Forums / Property Investing / Help Needed! / Advice on buying a new or old apartment

Viewing 20 posts - 1 through 20 (of 23 total)
  • Profile photo of PaninaPanina
    Participant
    @panina
    Join Date: 2016
    Post Count: 8

    Hi im about to purchase a new apartment for $360000 in the gold coast but i have been looking around the same area and have found a not new apartment for $300000 its nearly 10 years older but ill be getting the exact same rent.
    My loan has only came out at $260000 so if i want the new apartment ill have to fork out $100000 which is all my savings.
    It’s going to be an investment the new apartment is already furnished the older one i could put my own furniture in and further increase the tax depreciation benefits.
    Any advice is appreciated
    Thanks

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,366

    Hi Panina,
    And a big welcome to you….. You have come to a good place. ;)

    My loan has only came out at $260000 so if i want the new apartment ill have to fork out $100000 which is all my savings.

    Wow – that is a big OUCH !! Smart move for looking around before putting so much of your own cash into the deal.

    May I ask – have you been talking to a Mortgage Broker, or are you dealing direct with a lender? See, as with anything we are “new to”, we often struggle to think of questions to ask. So dealing with someone who has YOUR interests at heart, and the knowledge of a subject you are unfamiliar with, can be a huge win.

    To that end, let me suggest you at least have a chat with a Mortgage Broker (maybe one from on here?) just to be sure your lender has given you all of the options you might have available to you. See, lenders are often just “wanting to sign you up, while giving themselves the best security for their money that they can” – enter xcoll loans, huge deposits, restricted allowances for your Income, etc.

    Better for you to be more aware of all of the different options available to you – via a Mortgage Broker. The results might point your thinking in a whole new direction !!

    Re which is better, old or new, there are several points around that – for some (high wage, passive investor, low Tax deductions) a new property might be beneficial. For a low income investor, buying new may not be such a good idea. But don’t let me put you off – ask the questions, and let’s see what other answers spring up. Look out for a mortgage Broker who might reply to your post. There are several good ones on here….. (check their signature)
    Benny

    Profile photo of PaninaPanina
    Participant
    @panina
    Join Date: 2016
    Post Count: 8

    Thanks for the reply yes I’m going through a mortgage broker the thing is I’ve got 3 other investment properties in other states that are affecting my cashflow but they are all postive geared.
    I’m not to keen on the putiing the $100,000 into the apartment even though im told it’s like putting your money into bricks and mortar not the bank.
    I thought if the valuation is correct i have to only come up with 20% deposit and can borrow 80%?

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Assuming the valuation of the property comes back at $360,000 – a 20% deposit + government charges equates to ~$84,000 – a tad short of the 100k you’re being told. So either there’s a valuation shortfall or something else at play.

    Apartments in the Gold Coast have been the butt of jokes for sometime now – for many years many investors dreams were crushed with slick salesmen selling them stock which was either A, overpriced or B, in an area where theres just increasing supply keeping prices low. A key example in your scenario is that there is older stock selling for less – what happens when your property is old and a new apartment block comes up? Do you think property prices will drive up if there’s newer/better stock continually coming on?

    Buyer beware as always.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,366

    Hi Panina,

    I thought if the valuation is correct I have to only come up with 20% deposit and can borrow 80%?

    Exactly the reason why I said “Ouch” in my first reply. That deposit sounds “over the top” as Corey has defined. Is there “something else” underlying that would have your lender wanting more security?

    e.g. Are your loans xcolled? Even with those other positive geared investments, the banks may “see” them as negative geared (by limiting how much rent they will allow in the calcs, and by including a “Qualifying Rate” for Interest that allows for rate increases, etc). So, even if your bank account sees a positive cashflow, this might not be seen this way when borrowing. Hence the need for a Mortgage Broker who is well versed in all of this?

    What does your Broker tell you re that huge deposit? Do they agree that you would need to pay the higher deposit? And if so, WHY?

    Benny

    PS And yes, as Corey said – watch out for way over-priced apartments on the Gold Coast and surrounds.

    Profile photo of PaninaPanina
    Participant
    @panina
    Join Date: 2016
    Post Count: 8

    Hi i was told because I’m not earning enough through work so i cant borrow as much and the banks are also cutting back on lending.
    I spoke to the mortgage broker today it’s actually $90,000 now not the $100,000.
    The loans are not xcolled this mortgage is with a new bank.
    I’m not happy with the huge deposit the 90,000 is everything including government charges.
    Considering not going ahead with this although i think the gold coast particularly this area will grow the next couple of years the big deposit is preventing me investing in my own home which i really want.
    Really confused now i need to go speak with someone who can sit me down and run through everything cruch the numbers and get a positive outcome.

