All Topics / Finance / 30 properties before 25, finance???

Viewing 20 posts - 21 through 40 (of 103 total)
  • Profile photo of Ossi89Ossi89
    Participant
    @ossi89
    Join Date: 2011
    Post Count: 31

    Hi All.

    I’m very keen to buy my second ip, especially after learning more about using the equity in one ip as the deposit for another!

    I didn’t have the best experience with the broker I used for my first purchase. I assume he wasn’t all that interested due to the fact my loan was so small (128k).

    Can anyone suggest a decent broker who would be happy to help me out with a similar size loan? Ideally I am looking for someone that can really help me meet my long-term investment goals. I don’t plan on buying 140k properties forever but for now I am sticking with the cheaper properties so my lifestyle is not impacted to a great extent.

    If anyone can send some recommendations my way that would be great!

    Cheers,

    Oz.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Oz,

    Where are you based? There are a few brokers on this forum.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Ossi89Ossi89
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    @ossi89
    Join Date: 2011
    Post Count: 31

    Haha, that might help!

    Ideally looking for someone around the Parramatta/Penrith area.

    Oz.

    Profile photo of N@than[email protected]
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    @n-than
    Join Date: 2010
    Post Count: 241

    I would personally recommend Jamie M who has commented on your post. He is based in canberra but with the internet and faxes it doesn't really matter where you live. He has helped me out quite a bit and I am in Queensland. Check out his website in his signature.

    Good luck with it all,

    Cheers,

    Nathan

    Profile photo of Ossi89Ossi89
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    @ossi89
    Join Date: 2011
    Post Count: 31

    Thanks Nathan! I’ll check out his site.

    Oz.

    Profile photo of biltongboerbiltongboer
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    @biltongboer
    Join Date: 2011
    Post Count: 4

    OK, so what exactly does this mean:

    "The worst thing you can do is cross collaterise your home with your investment property"

    I have no idea what this guy just said? 

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    biltongboer wrote:
    OK, so what exactly does this mean:

    "The worst thing you can do is cross collaterise your home with your investment property"

    I have no idea what this guy just said? 

    Use two properties as security for one loan.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Wiwin
    Participant
    @wiwin
    Join Date: 2011
    Post Count: 30

    So we were using equity  from the 1st IP for 2nd IP deposit. Bank will increase the bank loan right? isn't it means that we have to pay more loan ? just for example 1st IP bank loan 300K, after 2 years the value increased by 100K, and i used it for deposit
    2nd IP, duty stamp etc.

    I will have 400 K on loan for the 1st IP and another loan for 2nd IP ( Total purchase 2nd IP minus Deposit ) 
    If I rent out 2nd IP with negative gearing – then the total loan that i have to pay will be increase with the difference..

    Am I right or am i wrong ? 
    Don't really understand how they ( the ones who have many IP ) managed so many IP without any default… 

    Thanks,

    Wiwin
      
        

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    Wiwin wrote:
    Don't really understand how they ( the ones who have many IP ) managed so many IP without any default… 

    Because they're probably not buying IPs that cost a lot to hold – ie. they're not highly negatively geared.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Ossi89Ossi89
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    @ossi89
    Join Date: 2011
    Post Count: 31

    Hey,

    I am confident have equity in my ip as I bought it well below market value.

    I have a very simple question, do I now contact my lender to have the property revalued in order to.determine the available equity or is there some other method?

    Also, what does a valuation usually cost?

    Can the result be disputed?

    Cheers,

    Oz.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    Ossi89 wrote:
    Hey, I am confident have equity in my ip as I bought it well below market value. I have a very simple question, do I now contact my lender to have the property revalued in order to.determine the available equity or is there some other method? Also, what does a valuation usually cost? Can the result be disputed? Cheers, Oz.

    Pick up the phone and call. Its as simple as that.

    Valuations cost from $200 to $400 for a residential property, but it may be free if you are on a professional package. Results can be disputed – but this doesn't mean they will change it. What you need to do is to gather evidence on similar properties that have SOLD recently.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of TerrywTerryw
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    @terryw
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    Wiwin wrote:
    So we were using equity  from the 1st IP for 2nd IP deposit. Bank will increase the bank loan right? isn't it means that we have to pay more loan ? just for example 1st IP bank loan 300K, after 2 years the value increased by 100K, and i used it for deposit
    2nd IP, duty stamp etc.

