Thanks to anyone who takes the time to read this. I am buying my own home, and currently owe around 300k on a 500k home, so we have some equity. I’m 26, so have plenty of time left to build a solid portfolio. We can live comfortably on my single wage, with the wife soon to quit to look after 1st kid (in Sept). Living in Bris, we want to start out small, but dont care if we go resi or comm. I just need a starting point. My loan broker is the apsolute best (I can recommend him to any one) and he says he can get us the loan.
Should i be looking at residential or commercial first time round? Want to buy plenty more.
We have been looking further afield, where the prices are not unrealistically inflated. Does anyone know about Gympie/Harvey Bay/Maryborough? I want to buy positive geared. Dont want to add any more expenses on a weekly basis.
I have read heaps, talked heaps, and now need some guidance as to my first step. Any and All feedback greatly appreciated.
Hi Phil,
Based on the information provided it would appear that you have approximately $100K equity available to use for deposits and purchasing costs.
This $100K + $300 mortgage represents 80% of the total value of your own home. You could increase the $100K by another $50K if you were prepared to go to a 90% lend.
My counsel would be to look at residential proeprty at the moment as you can get away with as little as 10% deposit + a further ~6% for purchasing costs. Whereas commercial lends require proportionally more as a ‘deposit’ so your $ will not go as far.
As your first step I would recommend you go back to your broker and see what sort of financial structure he recommends in your situation. Get this bit right and then move to stage two which is to look for a property.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
With commercial you will have to put up a 30% deposit so go residential. With residential you can go as high as 97% lends.
Check out Steve McKnights book – ‘130 properties in 3.5yrs’, as that provides a good base.
Rgds.
Lucifer_auHi Lucifer,
Sheez – pushing out to 97% in a flattening market – I don’t think I would go there [biggrin]
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
god guys did you actually read the question. I have to wonder about your ethics if you recommend to someone about to loose 1/2 the family income to a new bub(we had that 4 years ago) and you recommend more than an 80% lend.
Madness, sheer madness.
I wish that you guys were in their particular shoes for just 12 months without your high income and wild recommendations.
Do not if your circumstances are changing go for a total extension on ‘whats comfortable now”. This changes in September so for goodness sake back off with insane recommendations you guys. Unless their new IP’s get them remarkable rent they would actually thank you now and curse you shortly.
Geez, with a $300k on their home I agree go for a $100k loc as deposits but get great returns or kiss the comfort goodbye. I dont care what little Johnny and Mr Smarmy Costello are promising as a sweetener for new babies, I really think you are mad not to get something but a cautious something whatever it is.
Sorry to get heated but wild recommendations really upset me.
Congrats on your baby, we used ours as an incentive to really go for it in property. We are doing ok so basically go for it but be a little sensible at times.
DD
Don’t sweat the small stuff,and it’s all small stuff!!
Agree with some of what DD say’s Phil98..
As we have 2nd child due in Oct and will go to 1 wage for a while..
You 26, and have $200K equity on a $500K home..Congratulations [biggrin]
Construct a Budget, and keep an eye on it..
My 2c, Look at residential, easier to rent out, everyone needs somewhere to live [cowboy2]and a great starting point..
Dont over-commit, and find something that fits your “comfort level”..
Wish you all the Best and congrats on the forthcoming addition to your family[hair2]
Use Jaffasofts calculator at bottom of my post, to look at prospective deals..and see how you go, it’s a learning curve
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorOriginally posted by DD:god guys did you actually read the question. I have to wonder about your ethics if you recommend to someone about to loose 1/2 the family income to a new bub(we had that 4 years ago) and you recommend more than an 80% lend.
Sorry to get heated but wild recommendations really upset me.
DD
Hi DD,
Wild recommendations? Ethics?
You will note the essence of my comments revolved around an 80% line of credit against the security of the property.
The ‘option’ of going out further is provided if Phil felt comfortable about that. As an aside just because a line of credit goes out to 90% doesn’t cost more in interest if the funds remain undrawn.
You will also notice that Phil indicates “I want to buy positive geared. Dont want to add any more expenses on a weekly basis” and as such if he is able to do so there will be some additional income coming in – sure not the same income levels as now – but in essence Phil has already acknowledged the desire/need to not add further to his weekly expenses.
Phil hasn’t indicated a swag of deposit money so it would seem that he is going to borrow the full purchase price anyway (assuming at market value purchase) of the property anyway. In effect to pay LMI, or not, is the one key cashflow difference with a 100%+ loan, with 80% coming against security of the property and the remainder from the LOC.
You will also note that I recommended against commercial because they consume more of the available loc.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Thanks to all that have posted reply’s![thumbsupanim]
Your thoughts, along with the animated debate have gone a long way to helping the decisions. The baby is the incentive to get off our butts, and push the comfort zone out a bit further. My wife will be devoting what time she has to sourcing +CF residential deals.
I notice no hot tips[jealous] or thoughts about mid north QLD. Probably dont want any more competition[wink2]
Thanks all!! Expect plenty more questions and updates.
Phil
I’m just starting out myself so I’m no expert but I looked at Gympie and I think that it is starting to get a bit pricey and I didn’t think that the rental returns were terribly good. You really need to be careful about the property position too in the case of floods!!
If you want to go a little further afield, maybe look around Yarraman/Blackbutt or even Kingaroy which is really taking off. Rents in Kingaroy are around the $170-$175 av for a 3 bedroom. I think that even Dalby could be worth a look although I haven’t checked that out myself.
Hope that this helps you. Good luck!
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