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    If you’re looking to buy your own home – do this first. You can put all of your cash into that property, reducing the repayments as much as possible. AFTER this you can then setup a seperate loan account drawing out equity from your own home to purchase an investment property, allowing you to effectively have your cake and eat it – the best of both worlds.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    If the furniture package is included in the purchase price the valuer will have factored this into his valuation and you will need to pay for this from your own savings or equity elsewhere.

    Why not look at buying an established unit and borrowing 90% and then talking to a local property manager and see what furniture if any you would need to put in to increase the rental income.

    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 PaninaPanina
    Participant
    @panina
    Join Date: 2016
    Post Count: 8

    Hiya no furniture in the house someone is already in there.
    I was thinking that buying a established unit and furnishing ive seen units 100 meters away $100,000 less i travelled to the gold coast and viewed the properties but I’m told buy new buy new buy new!
    I think the best option is buy my own home like corey said considering rates are so low.
    Can i email one of you guys and give a run down on my situation?

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Happy to have a chat with you Panina. Getting into your own home whilst affordable will at least give you the breathing room to rapidly pay down your personal debt, freeing up that equity to get buy investment properties.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    Hi Panina

    Sure feel free to email me.

    I can send you my API interview on 0-40 properties in a decade which might give you some tips on other strategies to increase your wealth.

    If you tell me which part of the GC the property is located i can give you some further info as i am down there once a week.

    Certainly wouldn’t pay an extra 100K just because the property is new.

    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 D.T.D.T.
    Participant
    @dtraeger
    Join Date: 2014
    Post Count: 128

    I think Corey is your best bet for deals like this.

    D.T. | DT Property Management
    http://www.dtproperty.com.au
    Email Me | Phone Me

    Adelaide Property Management - whole Adelaide metro

    Profile photo of PaninaPanina
    Participant
    @panina
    Join Date: 2016
    Post Count: 8

    Thanks alot ill email you both soon

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi im about to purchase a new apartment for $360000 in the gold coast but i have been looking around the same area and have found a not new apartment for $300000 its nearly 10 years older but ill be getting the exact same rent.

    Hiya

    Like anything in life – the shiny new item tends to attract a higher price. However – over time, that shiny new item begins to age.

    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 BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,366

    Hi Panina,

    As Steve says “Buy a problem and sell the solution – don’t buy the solution!”

    He explains by saying “The developer builds new properties, providing solutions for all those who just want a new house”.

    For those who can fix problems, (either by developing, renovating, or simply buying for a bargain price from someone who over-stretched) they then have a solution to sell to someone else. Or, they have a “solution” that has appreciated in value, and is now able to release some Equity !!

    Benny

    Profile photo of PaninaPanina
    Participant
    @panina
    Join Date: 2016
    Post Count: 8

    Thanks i don’t think i can justify putting so much into this apartment

    Profile photo of Colin RiceColin Rice
    Participant
    @fms
    Join Date: 2011
    Post Count: 338

    @panina any reason you cant put in a 10% deposit as opposed to an 20% deposit. Yes you will cop some LMI but you will have held back some of your capital that can be placed in a offset account for the next purchase and/or a buffer.

    • This reply was modified 2 years, 11 months ago by Profile photo of Colin Rice Colin Rice.

    Colin Rice | CDR Finance
    http://cdrfinance.com.au/
    Email Me | Phone Me

    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

    Profile photo of PaninaPanina
    Participant
    @panina
    Join Date: 2016
    Post Count: 8

    @panina any reason you cant put in a 10% deposit as opposed to an 20% deposit. Yes you will cop some LMI but you will have held back some of your capital that can be placed in a offset account for the next purchase and/or a buffer.

    I would love to do that! The loan only came out at $260,000 maybe the banks are starting to hold back their lending.

    Profile photo of Colin RiceColin Rice
    Participant
    @fms
    Join Date: 2011
    Post Count: 338

    [/quote]would love to do that! The loan only came out at $260,000 maybe the banks are starting to hold back their lending.[/quote]

    It could be that you have hit the serviceability or may need to make sure you have exhausted all options with other lenders. Your broker may have missed something?

    • This reply was modified 2 years, 11 months ago by Profile photo of Colin Rice Colin Rice.

    Colin Rice | CDR Finance
    http://cdrfinance.com.au/
    Email Me | Phone Me

    Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,010

    @panina from the figures you emailed me i managed to get the deal to service for $260,000 so not sure who your TIC broker is looking at but seems to be a vast difference.

    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.

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