Hi all,
We desperately need some financial / property investment advice please. I'm totally new to this and dont even know where to start researching.
Our current situation is $550k mortgage. Current home worth $850k+ in Sydney. No cash in bank (we literally live week to week). Builder husband is self employed sole trader who's last 2 tax returns show a taxable income of $50k-$55k. Me – stay at home mum with 3 young kids. We have 2 exchange students living with us who provide an additional $550pw – which basically gets us through.
We want to start investing in property but our finance broker has told us that the banks will not touch us. This is not what we want to hear and we want to buy a $300k property in a great beachside suburb in Melb, subdivide, build 2 townhouses, sell and move onto next project.
It seems that the only way we can do this is to sell our house in Sydney (which I really dont mind doing as it was only a project for us anyway and we've renovated it to make profit) so we can free up some money and hopefully walk away with $250k-$300k. Will this make us more favourable with the banks?
We would prefer to stay in Sydney and rent as our business is here whilst we subdivide in Melb and use a project home builder to put up the townhouses – as this would be much cheaper than hubbie taking time off work to build. So he can continue with his business here and continue earning a wage.
We are looking around Frankston/Mornington. Does anyone know what subdivision costs would be and timeframe before we could start on the actual building of the townhouses?
We have a 10 year plan with the hope of being mortgage free. We are assuming we'd have to basically start again from scratch – hence the sale of our current PPoR. Sell the first few projects to gain some extra $$$ and eventually be able to continue without having to sell and being able to hold them for the long term.
Any advice would be much appreciated.
Thanx so muchHi boshie
Hard to comment without actually seeing your husbands actual Tax Returns but with the potential rent being taken into consideration and with different lenders all calculating serviceability slightly differently especially when it comes to investment loans I would certainly look to get a 2nd opinion.
Some mortgage brokers have little or no experience when it comes to investor loans and it makes me laugh when they provide advice when they have never actually purchased an IP themselves.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Richard is right, some finance brokers are good and others…sometimes they don't know what they are talking about and they give advice with a lack of information.
Get a second opinion from another bank or mortgage broker and see what they say.
The thing that worries me is that you are living week to week and it sounds like you are struggling to get by. If you have to have exchange students paying rent to keep up with your mortgage expenses that sounds like it could be a little dangerous.
Just be careful not to over extend yourself because if interest rates continue to go up then you might find yourself with a lot of properties…but no money to service the loans.
Having said that, good luck and I hope you can do it. Find a good broker who will help you.
I hear Richard is a pretty darn good broker
Ryan McLean | On Property
http://onproperty.com.au
Email MeThankyou Ryan and Richard for your comments – much appreciated.
Richard, I notice you're in Qld but do you have clients you work with in Sydney? If so, we would definately be interested in getting some expert advice from you regarding our current situation and, more importantly, our future goals. Or, can you recommend anyone in Sydney we could speak to as I'd really like to get a 2nd opinion on how we can move forward or make changes to get us moving forward.
thankyou,
boshieRichard is right. The whole idea of a good mortgage broker is knowing how to best present your case so the mortgage deal actually goes through. However you are dealing in a much more difficult climate than it was 2 years ago. Banks arent throwing money left right and centre anymore, they are only really letting solid deals through .. they are asking for more to make the deal happen and they are putting extra clauses in for their own security. I had a friend of mine who is reasonably well off ask for a 50% LVR loan and they sort of suggested they'd like extra securtiy .. at 50%LVR? thats a bit much.
My recommendation for you is to do two things, build up a savings bank for the moment, for your next venture. If you want to sell your house for the starter funds .. thats ok too. People seem to think that hanging onto a diamond brings food to the table. No .. it leaves you with a big rock. If you need to get your current equity working for you .. so be it .. get it going. There is no time better than now to get your asset portfolio right side up.
If the banks are baulking at your serviceability, you may be needing an investment property instead to get the ball rolling. With 300k plus a small mortgage, you'd be able to buy something returning another 30-40k income. Within a couple of years though (and lets face it you have your 10 year goals to work towards) the incomes of the investment property will have increased, and you'll have extra money you'll need to invest in ANOTHER investment property or scheme.
Summary: Reduce your expenses, eat less takeaway food, budget so you can produce a savings report. Increase your income vs expenses gap so the banks or financial institutions will love you more.
And if all that fails, think outside the box. Magic words :- vendor finance .. solicitors funds .. long settlement terms. Make the deal happen your way. One of my best purchases was done using the 10k off a credit card for the initial deposit.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
