I wouldn’t pay the apartment down any further. Instead place these funds in an offset account to be used as deposit funds for the townhouse. I assume otherwise the full deposit amount will be drawn from equity, meaning you have a minimal deductible debt and maximised non deductible debt – not ideal.

Settled on a property which is currently being renovated, another property under contract which is settling in 1 July (another reno project).

Chugging along as usual. :)

There’s three other units in that complex available for rent at $310wk including the free rent, so that’d definitely be the ceiling for rent, most likely lower to get it tenanted.

The strata units are always deceiving when it comes to yields, especially in certain locations such as QLD with their high Body Corp and council rates.

Try to estimate how many hours you would spend a year chasing up problems, understanding current tenancy laws etc vs. how much you will save.

I personally don’t self manage any problems for this reason! :)

I completely disagree. :)

This leaves little flexibility and causes potential tax issues moving forward. A more appropriate strategy would be to have an Interest Only mortgage with full transactional offset. The same reduction in interest applies, however you can access that increase in funds for both investment and personal usage. By paying…[Read more]

If you sell out of the assets at sub 7% yields, what would your plan be from there?

I’d say the opposite re; 6% yields, unlikely to be CF+ in the short term, but long term growth will make the investment CF+.

If it’s a topup of the existing loan it would increase to 270k. However in the case of a PPOR, you would generally setup a separate equity access with a balance of 30k.

Generally the main issues people find with display homes is LVR restrictions + insurance issues. Not to say they are all lemon deals, but there certainly is a reason why the yields are provided as high as they are.

Some of the deals I’ve seen with them however have ‘make-do’ clauses, where they repaint, refit carpet etc too at the end of lease,…[Read more]

Bank policy isn’t always logical, which is the bane of many a brokers existence. In the end they are the king makers however, as they control the money and the rules.

Risk matching obviously tells certain lenders that reliance upon rent is a higher risk factor than a salary, likewise AMP believes owners with 10+ properties are a higher risk to…[Read more]

With the pool and public facilities, I wonder how much of that cash flow is lost to strata?

So long as you can meet the lending criteria, I can’t see what restriction you may have. If you have sufficient deposit funds and serviceability, you just need to add a suitable property into the mix and you’re on your way.

Will you be investing in an IP by yourself, or with your partner?

Be wary of affiliated brokers, as there have been many cases of the developers/brokers/conveyancers etc stitching up the buyer by skimming over issues (poor valuations, trying to stop clients exiting OTP contracts using sunset clauses etc).

It is much more beneficial that you enlist the help of independent advisors who’s interest is in serving…[Read more]

The issue is related to split contracts and the Australian Property Institutes view that there is a $0 value to land with common walls/construction until it is completed, as it could not be sold into the open market. This would be the stumbling block which the purchaser would be facing.

As such these forms of developments are being sold on as…[Read more]

Lenders look at base income as the most reliable form, with bonuses, overtime etc being treated differently by various lenders. Bonuses generally need to be shown over 12-24 months to be considered by most lenders as income.

As Jamie has suggested, if serviceability is tight, purchasing this as an investment property may get this over the line. If you haven’t already got a broker, I’d suggest contacting one, as they will be run through the plethora of scenarios and lender combinations which can be used to meet your needs.

Too many credit checks can raise a lot of eyebrows indeed. I’ve had clients who were originally using mobile bankers, who would put them through perpetual pre-approvals, applying for a new pre-app after each expiry. Add in a lender switch through the process, they had 6 pre-approvals over 12 months.

Needless to say the incoming lender for the…[Read more]

Deal of the week:

Purchase Price: $230,000
900sqm subdividable into 3 blocks
Rent: $440wk (duplex)

Gross yield of 9.95% – CF+ certainly does exist out there. :)