Forums / Property Investing / Help Needed! / Why Aren’t You Buying?

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  • Profile photo of matthew.fmatthew.f
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    @matthew.f
    Join Date: 2011
    Post Count: 27

    What are your biggest setbacks? Why aren’t you pouncing on great deals? Discuss the challenges we face, in a marketplace with so much opportunity.

    Profile photo of matthew.fmatthew.f
    Member
    @matthew.f
    Join Date: 2011
    Post Count: 27

    I thought I would share my frustration with some new bank lending criteria. I have sourced a property in Brisbane 2km from CBD. Returning just over $1,100 per weeks and for sale in the low to mid $800k’s. Gross returns for a house @ approx 7.2% gross returns. With 10% deposit and such great returns it seemed a no brainer. This house is in immaculate condition and the floor plan has been reconfigured to accommodate for 4 bedrooms all with ensuite and own kitchenette’s. 4 seperate leases (for each room) accumulates over $1,100 income. Bank criteria will not take into account the extreme returns as they deem it to be student accommodation and then decipher what the true market rent they think would be…. $600per week (rented out on one lease).

    True rent to me is exactly the true rent that is on the leases?

    Any thoughts.

    Profile photo of beediebeedie
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    @beedie
    Join Date: 2007
    Post Count: 158

    We buying/searching inner city Brisbane development sites, however most sites that come up are either secondary sites or still overpriced  or a combination of both……  so most just sit there going stale ….. seems like a lot of sellers have bought in the recent peaks of the last few years and trying to flog them off but unfortunately for them they only worth what they paid for them.
    Bitter pill to shallow

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
    Join Date: 2010
    Post Count: 5,065
    matthew.f wrote:
    Any thoughts.

    Try another bank.

    If there's a broker organising the deal they should be able to make some calls to see which lender will accept it.

    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 Scott No MatesScott No Mates
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    @scott-no-mates
    Join Date: 2005
    Post Count: 3,840

    True value does not relate to true rent. Sustainable rent gives rise to true value. If you leased the house as a normal house, what would be the rent that could be achieved? Ie lowest risk for the lenders?

    How much less is the net rent & how does that compare to leasing the house normally ie less management & letting fees, power, water use, internet, rates etc? There may be a higher gross yield but the running costs will have a greater impact on the net if there are no recoverables.

    Profile photo of lifestylezlifestylez
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    @lifestylez
    Join Date: 2011
    Post Count: 61

    I'm not buying right now because I plan on getting back into a PPOR in Brisbane next year.

    I basically do not have enough spare cash or equity to buy an IP at the moment.

    Wish I did though, because there's some good buys out there.

    Profile photo of matthew.fmatthew.f
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    @matthew.f
    Join Date: 2011
    Post Count: 27
    beedie wrote:
    We buying/searching inner city Brisbane development sites, however most sites that come up are either secondary sites or still overpriced  or a combination of both……  so most just sit there going stale ….. seems like a lot of sellers have bought in the recent peaks of the last few years and trying to flog them off but unfortunately for them they only worth what they paid for them.
    Bitter pill to shallow

    Hi Beedle,
    You are exactyly spot on to some extent. Many of the new (within last 4 years) developments in the riverside precinct in West End are inflated in price as most paid premium in a hot market. Many of these investments are worth, and selling far less than what they paid.

    The market will self-correct itself with the driving forces of supply, demand, economic conditions, world conditions, interest rates and buyer sentiment. Many of these investors are unfortunately realising that 4 years on from their purchase that is has been a poor investment and sometime time to go before they would potentially break even. The foresight of profit for these investors is slim.

    Profile photo of matthew.fmatthew.f
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    @matthew.f
    Join Date: 2011
    Post Count: 27
    Jamie M wrote:
    matthew.f wrote:
    Any thoughts.

    Try another bank.

    If there's a broker organising the deal they should be able to make some calls to see which lender will accept it.

    Cheers

    Jamie

    Thank you for your suggestions.

    Helpful.

    Profile photo of matthew.fmatthew.f
    Member
    @matthew.f
    Join Date: 2011
    Post Count: 27
    lifestylez wrote:
    I'm not buying right now because I plan on getting back into a PPOR in Brisbane next year.

    I basically do not have enough spare cash or equity to buy an IP at the moment.

    Wish I did though, because there's some good buys out there.

    Is that link to Logan City your site…

    Great post.

