Positive Cash Flow” is an advertising catch-cry which often doesn’t stack up or has a lousy Cash on Cash return – saw an example in Steve’s course where a high profile ocean front apartment was about $100 per month positive cash flow providing you were able to foot the full $500K + purchase price cash AND get $1,500 per week rent ….. um, I don’t think so Watson!!
As always, examine any investment club numbers given to you very carefully and do your own independent research.
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Mel
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