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February 10, 2011 - 9:18 pm

michaelandre70 wrote:

good bargain from $700  to only $18.

are the lease fees always a percentage of the rent or are there companies who charges a fixed amount no matter what the rent is?

The $700 represented one weeks rent.

You wouldn't believe it,but after all this the tenants decided to move out.All worked out well as we had 25 groups through the open inspection to rent and someone offered tenty five dollars more than the asking price to secure it at $750.

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December 22, 2010 - 5:24 am

Good news!

The agency has agreed to waive the weeks rent fee for the renewal and just charge $18- for lease prep.

I am glad they responded to my concerns

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December 21, 2010 - 9:46 am

Its $700,thats why I am questioning value for money when it takes very little work to renew a lease

Scott No Mates wrote:

yes. Some DO charge as it is 'over & above' collecting rent , administration of maintenance & paying outgoings. There is a negotiation & lease preparation as well.

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August 9, 2010 - 12:17 am

Limited Recourse wrote:

[Sounds like you've done well.

One question is- do you think that paying off as much of the priciple early on (or any time) cost you money in the big picture?.

I say this because this money can be used as a deposit for an additional property.30% LVR's seems very consevative and a very low risk tolerance.I was told that a 60% LVR is a point that banks are very willing to provide Line of credits against properties even when debt to income is lowish.

Yes 30% is very conservative. In the good times 1996 -2000 and 2003 to 2005 we use to gear up to 120% for a new property using our collateral from our existing investment properties.

In every property cycle there are times when banks will refuse you further finance. The old saying from Alan Bonds heyday you have a problem if you owe the bank 2 million dollars. The bank has a problem if it has loaned you $250 million dollars

At this stage of the property cycle we feel its prudent to sit back and be conservative. Our number one priority is to remain solvent[/quote]

I think that is wise.
 
 I have found that in this part of the cycle that banks are very reluctant in refinacing my properties,even when I have more than 20% equity in all of them.Changing careers to a lower paying job has not helped but I am going to fight tooth and nail and try not to sell one of them.

Will need to live quite consevatively for a while until I build up work history and hopefully bank criteria loosens a little.

Do you think that bank criteria on lending will loosen in the next year or two at all?  I'd love the old equity loan to return but thats probably wishful thinking.

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June 20, 2010 - 11:16 pm

Limited Recourse wrote:

Hi; We just capitalised our interest in advace for 12 months 100K + for one property. But we also are cross collateralised and also have properties in our SMSF of which we have paid out with good cash flow so the bank is happy to accomodate us.

I would also say that the days of securitised loans are over and if you do not have a huge amount of equity then you are going to struggle. The key is your debt to equity. If you can keep it below 30% your laughing. Early in your growth phase try to pay off as much of the principle. Yes you pay more tax and yes your growth in acquring more property is slower but over the long term your solvency pulls you through the tight times.

You make your profit when you buy not when you sell.

Sounds like you've done well.

One question is- do you think that paying off as much of the priciple early on (or any time) cost you money in the big picture?.

I say this because this money can be used as a deposit for an additional property.30% LVR's seems very consevative and a very low risk tolerance.I was told that a 60% LVR is a point that banks are very willing to provide Line of credits against properties even when debt to income is lowish.

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May 25, 2010 - 11:34 pm

P.S

 I forgot to mention I was with Wizard as well.I got out as soon as possible as they were'nt competative. Uncompetative lenders need to lose business as it helps everyone.

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May 25, 2010 - 11:33 pm

I would definately refinance if you can

.As you are variable you can change lenders without a payout. The cost of selling and rebuying is huge,especially if you like the property and it is doing well.

Ita a no brainer for me

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April 26, 2010 - 8:30 am

I can't work out why you cant buy more.I have 4 IP's worth around 3 mil (loans 2.3) and am a bus driver.We were earning around 150k for a year or two with my wife but mostly under 100k combined for most of the last 5-10 years.

You may need to see a better mortgage broker as this seems very strange. I would love to have your income as I know I could definately buy more according to my broker

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April 26, 2010 - 8:22 am

I garentee that you will look back in 10 years and be very glad.Especially when you look at your friends who will probably waste their money until they are around 30 and then wish they had bought earlier.