    Profile photo of Andrew_AAndrew_A
    Participant
    @andrew_a
    Join Date: 2003
    Post Count: 392
    matthew.f wrote:
    I thought I would share my frustration with some new bank lending criteria. I have sourced a property in Brisbane 2km from CBD. Returning just over $1,100 per weeks and for sale in the low to mid $800k's. Gross returns for a house @ approx 7.2% gross returns. With 10% deposit and such great returns it seemed a no brainer. This house is in immaculate condition and the floor plan has been reconfigured to accommodate for 4 bedrooms all with ensuite and own kitchenette's. 4 seperate leases (for each room) accumulates over $1,100 income. Bank criteria will not take into account the extreme returns as they deem it to be student accommodation and then decipher what the true market rent they think would be…. $600per week (rented out on one lease). True rent to me is exactly the true rent that is on the leases? Any thoughts.

    By sourced a property I presume you mean you found a listing from your colleague and fellow sales agent at Ray White South Brisbane, Brent Compton?

    Profile photo of matthew.fmatthew.f
    Member
    @matthew.f
    Join Date: 2011
    Post Count: 27
    Andrew_A wrote:
    matthew.f wrote:
    I thought I would share my frustration with some new bank lending criteria. I have sourced a property in Brisbane 2km from CBD. Returning just over $1,100 per weeks and for sale in the low to mid $800k's. Gross returns for a house @ approx 7.2% gross returns. With 10% deposit and such great returns it seemed a no brainer. This house is in immaculate condition and the floor plan has been reconfigured to accommodate for 4 bedrooms all with ensuite and own kitchenette's. 4 seperate leases (for each room) accumulates over $1,100 income. Bank criteria will not take into account the extreme returns as they deem it to be student accommodation and then decipher what the true market rent they think would be…. $600per week (rented out on one lease). True rent to me is exactly the true rent that is on the leases? Any thoughts.

    By sourced a property I presume you mean you found a listing from your colleague and fellow sales agent at Ray White South Brisbane, Brent Compton?

    Hi Helen,
    Thank you for doing your homework. That is a source isn’t it? Yes Brent not “Brett” is a work colleague.

    Moving on from this, the emphasis is on the Returns (income/expenses).

    Amazing. Some people don’t share ideas, but rather dissect other’s postings.

    Thank you for your comments.

    Profile photo of Andrew_AAndrew_A
    Participant
    @andrew_a
    Join Date: 2003
    Post Count: 392
    matthew.f wrote:
    Andrew_A wrote:
    matthew.f wrote:
    I thought I would share my frustration with some new bank lending criteria. I have sourced a property in Brisbane 2km from CBD. Returning just over $1,100 per weeks and for sale in the low to mid $800k's. Gross returns for a house @ approx 7.2% gross returns. With 10% deposit and such great returns it seemed a no brainer. This house is in immaculate condition and the floor plan has been reconfigured to accommodate for 4 bedrooms all with ensuite and own kitchenette's. 4 seperate leases (for each room) accumulates over $1,100 income. Bank criteria will not take into account the extreme returns as they deem it to be student accommodation and then decipher what the true market rent they think would be…. $600per week (rented out on one lease). True rent to me is exactly the true rent that is on the leases? Any thoughts.

    By sourced a property I presume you mean you found a listing from your colleague and fellow sales agent at Ray White South Brisbane, Brent Compton?

    Hi Helen, Thank you for doing your homework. That is a source isn't it? Yes Brent not "Brett" is a work colleague. Moving on from this, the emphasis is on the Returns (income/expenses). Amazing. Some people don't share ideas, but rather dissect other's postings. Thank you for your comments.

    I've been sharing ideas on here and other investing forums for 8 years, how about yourself?

    No problem at all looking into the property, lets just be clear about who will be rewarded if this property sells.

    Profile photo of matthew.fmatthew.f
    Member
    @matthew.f
    Join Date: 2011
    Post Count: 27
    Andrew_A wrote:
    matthew.f wrote:
    Andrew_A wrote:
    matthew.f wrote:
    I thought I would share my frustration with some new bank lending criteria. I have sourced a property in Brisbane 2km from CBD. Returning just over $1,100 per weeks and for sale in the low to mid $800k's. Gross returns for a house @ approx 7.2% gross returns. With 10% deposit and such great returns it seemed a no brainer. This house is in immaculate condition and the floor plan has been reconfigured to accommodate for 4 bedrooms all with ensuite and own kitchenette's. 4 seperate leases (for each room) accumulates over $1,100 income. Bank criteria will not take into account the extreme returns as they deem it to be student accommodation and then decipher what the true market rent they think would be…. $600per week (rented out on one lease). True rent to me is exactly the true rent that is on the leases? Any thoughts.

