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February 1, 2012 - 9:59 am

JayDee26 wrote:

So the comments leads to Blacktown, St Marys etc being high growth areas. One question I had in mind is if this is the case then why do the house owners sell their properties for under $300k in some areas when they could just keep them and wait for CG?Your thoughts please!

If your buying in St mary an Blacktown, you won’t be waiting for CG, because it may be a long wait…just remember who you will be off loading your property too? other investor;

These area are purely for investors who are after good cash flow, say at 6-7% yield…but if you hold the property long enough due to rental increase the yield will be 8-9% in 3 years time. Much better yield if some renovation are done, GF ( depending on the area and street) etc…

Regards
Michael

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February 1, 2012 - 6:02 am

If you go to a diff lender; make sure to order an UPFRONT valuation first BEFORE any Credit checks- else you end up with muti credit checks.

It doesn’t affect your approval as such. just a different order of how things are normally done.

Regards
Michael

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January 28, 2012 - 3:05 am

wobblysquare wrote:

difference between a construction loan vs normal residential loan…(criteria / int rate difference etc.)

If you want to get down to the finer details of criteria and rates etc…why not shoot Richard an email and he should be able to direct you + provide a more accurate and detail answer.

Regards
Michael

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January 26, 2012 - 6:15 am

1. No your SMSF wont be able to buy your own property, there’s a “one arm length” rules restriction in place.
2. ( not 100% sure) But i thnk if your SMSF buy any another property; the fund is not able to rent the house back to the beneficiary ( they could have changed the rules too this?)
3. Your company can buy the property- but expect to pay stamp duty + CGT and the company wont have any CGT discounting when it sells etc…
4. The houses are cross securitized- so you need to make sure the property can hold it’s own value when you sell or off load one of them.
5. Who makes the higher income? sine the mortgages are in Julie’s name – shes the only one that can claim the expenses from the IP

The question is; what are you trying to achieve? minimize tax? improve cash flow to invest more etc??? be debt free?

Regards
Michael

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January 25, 2012 - 2:18 pm

From a Investors point of view—

High density are normally located closer to the station, shopping centers and amenities ( council regulations – you wont see any high raise in the middle of the suburbs….) so that means they are located in better” postions” = higher rent = better returns.
But due to it’s size , there are def more maintenance issues as you would expect with a larger building ….more ppl, more lift and more traffic = more maintenance

+ high density = more competition in the market place, with the same unit deign and location.

From finance point of view—

Med density you can def leverage a lot more- ie borrow above 80%– up to 95% in some cases. = better capital growth potential.

High density on the another hand has a max LVR of 80-90% depending on the size…most of the time it be capped at 80% = less range of buyers = capital growth will be dependent on the growth of the area and location ..rather then the unit itself ; but def better rental return because of the lack of growth.

Both type of apartment plays a different role and suits different type of investors; i personally have a IP that’s in a high density building ( Sydney CBD) ; i would consider it as one of my best buy- 8% rental return + steady capital growth + strata is expensive but the rental return is enough to absorb most of the cost.

Regards
Michael

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January 25, 2012 - 2:08 pm

Hi,

Why your broker has recommended Macq bank is probably because they offer a fixed rate of 5.99% ( which is one of the lowest) ; but another banks are offering 5.99% as well + some are lower then that.

She recommended Sun-corp; because they offer one of the lowest Variable rate ( for loan under 80% LVR) – which is not a bad option.

Suncorp—-

– Ok bank, never had any issues- most clients has been happy with Suncorp
– Great variable rate of 6.30%

Macquaire bank—

Now this is a different story…they are dis-liked because when the last GFC hit they exited the market, increase the rate, didn’t allow any extra borrowing + was very hard + costly to refinance out of…= a lot of unhappy clients and brokers.

They done it once, they may do it again…who knows…

If your after a good fixed rate; consider ANZ ( Major bank) with a fixed rate of 5.80% 2 years fixed. Or Citibank 5.95% 3 years fixed ( Note Citibank has a Max LVR of 85% – so not the best bank if your planning on leveraging equity above 85%) – but which one you choose will depend on your purpose, overall goals and your investment strategy

Regards
Michael

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January 25, 2012 - 5:17 am

If it’s reported in the paper, you most likely missed the boat already to a point.

Regards
Michael

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January 25, 2012 - 5:16 am

Depends on your timing- are you waiting 1,2 ,5 years? or months etc…

Term deposit – for short term
Shares – for longer periods ( but go for shares that pays a stable dividends + blue chip company)
There are another means of investing such as short term mortgage bon , insurance bond etc….all with diff risk portfolio

note: Personal post here, not making any professional recommendation about shares etc….

Regards
Michael

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January 25, 2012 - 5:12 am

Question is…. are deceased estates properties any cheaper or better???

been to a few Mortgagee sales and deceased estates auctions and the prices were the same as buying it on the market for a similar property.

Regard
Michael

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January 25, 2012 - 5:08 am

Hi Mary,

Happy to help Mary.

Do you have a burning question you wanted answered in particular?

Feel free to visit our site- it has an updated matrix for different type of commercial properties; based on which one is the easiest and hardiest to finance.

http://www.shapehomeloans.com.au/commercial-loans

Regards
Michael

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January 24, 2012 - 10:53 am

Hi Anthony_Black,

As Richard mentioned; would need a bit more details to provide you with an exact borrowing capacity + is your fiancé going to be on the loan?? if so do she make an income etc….

