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60% LVR. Means they will borrow up to 60% of the value of the property. Actually I just got alow doc loan through ANZ with a 60% LVR and your right I did not have to prove my income . The rate was 6.7%, just as good as any full doc loan. It's going to be a flip so 60% LVR no LMI was fine with me. But the BEST thing was not going through all the hoops of a full doc loan. Low Docs loans are AWESOME! If you want 80%LVR then you need to pay LMI. A small price to pay for better wealth!
I've just got refi documents with me now and I am signing the declaration that I can afford to make the payments. The refi is with RAMS. Also, I do have a history with Rams, maybe that's why.
I have Companies, unit trusts, discretionary trusts & a SMSF but my last 3 IP purchases have been made in my own personal name. In my experience it's sooooo much more difficult to borrow under a Trust structure as there is limited Banks who will do it. All plain sailing when borrowing in my own name.
But you have'nt taken into account that the large deposit you put in could be sitting in a bank account earning 6% interest.
$342K @ 6.8% = $447pw + levies + water & council rates + management fees + land tax (if you own it in a Trust).I bought a 2 b/r unit in Coogee NSW right on the beach for $840K, did some reno's and it has been rented for $1500pw fully furn for the past 3 years. He just signed another 2 year lease. BUT, this was just plain LUCKY. Captial growth is AWESOME, just got valued at $1.3mil. But I have a place in Drummoyne NSW valued at $1.5mil and I'm only getting $980pw. Tried to get $1100pw but was empty for 3 x mths. Tis is all a gamble just like the stock market. No one really knows where the best deal is, just like no one knows the best stock to buy. If we all knew then we would all be megga rich by now.
$342K PP, Rent $370pw, negative cashflow!!!!
I would NEVER, NEVER put wooden floors in a rental. As Lesia pointed out, tenants won't fix damage as they consider it normal wear & tear. If you were to flip the property then wood floors look great. I put cheap carpet in my rentals. If and when I decide to sell then I will put wooden floors in.
I admit that I asked a mortgage broker who works out of Melb (Acceptance Finance) and he advised post code of Moranbah was no good to borrow for lo doc. Maybe because he is in Melb the banks are different down there!!!!!
Marisa – do you know what LVR CBA will do for lo docs in mining towns?
I ended up buying in Biggera Waters instead of mining towns, I'm a hands on investor and like to do all the managing myself so that's why I have not invested in Moranbah yet.
Mate I hear you, my valuations are all over the place. I had one value (ANZ Bank) at $1,150,000, a month later Westpac did it at $1,450,000 and I managed to refi with Rams – finally after waiting 18 mths to get finance. Tis is a financing nightmare at the moment, but it will all change – one day and the Banks will be cralling for our business again.
2 years is not a long time for your equity to grow, unless you did a reno. Don't believe everything you read and hear about property increasing in value every year. it's not as simple as that. On a wage of $70K, surely you could save at least $20K pa. Eat baked beans everyday if you have to. I remember when I rented a house for $20pw (it was under the house), my kitchen was my shower & laundry all in one just so i could save for a deposit to buy a property. keep saving your deposit as your very lucky to have such a good income.
I was very impressed with the conference, thank u Steve. It was a chance for me to meet with other like minded investor's and exchange stories and experiences. I did'nt buy any products as I felt I was not there for that. I just wanted to be whacked over the head by someone to help me feel that i am doing the right things in my life of property investing. I just made a phone call today and made an offer on a property that I had been stalling for some-time now because I was'nt sure where the market was heading. The 3 day conference gave me the confidence again of getting out there and taking the risk (good risk) again. Thanks
Apply for a low doc loan to finance it!
I say buy LOCATION, LOCATION, LOCATION. I have never cared about cash flow positive and I have been buying properties for over 20 years. Prime waterfront, harbourfront & beachfronts are what I call Location. The best value at the moment is in Maroubra. Prime beachfront 2 b/r units still selling under $600K, suburb next door, Coogee 2 b/r selling $1mil +. These Maroubra places will be $1mil in a couple of years. Only my opinion.
NSW has been flatline since 2004.It is due for a huge increase in properties (Sydney that is). I reckon properties will increase 15-20% in the next 2-3 years. 7% interest is still very very cheap money.
My dad worked his butt off all his life for the Government (Dept of main roads) and retired at 60 with $232K payment. He went on a 3 mth overseas holiday, came home and got cancer. Died 15 mths later. No wonder people want to retire at 40!
My ultimate goal was to retire at 40 — since retiring I now have 2.5 children age 3, 1 and another one on the way. I use to work 80-100 hours a week on my own business. Luckily I managed to buy 12 Investment properties that I purchased over the past 20 years. Only 3 of my IP are positive cash flow, the others are prime beachfront and harbour front apartments that gives me awesome CAPITAL GROWTH. I manage all my places myself which keeps me fairly busy. What I have learnt is that you can have all the money in the world, but no time (hence when I worked my business), or you can have all the time and no money (retiring on the pension). I like the balance of all the time and all the money. TIME is my rich! I love being able to pick up and drop off my child at day care, go camping whenever we want to, do whatever we want when ever we want, go overseas whenever we want, go on holidays whenever we want. Retiring does not mean doing nothing, it means doing the things that you enjoy in life. If you enjoy your work then essentially that's your retirement. Mine is travelling and watching my children grow up. I invested heavily in real estate and still am, but there is something I believed that has worked for me and that is when buying real estate the most important aspect is LOCATION, LOCATION, LOCATION. I purchased in prime spots in Sydney and yes while my cashflow is not always positive (a property I purchased 21 years ago is just neutral now – oh it will be negative after todays interest rate increase) I have managed to re-finance properties and put this money into an account and live off the equity. Also, you can borrow money but only as a low doc borrower.
Why not go for a low doc loan
That's the problem, i'm a low-doc borrower and banks won't lend on these post codes. I'll put in a call myself to the NAB in Mackay rather than go through broker. When I sought out the finance, I will only buy in Moranbah.
of course he is paying P& I. otherwise he will never pay it off!
great, thks for your help.
Thanks everyone,
The deal is that I actually have already loaned him the money 3 years ago, but his accountant is hassling me that I am charging 12% on the loan. The accountant says it's way above commercial rates. I beg to differ, so I just wanted to get other opinions on the matter.Just another thing, I loaned him the money $220K @ 12% and he pays $700pw (never missed a payment), do I declare this income on my tax returns yearly or do I wait until he has paid off the principal amount, then I declare the rest as income later on.
the reason i say this, if his business fails and he re-paid less than what i gave him, then technically I have earned nothing. Hope this makes sense!!!!
