[purple]To all u property gurus,
I bought my first property back in December last year ( I know it wasnt that long ago) however, I am keener than mustard to get my second one!
I have only really been paying it off for about 2 months. I realise it probably really soon, but that I read books about 0-100 in ‘so little time’ so why cant i acheive this?? I realise that the properties that steve was talking about were probably really reall cheap. I borrowed just under 190K for a 2 bed unit near city in brisbane,
and I am realy keen as to when I can start looking at buying something else, – iam always looking on the different website but would like to know when I would be able to seriously start looking at buying my second one.All guidence is appreciated!
thanks in advance
ps after paying all my bills, mortage etc I still have about $300 left. should this go on the loan or save for a deposit?[/purple]
Hi,
I’m not a property guru but have a couple of IPs.
First word I would say is “patience, little grasshopper”
Yes. it’s great buying property, but it is also important to know you can sleep well at night without wondering how all the bills will be paid as well as the mortgage repayments. We have been in the somewhat uncomfortable position of being too highly leveraged, and it ain’t worth it.
Secondly, is the idea of owning lots of properties the main aim or is it part of your journey to establish wealth? I went to one of Steve’s masterclasses and I remember him asking us to consider whether we were collectors (of property) or investors. Another uncomfortable realisation.
Congratulations on starting your jouney in property investing, but like most things it takes time and hard work. I love it!Cheers
jebro
As soon as you have 5% in savings or equity growth you can go again (plus closing costs).
One idea might be to approach a lender with a history of strong vals – get it revalued and if the equity has “appeared” move the loan immediately and take a new one as well.
The more property you own before the next boom the bigger the effect! That how I work!
Cheers,
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Simon,
How do you know or find out whether a lender does good valuations.
Do you find this out from your mortgage broker?
Cheers.
Hi,
Go for it. When buying a property and lending the money from the bank(s) you must satisfy the banks of two main things. Equity and serviciability.
Equity: The bank will lend you 80% of the purchase price or the valuation what ever is general the lowest ( if the val is higher than the PP some banks will lend on the val if your’ve held it for longer than 12 months). Equity can come in the form of equity in another property or cash. The bank will lend you a higher amount but then the “Mortgage Insurer” must insure the loan and their criteria is MUCH [weird]stricter
Servicability:
You must have a job and be able to pay for the debt as well as all of your living expenses and other debts. How do they work it out? The banks put a 2% buffer (some banks vary) over the current interest rate, they put a living expense (its called the Henderson Poverty Index) and depending on how many kids you have this figure goes up, they also put 5% of your credit card limit (again this can vary) regardless on what you owe, so if your limit is 20K they’ll say you need to put aside 1000 ( this can kill your servicability) so keep your limit small. Then they will only add 80% of your gross rental to your income and disallow any commissions, bonuses, capital gains and even overtime unless it can be proven that you have earnt the same amount of money consitantly for 2 years ( on your tax return). They will include social security if its in the form of child allowance and or disability. They will take into account child maitenacne if it is court ordered.
Example:
Fred and Mary have three kids, Fred earns 60K Mary gets about 2600 PA from Child allowance they have a car loan for 20K at 550 per month and a C/C with a limit at 10K. There house is worth 350K and they owe the bank 200K they dont have any savings. They want to buy an investment property worth 180K and it rents for 300 per week.Heres how the bank views this;
Equity:
Home $350,000 @ 80% = $280,000 less $200,000 = $80,000 equity
(enough to purchase the new investment plus costs)Thier monthy income (less tax and plus proposed rental) is
$4166There expenses are:
$2017 living ( based on HPI)
$200 C/C
$550 Car loanTotal expenses $2767
Loan repayments
existing loan: 1374 per month
New loan inc buffer: 1322Total exp $5463
As you can see this would fail by over $1000 per month and thus would not be considered by the bank.However, there are ways to make it work so you should contact your broker or email me if you have any more queries
Deanna Wittey
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