Just a few comments:

1. What the agent says in term of your property value is pointless- get CBA / a bank to do a valuation on the place, since you haven’t done one for a while

2. Depending on your LVR; it may be worth while to stay with CBA given the LMI cost- but as Richard mentioned CBA has a poor serviceability model ; so it may pay to swap lender who are willing to offer a higher borrowing capacity OR higher valuation for equity release purposes

3. Your accountant is a smart cookie Save up via the offset, your almost there…

4. Saving up for a 10-20% deposit is not easy + it’s a slow process and property prices may have increase faster then your saving ability. So for your next IP lender it may be worthwhile NOT to go with CBA and choose one that offer a discounted LMI cost OR equity release from your current IP as much as possible ( equal balance)

Sometimes it’s cheaper to do a 85% loan for one and another 85% loan for the other….COMPARED to 80% and a 90% Loan- find a equal balance based on cost- something a broker can calcu and work out for you

5. Don’t cross your loans

6. Since you get back 7k in tax every year…get a PAYG Variation done- so instead of waiting to see this money at the end of the year; you get to access it every month.

Regards
Michael

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January 24, 2012 - 10:27 am

At 60-65% LVR you be able to get this through smaller residential lenders, but one of the main issues with residential lenders is that they are very picky with the quality of the security ( size, how much control the hotel holds etc…) + will discount the amount of rent they will use in the serviceability.

Commercial lenders are more flexible, but charge a higher set up cost and rate.

Regards
Michael

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January 24, 2012 - 6:11 am

JayDee26 –

You def need to physically go and have a look at the properties in W.syd – the numbers looks great on the computer…but trust me there are def some bad buys out there, even if the numbers stacks up!! took me close to 15 house inspection before i bought my most recent IP.

Id suggest you got to a through house inspection to make sure your comfortable with the area, but most importanly work out what sort of strategy your comfortable with.

Regards
Michael

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January 23, 2012 - 12:14 pm

the math looks right- and yes you are on a P and I loan- at the initial stage you will be paying a much higher interest VS principle “balance” ; the amount of interest you pay every week will change slightly, but overall “repayment” will not change,

who’s the lender? and is this a commercial type loan where the interest is capitalized?

Regards
Michael

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January 23, 2012 - 12:09 pm

4.5% is quite low ..Is it a honeymoon loan? or a fixed loan? does it revert to a higher rate; if so these will have a bearing on the cal.

Regards
Michael

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January 23, 2012 - 7:59 am

rusty05 wrote:

Shape,
Funnily enough it was the one bank I initally refused to go to because of a previous customer service issue … but given the complexity of our purchase (primary production on a residential loan, etc) they were the best this time round for us, the 0.9% brought us down to not much less that where we hoped to be originally. 

 I agree 1% is an ask but we'll see

Well if that is the case, i would be happy with 0.90%

Yes 1% + is possible…but as you said given your unique security ( primary production); it wont be easy to switch lender on a residential rate.
Keep us posted.

Regards
Michael

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January 23, 2012 - 5:08 am

rusty05 wrote:

We've just been approved for a 0.9% discount with Westpac on a loan of over $800000 but the broker is hitting them up for 1% because the LVR is only at 42% – Worth a shot.

The big red is one of the hardest lender to neg on discounts + they have the highest SVR…i guess you pay a prem to be the first bank of Aus.

Regards
Michael

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January 23, 2012 - 1:18 am

Hi Andy,

Unfortunately CBA has gone backwards with their discount margin in the last 1-2 months; due to their so call “funding cost”
http://www.facebook.com/notes/shape-home-loans/cba-cut-back-on-discounts-for-new-lending/331426753534241

Having said that- another banks are still offering massive discounts- up to 1% discount as standard; and more for higher borrowing.
http://www.shapehomeloans.com.au/blog/january-2012-interest-rates-2012010372

Anything over $2 m with LVR under 75% with location 1 or 2 security – a discount of 1.05-1.15% is possible depending on the bank.
If your a doctor, practicing CPA ( over 5 years) , executive ( medium-large company) or a trading client ( self employed over 7 years) then expect the discount to be even higher!

Regards
Michael

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January 18, 2012 - 1:04 am

Our subsidiary company is based in China and we have direct access to 7 of the top Chinese based banks, however 6 of them only lend to;

1. Commercial deals over 15M OR
2. Existing clients of their banks OR
3. Chinese citizen ( it’s not easy getting money out of china, it;s all controlled by their Gov)

if your after a much smaller residential lending; then we use Bank of china – but it’s standard rates, as some of their funding source is Australian based as well ( TD). ( current offer 5.50% fixed 15 years)

It’s never wise to leverage off international banks for residential lending JUST because the rates are low now…the rates will change + different policy in terms of “breaking the contract” and currency will kill you as well.

We only suggest international based banks for commercial deals; where the terms are shorter + it’s fixed.

Regards
Michael

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January 17, 2012 - 12:21 am

LMI price is based on the loan amount figure.

Another cost generally speaking can not be capitalized unless;

1. You have equity in another property
2. Some smaller lenders do allow for Cap case by case – but rates are higher.

Regards
Michael

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