Hello fellow investors
i have just finished reading Steve's revised 0 to 130……over my xmas holidays and am really inspired! Thanks to Steve and his team.
Hopefully i can get some guidance here and may even help someone else out there that is in the same situation as me.
I have just recently bought a house prior to ready 0 to 130, and have done what a typical investor has done and targetted capital gains with a heavily negatively geared model.
I recieved the FHBG so have to live in it for 6 months, doing a bathroom reno "adding more in percived value than actual costs" then im renting it out with a negavite gear model.
I am now looking into securing my 1st CF+ property and have found one in NSW.
these are the numbers:
Annual rent: $11,440
Asking price: $159,000using the 1% rule i have figured it out that the ROI = 7.19%
i can get a loan at 6% interest, but i need to have a 20% deposit $31800.All my equity is tied up in my other property, i have spoken to some financials and they all are saying i need to the 20%.
And now the question is how/what creative investment strategies can i do to secure it?thanks
Sorry can i just ask you why you need 20% deposit.
There are not too many areas where we cant get more than that even with LMI.
Richard Taylor | Australia's leading private lender
Richard,
thanks for the quick response.
20% deposit is one of the conditions for Steve's 1% rule to make sure it is CF+.
So you are saying that i should grab this with a 100% loan. maybe even more than a 100% loan i need to cover stamp duty and legal costs.
I called the agent and they confirmed that it is currently leased for 12months for $220/week and the asking price was $159,000.
I too thought it was too good to be true.I have planned to inspect this week.
There are some good cashflow positive properties in regional nsw, even when 100% financed
cheers
Sonya
Vitaliano,
Without giving too many details (don't want anyone to steal your gem!) how did you find the property?
ie: Internet, papers, word of mouth, agent contact?
Would be interested to know.
Regards,
YIYou should never put a deposit from your own cash if you still have a PPOR loan – otherwise you will be paying more tax. If you can borrow it all the better.
Also beware of just buying a property because of the rent. If there is no capital growth it could end up costing you.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks everyone for your advice.
Sonyasal, I have only been researching for the past 2 weeks and there are quite a few CF+ in regional NSW.
YI, i found this through internet. If for some reason i am unable to get finance any chance we could talk a deal? say 50/50?
Terry,
how do i end up paying more tax if i still have a PPOR loan, and i pay with cash despoit for my next IP?
how do i find out the capital growth for the area? Residex?Thanks everyone for thier comments/advice really appreciate it.
And if i cannot get finance i am willing to share this with someone in the same boat as me.Vita
Think about deductibility. You will have a smaller deductible loan and a larger non deductible.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi all,
Great posts, We put up 20% plus stamp duty etc on one of ours, Terry and Richard are you saying that this is the wrong way to go about it. Our MB has told us that we pretty much cant borrow 90-100% and has pre approved us on our next loan if we come up with the 20% once again. Am I missing a trick? Sorry Vit to hijack your post but it may help you too
Thanks Guys for all your great info!
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeIf you have equity you should set up a new loan and borrow the deposit while placing the cash you would have used into decreasing your non-deductible debt. The net result is a overall loan of the same size but reduced non-deductible debt = more tax deductions. If you don't do this you are really throwing money away.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
DWolfe, no worries hijack all you like…..just dont terrorise!
I get you Terry. but my PPOR will be turning into an IP in 5 months (to satisfy the FHBG) and moving into parentsto save and get more IPs.
I too have been told by my MB to get at least 10% deposit, legals and stamp duty in order to get my loan. I dont know where i can get a 100% loan?
anyone want to help me?
Vitaliano wrote:DWolfe, no worries hijack all you like…..just dont terrorise!I get you Terry. but my PPOR will be turning into an IP in 5 months (to satisfy the FHBG) and moving into parentsto save and get more IPs.
I too have been told by my MB to get at least 10% deposit, legals and stamp duty in order to get my loan. I dont know where i can get a 100% loan?
anyone want to help me?
Your borrow the deposit from the equity in existing properties.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks Terry, i have asked my MB about that and he says that the banks will see it as too risky as i have just settled on the is property about 2 months ago, so only have made 2 repayments.
I did some other calculations and found that this may not be much of a gold mine.
Annual Rent = $11,440
Asking price = $159,000Expenses
Interest = $9540
100% loan, 6% interestRental management =$800
7% of annual rent
Repairs
2.5% of annual rent =$300Rates =$1,583 pa
Strata Fees =$1,320 pa
Total expenses =$13,543
ITS ACTUALLY MAKING A LOSS!!
PASS!!No Equity….
I was hoping the magic money genii would come along and give me three wishes….or three houses ……I'll even take loans ok
hahah. I think a new product that could be released by banks instead of sub prime mortgages could be the "You think you might get an equity gain in the next year or so" Mortgage!enjoy your day!
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email Mein the good old days there was such a product. There were loans of 105% or even 110% of the value of the security – ie one one property
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Was the 105% loan entirely deductible?
Vitaliano,
Have you considered:
– Putting in a lower bid
– Capital growth in the area
– Potential of renovating the property and achieving a higher rent
– Speaking with the tenants regarding a rent to own strategy?All of the above need to be researched in a lot more detail, but I'm just saying perhaps don't write the deal off yet!
Regards,
YIYoungInvestor wrote:Was the 105% loan entirely deductible?
If was was used entirely for investment it would have been
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
What if it was used to pay stamp duty and other costs associated with acquiring the property?
There are still shared equity loans available for PPOR loan albeit they have to be in right post code.
As long as you can come up with 10% deposit you can reduce your monthly to free up more income for investment loans.
Your P & I repayments are based on 70% of the purchase price and the 20% is interest free (subject to payment history being satisfactory) with the lender taking 40% of the eventual increase in value.
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
