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Hi Jebb,
Sounds like you've given its lots of thought – that's a great start! You're coming back at a great time – given the latest interest rate cuts, finance is extremely affordable and there are lots of opportunities to find or make cashflow positive deals.
My strategy is always to use my capital as a deposit to purchase as many cashflow properties as possible. This way you are spreading your risk and maximising the potential for capital growth (eg. 10% capital growth on 5 properties gives you more $$$ than 10% on 1 property).
Anyway there are a lot of great properties out there at the moment if you know where to look for them!!
Good on you for taking action – and good luck!!
Cheers,
Matt.
It is funny all of a sudden in the last 6-8 weeks we have received more finance enquiries from Expats than we would have done in the previous 6 months.
Interest rates on the decline and the stable property market makes Australia a great place to buy affordable housing.
My strategy has always been to purchase + cash flow properties as use this additional income to cover any shortfall on my capital growth portfolio. Thanfully over time these properties have of course become cash flow + and now the income stream is very nice thank you.
Couple of things to bear in mind with regards to the financing of these loans:
1) Set up the loans with offset accounts and use these accounts to deposit your rents and even lump sums from your income into subject to the exchange rate at the time.
2) Subject to the exchange rates look at a foreign currency loan. Currently for a Singapore Libor rate loan you are looking at a variable rate of around 4.25%. HK Libor is a little more expensive at 4.73%.Not sure what currency you are getting paid in but unfortunately Yen is not an offered currency at the moment.
3) Understand that as a non resident you will be able to offset the rent being received against the interest however will only be unable to negative gear this against your current non resident income. Any losses can be quarantined against future Australian income.
Depending on your income and the prospects over the next few years I would use the unencumbered property to gear against for deposits to purchase multiple properties. As most lenders will not go past 80% LVR (90% is still available but of course LMI is payable) you could still purchase a few properties with the available equity that you have let alone any of your own cash funds you look to introduce.
In the current climate many lenders will want to shave your income by a margin before converting it to Aussie Dollars but that again shouldnt cause a problem.
One thing to bear in mind being overseas is the time lenders are taking to process applications especially given the distance.
Allow yourself plenty of time and get your mortgage broker to start the ball rolling well in advance to when you think you are going to buy.Some lenders will
Richard Taylor | Australia's leading private lender
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