    By sourced a property I presume you mean you found a listing from your colleague and fellow sales agent at Ray White South Brisbane, Brent Compton?

    Hi Helen, Thank you for doing your homework. That is a source isn't it? Yes Brent not "Brett" is a work colleague. Moving on from this, the emphasis is on the Returns (income/expenses). Amazing. Some people don't share ideas, but rather dissect other's postings. Thank you for your comments.

    I've been sharing ideas on here and other investing forums for 8 years, how about yourself?

    No problem at all looking into the property, lets just be clear about who will be rewarded if this property sells.

    Hi Allen,
    I can see you have been here for sometime. I look forward to reading some of your ideas in the future.

    I am very clear of who will be rewarded when it sells. The listing and/or conjuncting agent.

    It seems you have a keen interest which is great. I will post and inform you of many other great buys I have sourced. All over Australia.

    Thank you for your comments Allen.

    Profile photo of Blue Ridge HomesBlue Ridge Homes
    Participant
    @blue-ridge-homes
    Join Date: 2010
    Post Count: 32

    Hi Scott no mates,

    Not sure if you are involved personally with the reao site? 

    If so could you please let me know?

    Meg

    Profile photo of masky005masky005
    Member
    @masky005
    Join Date: 2011
    Post Count: 13

    We are waiting for the right property, with the right price……. and we're being fussy. Hoping to get back in by early next year

    Profile photo of ten_burnerten_burner
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    @ten_burner
    Join Date: 2006
    Post Count: 242

    Im trying to get more deposits, I have been buying stuff below market value, i need to wait 6-12 months to get them revalued then ill release some equity from them, I have one last cash deposit, Im looking at a house in Gladstone with subdivide potenial

    Profile photo of lifestylezlifestylez
    Participant
    @lifestylez
    Join Date: 2011
    Post Count: 61
    matthew.f wrote:
    lifestylez wrote:
    I'm not buying right now because I plan on getting back into a PPOR in Brisbane next year.

    I basically do not have enough spare cash or equity to buy an IP at the moment.

    Wish I did though, because there's some good buys out there.

    Is that link to Logan City your site… Great post.

    Yeah, that's my site I started about 4 months ago.  Thanks for the compliment!  And thanks for commenting on the post too, I approved it.  I don't get very many genuine comments related to the content of the post :) (lots of spam though!)

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    If i may be so bold to go back to the original post made there are a couple of lenders i can think of who would take the total income into consideration rather than an assessed income made from the local valuer.

    Course i can see the other side of the coin from the lenders perspective and that is when i reposess do i really want to be dealling with the 4 separate Tenants.

    You cant blame them as it does happen.

    Cheers

    Yours in Finance

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

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of matthew.fmatthew.f
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    @matthew.f
    Join Date: 2011
    Post Count: 27
    Qlds007 wrote:
    If i may be so bold to go back to the original post made there are a couple of lenders i can think of who would take the total income into consideration rather than an assessed income made from the local valuer.

    Course i can see the other side of the coin from the lenders perspective and that is when i reposess do i really want to be dealling with the 4 separate Tenants.

    You cant blame them as it does happen.

    Cheers

    Yours in Finance

    Hi Richard,
    Thank you for you reply. What financiers do know that will take the full income into their valuation?

    Look forward to your reply.

    Regards,

    Matthew Frost

    Free Property Buyers Agent

    Profile photo of v8ghiav8ghia
    Member
    @v8ghia
    Join Date: 2005
    Post Count: 871

    Why not?  It should be a good time, but depending on your budget / price range I think. I am genuinely not sure where all the good deals are though. It still seems like the actual asking prices in the eastern states anyway, (excluding capital cities that are out of my range now) don't seem to be getting any cheaper. The figures in the latest API still show some growth to July 2011. I guess it is just lack of time to do research and get serious – and that at the moment you cannot just buy any place and hope it will go up – but need to do a bit more due diligence than in the past couple of years, and get something you can add value too.
    …….Anything on acreage still seems to be through the roof and not coming down soon.
    So that's why……my next deposit can stay in the offset account for a little while longer – unless it gets spent on a new Triumph of course ;-)

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