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Hi Pleiades,
Thanks very much for that! That certainly gives me hope!
I was looking on the eastern side of melbourne.
The only real requirement for me would be to 'live' in an area in Melbourne where there are many asian convenient stores and such not too far away. The place would really be for my mother, and I think it would be good for her to live in an area where it's not too far away from asian supermarkets, churches, you know, things of that nature. And I have heard the East of Melbourne is pretty much the place for that. Places around Canterbury (which is very expensive!!) and Box Hill etc.
Any good areas which have fairly modern houses (or villages/ townhouse), which is not too far from the city?
But like one of the earlier posters said, it may be an idea to go over there, rent for 6 months to seek out the suburbs myself.
But it's very interesting to hear that you bought land and house for under $300k!! I will certainly be looking at that option also.
I am basically looking for a residential place in melbourne for my mother, not necessarily for investment, but moreso a fairly new small place with at least 2 bedrooms, that isn't too over the top in terms of price.
Then the rest of my interest is to purchase positive cashflow properties. This will most likely be around city/universities whereby you can buy 1 bedroom appartments etc for $200k mark, and the rent is fairly high.
Definately appreciate your thoughts!!
Mmm… Very interesting to hear you're doing the same thing!! It's not as expensive as I was expecting. i was thinking down the lines of $10,000+ to build a trust structure with companies/trustees.
Excuse my ignorance but PPOR…???
Yeah that's what I thought too, but I figured if I sold my house in Brisbane, I'd lose all my $245k of equity!! And quite honestly you can't really buy another decent place with $400k… Not in Melbourne anyway….
So it looks like I have to keep the place, if I want to use the $245k of equity and use it to purchase positive cashflow properties!
number 8,
Thanks for your advice.
I read Steve McKnights book, which talks about building a trust structure, with trustees and companies. It talks about a law, which says a company is not responsible for the director's debt, and the director is not responsible for company debt.
Because of this, he can use his financial borrowing power as a director, make a company, buy assets under this company until it his borrowing power is maxed out, then build another company, and repeat all over again!
Don't quote me on the above, because I haven't got the full grasp of it yet and I've probably mixed up the terminologies such as companies and trusts, but that was the overall impression that I got from reading that chapter.
Apparently this method is used in the commercial world very commonly, and that is how many people own many different properties. But as you can imagine, if you already have a property under your own name, even though you are the director of a company in your trust, your borrowing power for every company you make will be limited because of the property you have under your own name.
It would be interesting to get the view from others who know much more about buying properties through trusts/companies to buy many many properties!!
Shane,
Yeah that's true.
But if my borrowing power is $400k (which I haven't calculated exactly but I assume it's around there), and I've already borrowed $185k, that leaves me the ability to borrow $215k more. Assuming I am putting in a 20% desposit for a $400k house, that means technically I should be able to purchase a maximum of 3 more houses.
That would mean i have one house to live in, which I'll use purchase using Capital Growth criteria, and then 3 investment properties for positive cash flow.
What I would like to do ultimately is to use trusts/companies so that I can purchase more than the 4 properties as mentioned above. After reading Steve McKnights book, which says by using trusts and companies, you can continuously use your maximum borrowing capacity for every house should you setup a trust/company structure.
I would like to do this, but I don't really know how to go about it yet, nor know how much a trust/company structure would even cost for my case!!
One step at a time I suppose…But then again, it says in the book, if you've already purchased a property under your name, you can't really do this trust strucutre because your borrowing capacity for every property will be lowered due to your current loan. Which makes sense.
But I guess worst comes to worst, I can alway just sell my house, build my trust structure with a full borrowing capacity, and then start to buy houses again?…
So many different ideas and strategies….!@!!
Well, the impression I got from some of my initial readings and learning was that it is important to voluntarily pay your principal at all times because it reduces your interest significantly, and shortens the life of your mortgage exponentially as well.
As I mentioned, I have $185k owing, and I refinanced the house with another bank, which the minimum loan was $250k. So at the moment, I have got a loan of $250k, but I have $65k (250-185) in my offset account, which is equivalent to having a $185k loan.
I guess I could use this $65k as a deposit for another house? But it'll only give me 20% deposit of a $300k house, and well…You can't get many houses with $300k!!!
Kind of confused now… … haha. Any help would be great!!
Scotty.
Hi Richard,
Thank you for your reply. I don't fully understand the purpose/benefit in your suggestions! Realestate is farely new to me, so you'll have to help me out with abbreviations and yeah… Why only pay the interest? 100% offset account? Basically I have turned my mother's savings account into our offset account, and i have a separate savings account.
Your suggestions sounds like a great suggestion but only if I could understand it better!!!
And as for moving Sydney number 8, haha, I actually preferred Melbourne!! I thought it had a nicer atmosphere than Sydney…But maybe that's just me haha.
Hi Richard,
The house was bought under my mother's name over 5 years ago. Because of this, we went with a private finance company, who we thought we weren't getting the best service from. She initially paid interest only, but about 2 years ago, started to pay both interest and principal.
Now that I have graduated uni and got myself a job, I have refinanced the house with a bank, and the house is now under both names. I am currently paying both P&I.
My salary is currently just above 90k excluding super.
Any extra advice would be much appreciated.
Thank you
Hi Andrew,
Sorry, I must have misinterpretted what I was trying to say. I bought the house for $210,000, and got a 95% loan at the time.
Now the total of the loan has gone down to $185,000, but the house was actually refinanced a month ago, whereby the value of the house was deemed to be $430,000.
So that's what I meant when I said the house is now worth $430,000, with a mortgage of $185,000. And I thought equity was what the house is worth minus what you owe, so that leaves 430-185=$245,000 of equity?? Maybe I'm wrong…and my LVR seems to be 43%…??
What are your thoughts? Does this make sense?
Paul,
Thank you for your input!
Yeah I am definately going to see accountants and planners before doing anyting with my money.
And I will definately ask around in this forum for good financial planners. Especially after all the news articles with commission based planners and so forth.
I have read Steve McKnights book on Vendor Financing, but because deposit isn't an issue for me (because of my high equity), I would've thought it would be more beneficial to just try purchasing a place if I don't want to rent??
Sonya,
That's a great idea. It's so difficult to try buy a place at another state when you can't stay there for very long!!
I went there for 5 days last month and loved the place. But renting will be a great option to suss the place out, and seek the right suburbs.
As for friends and family, I'm not too worried about that right now. I just want to go there early next year!!
Thanks again for your advice!
