Forum Replies Created
Terry,
The example is good but relies on a falling market and the person wanting to sell.
What about buy and hold investors in rising markets like the last 6 years?If the plan is to buy and hold then CC doesn't look that bad an option if the only way to secure the deal.
As prices rises you should be able to change from CC to individual loan/set ups etc.Chrisb,
Buying out your sister sounds good. Then put the profit towards paying off your ppor. Minimal risk with sound investing.
Sydneyme,
Not necessarily irrational but more like frustration at seeing love ones and friends kicked out of their homes from greedy banks.. Put yourself in their shoes.
Maybe if investors stop trying to pick up these type of repossessions from banks then the banks might not be so eager to repossess and kick people out of their homes.
Linar,
I think they might be worried about a business deal going wrong and putting the family property at risk.
Why does it have to be sold?
Can you take a loan out against this property and pay out the other person and then rent the property?
You could probably save a few thousand dollars doing it this way.
What stops the bank from trying to recover debts from other properties you have with other banks?
CC just makes it easier for the banks but they can still go after other properties.harvest,
One of my portfolios is CC and I haven't had any problems with it.
There are a lot of negative comments about CC and it is mainly based around if something goes wrong the risk of losing all etc.
Lomas comments about the overall equity increasing is correct and can be used to acquire other properties very easily.I'm sure others will point out all the pitfalls of CC.
Risk factors can be a good indication of a persons financial upbringing and maybe the difference between you and your partner. Always good to find a medium somewhere or compromise.
Scott,
The banks are obliged too but it depends on what is offerred on the day of auction.
I've seen a few situations were properties have been passed in as they haven't reached reserve but then sold afterwards to offers between what is owed and reserve price.H,
Probably depends on what price they are selling it for.
boshy,
One needs to determine ones safety/risk factor to decide how to invest $150K.
For some this isn't a lot of money for but for others it could be all they have.
For me B&H positive geared is in the low risk category and why I advocate it more than others methods, although it may not bring the best and fastest rewards/gains.
You may be able to change the title to one name (under VIC law for no cost, might be the same in Tas) depending on circumstances put forward to the titles office. Normally separation or break up of relationship is acceptable but this may have changed.
Another issue that may occur is if the loan was taking out in both names with the bank. A simple letter claiming that your husband is still liable for the loan and debt should be sufficient for the bank. Otherwise they can review the loan and make you take out a new one.
Does the other person want all the money or would they be willing to take a percentage plus weekly/monthly payments etc?
You could be in a sticky area if this is a defacto relationship and even if everything is in your name they may be able to claim 50%.Also are you looking at borrowing 50% of the total price or 50% of what is owed on the property to pay the other person out.
If the property is worth 400K but you owe 200K then payout should only be 100K. Don't fall for the trap of paying out on the value of the property. You may want to work out how much each person has contributed to the property so far and pay out a percentage of that.$150K could go a good way towards purchasing 3 or 4 properties if you split the deposits up the right way.
(1)
I'm the old school of buy and hold (B&H) so would look at splitting the deposit to secure a few cash flow properties that would achieve reasonable CG after 10 years. This might not produce the best Cash On Cash (COC) return but you have spread the money over a few properties and because positive cash flow you are already getting some returns from your $150K.
(2)
Find 2 properties that you can buy out right and have no debt but immediate returns on your 150K.
Again maybe not the best COC return but close to hassle free investing as you can get that.Lets look at Pauls05 situation in another light.
If for example Paul owes 30K on a PPOR he could ask the bank for the extra 30K for possible future renovations on the IP he is borrowing for. If later Paul decides to not do the renovations and use the 30K towards paying off the PPOR then the interest could still be classified as a tax deduction as the main purpose for the 30K was to originally do renovations. The ATO may see it differently which is why one needs to becareful when doing this. If the rate that one borrows the money at is lower than the current 30K owed on PPOP then even if the ATO knocks it back you still have lower repayments.
Paul05,
You might find that your best option as previously mentioned is to be just up front with the bank about the extra money.
I don't know if assumption is the mother of all mistakes but do agree assumptions should be made very carefully.
$650/week does seem to be high for the sale price on offer 399K. Is this a guaranteed rental for a few years?
sydneyme,
Good question.
Theoretical on average these areas do go up in prices at relatively the same rate as other areas.
This then poses the question are the values of properties in these areas a true indication or have the properties been sold cheaply by the banks to recover their money thus causing prices to be marginally lower than true value.You can pick up bargains but normally at the expense of someones misery and not the bank who has foreclosed.
I've heard of people buying properties where the neighbors are either close relatives or friends of the person who had their property repossessed and have vented their feelings towards the person who has bought the house cheaply after wards.If the council won't approve then who pays for the problem to be rectified?
Glenn,
Good question but very hard for people to predict what will happen.
HB,
What are the conditions to the bet? If you out line some parameters this could be interesting.
Will it cover all of Brisbane and all types of properties?Who's valuations will be accepted to judge if prices have gone up or down? Is it overall property rises or one individual property?
It has been suggested that a longer settlement in an upmarket can help with LVR avoiding MI depending on when your loan starts etc.