    I will have 400 K on loan for the 1st IP and another loan for 2nd IP ( Total purchase 2nd IP minus Deposit ) 
    If I rent out 2nd IP with negative gearing – then the total loan that i have to pay will be increase with the difference..

    Am I right or am i wrong ? 
    Don't really understand how they ( the ones who have many IP ) managed so many IP without any default… 

    Thanks,

    Wiwin
      
        

    Yes, if you are using equity you will have a bigger loan and will be paying more interest.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Wiwin
    Participant
    @wiwin
    Join Date: 2011
    Post Count: 30

    hmm… I am still thinking we still have a lot of cash to maintain it for longer term. 
    because once interest rates going up, the loan payment will going up as well, at that time the rent might not enough to cover it. 
    If we can't cover the payment – we still have to sell the IP. If the prices stagnant or decreasing and no capital gain made – then i already suffer losses from the interest and expenses ( entry and exit ). Is that correct ?

    Sorry, i am a newbie. I buy property to live not for investment. However i am really interested to try it as an investor.
    Just wanna make sure i am gonna do it right and advice from prof and experienced investors are the best! 

    thanks,

    wiwin
     
       

    Jamie M wrote:
    Wiwin wrote:
    Don't really understand how they ( the ones who have many IP ) managed so many IP without any default… 

    Because they're probably not buying IPs that cost a lot to hold – ie. they're not highly negatively geared.

    Cheers

    Jamie

    Wiwin
    Participant
    @wiwin
    Join Date: 2011
    Post Count: 30

     

    It is not as simple as other ppl said then..

    Thanks Terry,

      
        [/quote]

    Yes, if you are using equity you will have a bigger loan and will be paying more interest.
    [/quote]

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    its not that hard either!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
    Post Count: 1,099

    Hi,

    Nathan B has bought about this style of investing to reality, it’s not easy and takes a lot of risk; but it has paid off well for Nathan ( Maybe Nathan can post n comment on some hints)

    Here are some answers to the above posters—>

    —How equity release works( basic)—-

    Say you have a current home loan of $300,000 and the LVR was 80% ( so home at that time was purchased for 375,000) lets call this the PPOR

    Step 1 : You request the bank or broker to do a valuation and a loan increase ( split loan preferred way; for Tax reasons and simplicity)
    Step 2: depending on which bank and how much you need – you can top up to a 80% LVR OR higher/lower
    Step 3: say the value of the home is now $450,000 — that means your CURRENT LVR is 66%
    Step 4: Say you choose to do a 80% LVR top up
    Step 5: You have $450,000 x 80% = $360,000 ====== $60,000 equity to use.

    Use this $60,000 for the deposit + stamp duty on the next purchase.
    So the end results is
    – PPOR loan of $300,000 still
    – New IP loan of 100% LVR ( $60,000 + purchase cost) – tax deducible


    How to maintain a Large portfolio—-
    1. Buying +Ve property to maintain serviceability
    2. Buy under the market to access instant equity
    3. Renovate, Expand and develop to BUILD equity

    Say you buy a place at 80% LVR and loan is $200,000 + $10k for basic renovations = on a 7% interest ~$1,150 PM ( interest only)
    Rent = $350 x 4 = $1,400 PM

    Minus insurance, management fee etc —- you will either break even or make a small amount of say $20-$30 PM…yes not a lot BUT it builds up…

    1. Rent can be increased, and on average does go up over time…
    2. You can renovate, build granny, furnish, paint to increase rent
    3. The above does not take in any tax benefit or deprecation yet
    4. Value of the land goes up …with inflation at least

    Say your -VE or behind by $100 P/M — in effect this equates to a $90,000 mortgage in terms of serviceability.

    SO term of serviceability; the bank will normally take in 80% of potential and current rent; so it may get to a point where your “serviceability” hits a dead end….But as long as your rent keeps going up + you have a job to support the ongoing “smaller ” debt then you got a long way to go.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
    Email Me | Phone Me

    Same Banks. Better Rates. Served With a Passion.

    Profile photo of Ossi89Ossi89
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    @ossi89
    Join Date: 2011
    Post Count: 31

    Does a HECS/FEE-HELP loan have an impact on my borrowing capacity?

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Ossi

    Yes it does.

    It both reduces your net Taxable income as well as representing a liability.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of Nathan BirchNathan Birch
    Participant
    @nathan-birch
    Join Date: 2004
    Post Count: 189

    Hey there,

    I always have people ask me questions on how to do it and some while ago I made a blog about it on my website which I will cut and paste the bulk below.

