I was a sticky-nose neighbor at next doors house Mortgagee Auction which was passed in on Saturday with no bids and a starting price of $265,000 (I know for a fact the previous owners home loan is between $220-230k)
I am now thinking that perhaps this might be a good buy to rent out, being a 3 year old house in a growing estate with a train station being built.
I do not have pre-approval; however I am thinking that I shouldn’t let this slip away.
I have never put in a private offer before…. Am I allowed to submit an offer to the agent without pre-approval and how do I submit an offer? I was thinking of offering $230k?
Rough estimates I was thinking along the lines of:
I.O loan of $230 – 260k
Loan repayments range from $1,208 – 1,365 (avg. $1,286.50)
Comparative rent ranges from $270 -300pw (avg. $285pw = $1,140pm)
Short fall (avg. loan repayment – avg. rent) = $146.50 out of pocket each month
Can I please have your thoughts – thankyou.
When you say pre-approval are you referring to a loan?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
@ Shahin; Yes. Early last year, we received pre-approval from a bank, however the period lapsed and since then, our financial situation has changed.
1. Each bank/lender will have its own policy
2. If you are ascertaining a Pre Approval – make sure its a credit assessed Pre Approval and not a generic system approval
3. Pre-approvals last anywhere between 3 months to 6 months
I would be talking to a banker or broker about exactly what your options are. The figures above are fine – I would be looking closer at your situation (such as LVR, employment status, etc).
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Just be aware that when doing the numbers, you need to add in the other expenses like management fees, rates, insurance, etc to come up with a more accurate out of pocket cost.
As for the offer, yes you can put in an offer with having any approvals in place, however if accepted you should have the usual subject to finance and pest and building clauses put in the contract.
Cheers
Tom
tigermiger wrote:I have never put in a private offer before…. Am I allowed to submit an offer to the agent without pre-approval and how do I submit an offer? I was thinking of offering $230k?
You can submit an offer without a preapproval – there's no issues there.
However, make your offer "subject to finance" and give yourself enough time to arrange your finance and building/pest inspections.
Do you have a sufficient deposit or equity to get this done?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
would be best to have a friendly chat with the agent first and see if they would accept your offer of $230k. if they do accept then sign the contract "subject to finance"
@ Jamie M; no deposit, but hoping we have equity in our house.
OK – best to sort out the equity release first so you know exactly where you stand. Otherwise, you'll locate a property and will need to submit two applications at the one time (first for the equity release and second for the purchase).
Unless the bank/broker you're dealing with is going to cross coll your properties – then they'll take the lazy route and submit one application using all securities as collateral. This is good for them – but not so good for you.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Agree with Jamie – sort the equity release first then look forward.
While this may take a little time to get sorted properly you'll be grateful you did over the long term.
A question on an entirely different tack – do you really want to live next door to your IP?
For me this is toooooo close.
I would also wonder about the logic of having your two properties in the one location. The performance of your whole portfolio's will be driven by the performance of the housing market in your home suburb. If your suburb really does stack up then maybe well and good – if not, then I would counsel against this strategy.
Don't let comfort and familiarity cloud your investment decision.
Hope this helps.
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