With a joint venture-just make sure that you have every situation covered as peoples circumstances change e.g marriage,death,financial hardship,ect ect.  I have learnt that I much prefer to go out on my own as I don't have to consult someone else on every decision,small and big.

Other than that.use experts that are much more successful than you, in every area and don't be afraid to pay for it. I have personally used 'Capital 360' and they are great but use who you feel most comfortable with after weighing things up.

I pay people for every bit of property investing and don't do anything myself except make sure money is in correct account.These include,-property finder,property manager,depreciator,solicitors and accountants (that specialize in property). All I need to do is make sure I have the right mind set and my wealth will continue to grow.Sounds easy but most people can't adjust their mind set and therfore miss out.

Good luck

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March 24, 2010 - 10:30 pm

I wonder if  'capatilizing interest' is viewed as investment or consumer spending by the banks.

Up to this point,I have only used my LOC for paying shortfalls on mortgage payments.I prefer to do this rather use my wage money.I know this is only good if property prices increase.

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March 23, 2010 - 10:22 pm

Thanks for your in depth answer 'euro73'.

I want banks to be responsible with their lending as that protects my property values as it lessens the chance of a bubble through less defaults,but I also hope that restrictions on what I can spend my equity on,loosen a little.

I would hate to have to sell a property to access the equity to be able to use at least some portion for whatever I want to.

I do want Aust banks to remain strong.I can still remember those ads on TV with banks enticing people to use their home equity to live the good life with pictures of boats,cars,holidays ect, flashing across the screen. I am sure that those ads will make a return as human nature will demand it.Its just a matter of time I think.

I know we have had a credit crisis/crunch a couple of decades ago.I haven't studied it,but it would be interesting to see what happenned in that cycle and how long it took for credit to free up again.

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March 22, 2010 - 2:09 am

Thanks.

It would be the scenerio that you mentioned i.e borrowing during the construction for progress payments.

I wonder if this is a common form of finacing a new build? (borrow on the future value).

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March 7, 2010 - 10:00 pm

number 8 wrote:

Benjamin Csikos wrote:

Anyone can live off equity right now if they really wanted to.  It's all relative to what level of lifestyle you wanted.

Move to india. They live on 500 bucks a year over there.

…I'm just sayin'.

I live off $500 a year in Australia, and there is nothing wrong with my lifestyle………. join me on a bike ride or run one day and I can reveal all.

Paddyomail, there are lots of ways to provide an income, live off equity etc . Yes you are correct!
Thinking outside the square is the difference.

http://www.birchcorp.com.au

You can actually live off $0 in Australia. We have a welfare system that allows it.But the question is-what sort of lifestyle do you want and what are you prepared to do for it ( eg  go to work ect).

Some people are happy with little material entertainment or comforts but others are definately not.Getting the balance right for you and your family is one of the biggest dilema's in the western world.

Shanematt

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March 5, 2010 - 12:08 am

Hi everyone.I am the origonal poster of this topic question and have been watching with interest all the different opinions.

An update for me as I have experienced things is

-its definately harder to borrow money and tap into equity. I even had banks wanting me to sign documents stating exactly what "investment'  purposes I was going to use my LOC for.  That certainly didn't happen when I last arranged a LOC.In fact I can still spend that LOC on lollies if I want to.

-LVR's are getting lower  for me to access equity.Meaning I will have to wait longer,and until property value rises higher, before using equity. (fortunately my and most peoples property is growing at a fast pace at the moment)

All said and done,I think I will end up using cash flow and equity to live off one day.Even if that means selling one of the properties to lower LVR's and have cash flow. Thats why its so important to understand that the "size of your assetts" is important.You could never do this with one property or two.You need properties in the millions (in todays terms) to do it comfortably.

Thanks
Shanematt
P.S does anyone think the banks will repeat the same mistakes one day and credit will once again become easy to get? Even if thats years down the track?