    There are many ways to make money out there, however property is a vehicle and I personally have a system that works for me, almost bullet proof, recession proof and has all the upside with minimised risk. Best of all its in line with my lifestyle because at the end of the day its all about the lifestyle.

    Disclaimer,
    One should always get the correct advice and speak to relevant parties for their own financial decision befor taking any actions.

    How can you go from a small savings to owning 10 x properties on a $50,000pa income?

    Before we divulge into specifics, understand that this is an example and does not constitute as financial advice. One should seek industry professionals such as solicitors, accountants and finance representatives.

    Now let’s take an example scenario where we have a single person call them Sarah for the exercise and Sarah earns $50,000pa as a office support (Pretty consistent salary in the market). Sarah has $30,000 saved up and doesn’t know whether to buy a new car outright, go overseas for a year or…. buy a property (HOW CAN SHE BUY 10?)

    Well it all comes down to having the foundations right and having the correct strategy. Sarah gets wind of different properties and specific companies which all say to negative gear because its good and she will save tax. However the drama is Sarah doesn’t pay all that much tax and the property will be eating into her lifestyle of $10,000pa or $200pw. She cannot get her head around what all these spruikers are on about with $10,000 expenses it seems absurd. and to be frankly it is! Negative gearing is a term spruikers use quite commonly to justify losing money. For an investment strategy you must understand why your investing and how your investing can get you towards your end goal.

    Sarah decided she would develop a property investing strategy which would work for her and she used the same methods as B Invested uses which is buying properties below market value so she will have instant equity to help her into the next one and a buffer of safety in case she needs to sell at a fire sale she won’t be losing her money. The second principal being that it must be as close to cash-flow positive as possible so she doesn’t lose her lifestyle she currently holds and the ability to continue to sip on a chi latte with her girlfriends. The third principal is she buys bread and butter not, not only because it serves with a solid exit strategy having more buyers but that it also has great potential of going up in value because of its low starting point ensuring capital growth in the future.

    10 properties is around 3 per year for Sarah and how can she do that?

    Well each property she is setting out to purchase is around $200,000 and renting around $300pw. The reason of this is to keep her portfolio relatively neutral geared. Some are slightly negative and some may be slightly positive such as regional’s etc…

    If she has a deposit of $30,000 and buys property # 1 using 10% deposit and $10,000 for closing costs she has achieved 10% of her goals.

    She then either needs to save up some funds from work, get a second job, or…. because she bought well with the first property she can extract her capital back out.

    This will look like this…
    Purchase price $200,000
    Revaluation price $240,000
    Top up loan 90% or $40,000 = $36,000.

    Therefore she has even more money and she can repeat the process again.

    After that she has property # 2.

    Repeat the process over and over again.

    What now? She has 10 x properties and wants to retire 5-10 years after her first purchase.

    Sarah has a couple of options.
    Firstly, her properties have doubled in value and she had $2,000,000 purchase prices ($200k x 10) and now they are worth $4,000,000 or 10 x ($400,000). She can sell down half pay off all her debt and be owning 5 x properties outright

    Secondly she could increase her rents by $100pw (remember rents should double or go up $300pw) each and this will be $100 x 10 = $1000pw positive cash-flow as her expenses stay relatively similar. So she has still made $2,000,000 equity and also an income stream of $52,000pa.

    Thirdly, she could sell down a couple renovate a few, add a granny flat or manufacture extra growth.

    There are multiple options available however without getting the strategy downright first it would be impossible to get the right portfolio which will get her closer to financial independence and improve her lifestyle instead of getting her more enslaved into her job.

    There are multiple ways of making money in real estate but firstly start treating your investing like a business. McDonalds, Bunnings, Wollies, Coles, etc… They don’t go and open a new store to go and lose money do they? They spend time researching, and understanding their markets and the figures before taking a stake and setting up a store. Why wouldn’t you as an investor take the time and research to ensure you are making the correct decision.

    Good luck!

    © binvested.com.au

    Hope this helps in a couple of sentences clarify an option of doing so.

    Nathan.

    Wiwin
    Participant
    @wiwin
    Join Date: 2011
    Post Count: 30

    thank a million for your great explanation Michael and Nathan! 

    I appreciate it very much. I read all the books, attend the seminars ( one today – dymphna boholt @syd – great one ) , asking questions and hopefully will get my structure ready for next year.. 
    Please bear with me if i am asking stupid question..

    Thanks,

    Wiwin  

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