Hi Property Jockey

Might I suggest you simply wander in to your local bank and have a chat about refinancing in order to buy an investment property.

As TerryW has suggested, you may qualify for a few hundred Ks of extra loans.  Borrowing the limit to what the bank may offer is probably not a good idea, but yoinking $50 K or $100 K and using this for a deposit on an IP might be worth exploring.

Do some sums – if you buy an IP, what is the likely rent ?  How far will this rental income go towards paying the interest on the loan you take out to buy it ? 

Are you prepared to pay the difference between the rent and the loan repayment ? (ie negative gearing.)

Are you prepared to not eat takeaway food every week in order to meet this gap ?  Can you give up beer / red wine for a year or two or three while the finances are a little stretched ?  Can you bring lunch to work everyday rather than buying it ?

Can you borrow, say, $50 K more than you need, and slowly use this to drip feed into the other repayments to cover this gap between rental income and loan repayments for a few years while the rents catch up with the repayments ?

If yes, then go for it.

If no, then perhaps Terry W's original comment might be correct…..

It is surprisingly easy to buy an IP with a full time job and some equity as you appear to have !!!

Good luck !!

Thanks,

BDM.

It might be worth having a chat to a mortgage broker (or two).  As they deal with numerous financial institutions, they are in a good position to find "the best deal" – fees, interest rates, terms, etc.

There are several brokers on this forum who are likely to offer their services…. maybe have a chat with someone here (check their signatures), or wander in to your local Mortgage Choice outlet/office.

Good Luck

BDM

Hi Annare,

Perhaps this might be an opportunity for you to help educate the Property Manager ?

You mention that Property Management is new to him / his agency.  Ray White have agencies all over the place, so the infrastructure, systems and support for the Property Management side of things is well and truely set up.  It is just a case of your agent using the resources available to him.

Maybe hit the Ray White website, and find all the details about property management in Qld….. I'm sure it will all be there.

Send the link to your agent !!  Suggest that he might like to go and have a look at the place and check out any issues (like cockroaches, damage, broken stuff, dogs, etc).  He might charge for this, but that's not necessarily a bad thing.

Ask him, in his opinion, is the tenant carrying on like a pork chop ?  Or is the tenanant justified in their requests ?

I agree with TerryW – sounds like you have a "complainer".  There will come a point when you may need to say "no".  If they complain again, as long as it's not a vitally important request, tell them they are welcome to move somewhere else at their expense….

Hi Slippy / Sean,

This is certainly not fincancial advice but…… (end disclaimer)…..

Selling the unit to your wife is probably not the best idea – it will trigger capital gains tax, and you'd lose any depreciation / tax deductons that you claim if she does not have an income as such.

Sounds like some budgeting may be necessary – are there any ways to "save" more or "spend" less, so that repayments are not so much of an issue ?  Do you know how much your life actually cost s, so that you can paln accordingly ?

Have you fixed the interest rate (and have an interest only loan) ?

Perhaps it might be another idea to consider moving back to your unit and renting out the house ?  This would effectively reduce your own personal input into repayments – the tennant and the tax man would effectively be paying more.  While this idea is certainly not sexy or glamorous, it will make a big difference in your month to month cash flow. 

You have experienced some good growth on the unit over the last few years, and probably have also in the house over a short space of time.  I'd try to hang on to both properties and try not to sell either at all if possible.

Perhaps the house renovations might need to wait, or perhaps be staggered.  Sounds suspiciously like the whole "delayed gratification" thing may need to be discussed !!

I hope this helps,

BDM

Hi Ray,

You should get it as soon after signing the contract as is practical – ie straight away, or at the latest the next day, and do not wait until settlement.  The "settlement period" is kind of a grey area in-so-far-as ownership is concerned.  It's not yours yet, but it will be, and while the vendors still have possession, they have effectively agreed to sell it to you, (and thus have probably lost interest because mentally they no longer have any responsibility and are just killing time until they get their money).

If there was an issue – a fire or what ever – it can get complicated.  For the cost of a couple of months of insurance it is not worth the risk.

Thanks,

BDM

Hi Lukis,

As already mentioned :

"This offer is subject to Finance suitable to the purchaser".
"This offer, unless withdrawn earlier, will lapse at 5pm on -insert date here-"

In the example you have mentioned, I slo would strongly recommend checking out the Body Corp – meeting minutes, planned expenses (such  as fixing the pool), sinking fund status, etc.

I hope this helps,

Thanks,

BDM

Hi Danish83,

"The correct structure" can also be likened to "how long is a piece of string ?"…..

What is correct for you could be very different to someone else, and vice-versa.

However, in my opinion, your suggestions are good ones.  In fact, my structure is similar to what you are proposing.

Separate loan and security for each property as a stand alone concept – good. 
Total LVR under 80% = no Lenders Mortgage Insurance costs – good.

Interest only loans, thus reducing the monthly repayments – in many ways, good.

I know nothing about ratebusters.  Are they a mortgage broking service ?  If they are, then perhaps a suggestion might be to make it clear to them that you plan to use the available equity over time to fund further purchases, and see what they say.

Or, perhaps visit other mortgage brokers, and seek their advice.

Depending on many factors, including the company policy at the time, refinancing as you have suggested can sometimes involve fees / costs / etc.  Understanding this BEFORE you take out a loan will make life so much easier for you if and when you do come to refinance to release equity for another purchase.

Again, in my opinion, I think you are well and truly on the right track.

Go for it !!

Thanks,

BDM

Hi Hong,

The old "Chicken or the egg" question eh ?

I guess the answer to your question lies in what your plans are for the next few years… where are you going to live, what are you going to do, careers, studies, friends, partners, goals, lifestyle, etc.  At a guess, only you know the answer.

Either way, I reckon you should buy something.

How about buy a 3 or 4 bedroom Principal Place of Residence, you have the main bedroom, and you could rent out the other 2 or 3 in a share house situation ?  That way you get the best of both worlds…

As far as the FHOG is concerned, I could be wrong, but I don't think you would actually forgo the entire grant.  I'm not 100% sure of the exact details, but if you buy an investment property first, yes you loose some of the FHOG, but not all.  I am in Victoria, and I know that if you buy an IP first, you still qualify for the State component of the FHOG, but yes you do lose the Federal component.  I think it is similar in other states as well.

I hope this helps,

Thanks,

BDM

Hi Somewhereoverthere,

Depending on the relationship you have with your in-laws, it might be easier to go to your local bookshop and get a Do-It-Yourself Real Estate Sales Contract – and fill in the blanks.  They are usually in the same section of the bookshop as those DIY Will Kits….

Or, you can get a Contract of Sale from the Real Estate Institute in your state – eg http://www.reiv.com.au 
There will be a fee of sorts – sorry I have no idea how much…

Thanks,

BDM