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February 10, 2010 - 11:51 pm

Terryw wrote:

Lenders would not like to hear that you will be borrowing to pay interest. They probably wouldn't like to hear you will be using the money for personal use either – such as a holiday etc. Once you spend it it is gone. Whereas if you were to buy shares you would be increasing your net worth.

I wonder if they would think this about 100% of the LOC because in the not to distant past,banks were actually advertising on TV about using equity to buys, cars,holidays ect ect. I'm sure we all remember the ads. Obviously things are changing at the moment but I wonder to what extent.

Shane

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February 10, 2010 - 10:09 pm

I noticed that when I applied for a LOC the other day,they asked what the funds were going to be used for.They also wanted me to sign a peice of paper to state it was going to be used for investment purposes..

I wonder if they would allow ANY of the LOC to be used for personal use and also whether they consider capatilising interest as 'investment purpose'

Anybody know?

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February 4, 2010 - 10:49 pm

euro73 wrote:

shanematt, you're going to have a really tough time getting any lender to let you do this anymore. Cash Out is pretty heavily policed these days. The LOC you have in place is fine- you got that set up in the past where cash out wasnt scrutinised so closely, but when your LOC hits its limit (and it will eventually) and you go looking for more money I cant see you getting much joy unless you can show serviceability. Of course, this could change, but as it stands now- unless no docs come back to the market, or maybe, just maybe you could sneak through with a PAYG lo doc if you played it right  and had a low enough LVR, I think you're going to run out of luck.

I somewhat agree with you.I am actually going for a couple of LOC's now.

Due to a lifestyle change and hence a much lower income compared to when the loans were initially taken out,I am hitting some hurdles with the refinance.I will try a few different options like paying LMI ect.  Some good news is that like all things,they work in cycles,including the competition for loans.I personally believe we are at the beginning of an upswing in lender competition,with new players regularly hitting the market.They will come up with new products to beat the banks,just like Aussie and wizard did years ago.

I will keep trying until something happens.

Shane

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February 1, 2010 - 1:27 am

number 8 wrote:

It is all about the strategy,

Terryw,  I like that you are thinking, but, Taking money out with the intention of margin loans has a large element of risk : Margin loan interest rate of 8%, not likely and it will only get worse with the years to come….. A drop in the stock market like the GFC – do you sell or sit and wait only to find we have entered a secular bear market like Japan for the last decade or so……  Making money is not about speculation but calculated risk with back- up plans and buffers to secure your wealth….

If you wanted to take money from your investments (equity release), think about simple measures such as release of owners equity – borrowing to pay back owners equity by forming a partnership at general law. This is tax deductible without the added expectation of relying on the stock market and unrealistic franked dividends  (for the record unfranked can also be very good depending on your financial circumstances).

Your circumstances will not fit into a text book answer, there are strategies that are created for the individual all the time…..  But to sum up, if you have the right tools and advice releasing equity is very possible and done by wealthy businesses,  and individuals all the time. Yes it takes plannning and yes positively geared property is excellent but so to is the life when you are living on your equity…… I retired at 34
Leigh Birch

http://www.birchcorp.com.au

Thanks for post.Do you use your equity to live off? Are you still retired and if so,how do you increase LOC's with no servicability?
(income)

Am interested in your strategy.

Shanematt

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January 31, 2010 - 12:19 pm

I like your train of thought. I hope the 'Henry tax review' doesn't recommend any messing around with tax deductability in regards to property or shares.

Having a large loan of non deductable debt (after years of using LOC for living expenses) is a valid concern. This means that the size of your LOC must be substantial enough to withstand this concern.

I currently rent,so all interest on properties is deductable.
 
I wonder how an accountant would access ypur share scenerio.

Shane

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January 31, 2010 - 11:21 am

Damo666 wrote:

If anyone would like to re-open this I am happy to discuss why I think once you have enough equity (at least $1m) then this can be achievable

 
 
I would like to know what % of their available equity people are comfortable in using for living expenses. e.g if you had 100k would people be happy using 10-20k, and so on as the numbers get bigger…..
 
If I had 1 million in available equity,and decided to access 50k or 100k per year to do whatever with,then historically I would have been fine…even if I had every thing in sydney (where the market has been a little slow for 6 years)

Any new thoughts on this?