Forum Replies Created
- luke86 wrote:Better than my interest rate- I am paying 7.1% with Commonwealth Bank. But I have easy access to equity via Lines of Credit so I am happy with my deal at the moment. I probably should shop around for a better deal, next IP I will be talking to a broker.
Luke.
Luke you should look at trying to get onto Commonwealths wealth/professional package. I just spoke to them and I was on the same as you(7.1%) but they have put me onto the wealth/pro package and my rate is now at a 0.8% discount on the standard variable rather than the 0.7% that I was originally on. This 0.7%rate only lasts for 3 years.
The wealth package has an annual fee of $350 but it doesnt matter how many loans you have in the package. Another thing to mention is that there is normally a switching fee of $300 per loan but the bank is waiving these fees until June 2011.
Definitely worth a look.
One strategy that i have seen used successfully, (by my partner's father) is create as many incomes as possible from the property. things suchs as converting a bungalow into a self-contained flat, or splitting a 2storey house and renting out the top and bottom levels seperating are ways positve cashflow has been achieved by receiving more rent
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I would rather just go to the "Positively Geared Property" shop and buy one. Much easier!
haha…….Yes I am biased but that's because I know how good the REI(Real Estate Investar) tools work and how much time they can save you!
You are right, you dont have to buy in rural areas but the problem with finding +ve geared property in a capital city is that it takes a lot more time and your negotiation skills have to quite sharp. Same with adding value, it takes time, and money to get that rent up to a level that makes it CF+. How many many minutes, days, weeks, will it take you to find a +ve geared property in a capital city? I can find over 50 in a matter of minutes that are CF+ right from the word go.
Investar was designed to save people time and for those that may be time poor.
Buying CF+ in rural towns worked for one guy named Steve McKnight. You might have heard of him.
Corie
Hate to sound biased but the best way to find positive geared properties is using Real Estate Investar. I just performed 2 searches, 1 with a minimum rental yield of 8% returning 94 results and the 2nd with a minimum of 9% yield, returning 32 results. Even with an 8% rental yield you are doing well.
These searches combined took me less than 10 minutes and these searches were only in Oz. Real Estate Investar also allows you to search in NZ.
One thing to remember is that +ve geared properties are not your normal 3×2 houses in any capital city. They are often located in rural towns, mining towns or places you wouldn't go, even if someone paid you. You have to be prepared to invest in towns you may never have heard of if buying +ve geared properties is the strategy you want to pursue. But no one strategy is better than than the others, it all depends on what suits you best.
If you have a vision or dream then go for it and dont let anybody tell you otherwise.
Corie
Been having a closer look at the suburb of Reservoir and it seems to be a hot little suburb. Looks like the sellers have caught on to the fact that there are developments popping up everywhere. Not many properties on the market at or below the median!
Did find this one though. You have probably already seen it but seems to be the cheapest getting around.
http://www.domain.com.au/Property/For-Sale/House/VIC/Reservoir/?adid=2008559897
Because I am not from the area I dont know the zoning laws but have you had a look at some of the surrounding suburbs like watsonia and bundoora?
Corie
I did a quick valuation using pricefinder and for a block of 799sqm with a 3×1 weather board home un-renovated on Oconner St, Price finder estimates a price of 454k with a probable range of 391k to 517k. All the comparable sales looked very similar so I think 450k would be a fairly close estimate.
I dont know the area at all but I can see that Oconner St is about 4 streets away from the train station.
Azalea,
I think the Wembley/Glendalough areas are possibly some the best areas with a budget of 300k. Other good area where you can pick up townhouses for around 300k is Yokine, and even Bayswater. Otherwise you may have to look in areas such as Koondoola or Girrawheen.
One thing to remember is that while some of these areas are perhaps less desirable for you or me to live in there is still strong rental demand in these places. An investment property in not a place where you want to live, it is an investment and we need to try and remove any emotion from the buying process. It has to look good on paper before we worry about the way it looks or the stigma that surrounds the suburb.
Koondoola, Girrawheen and Balga are still only less than 15km from the city and have plenty of infastructure around them. They are not new suburbs. The other thing about these suburbs( as well as Glendalough and Wembley) is that the all fall under the City of Sterling who are committed to revitalising these areas. See article
http://fremantle.inmycommunity.com.au/news-and-views/local-news/423m-sought-for-city-centre-project/7576527/
Their website also contains a lot of useful information.Try not to over analyse. Perth is going to see some good growth in the next 12-24 months so my advise would be to get in sooner rather than later because if we have another boom, which is highly likely, then it will be too late.
Good luck!
Corie
Hi marq001
Yeah Margaret walks the walk and talks the talk. Her book – "20 must ask questions" is the bible when it comes to finding the right place to invest.
One thing to mention is that if you dont have foxtel you can purchase episodes of her show "Property Success" from her website for a small fee. In each episode she does a town spotlight on areas she believes are going to see good growth. some great info in there.One other group that may be worth looking into is the Active Property Network. This group can be found in most states and it is generally more a group of people who are interested in getting together with like minded people rather than people looking for mentoring. At each meeting there will be a few quest speakers of property experts from around the country.There is normally a small fee of $20-30 per meeting to cover the cost of the hall and refreshments. Well worth a look.
I frequently go to the Perth APN meetings and I look forward to them every month. What state are you in?
Corie
Hi Reeen,
I think what it comes down to is how much risk are you comfortable with? Sunshine and Braybrook are suburbs that definitely have potential and have experienced some great growth in the last few years like wise with Dandenong and Noble Park. I even think that Terry Rider had Dandenong listed as one of his hot spots early last year. But like you said, you would consider one over the other based on the risk involved. Often more risk means greater returns so you have to weigh that up for yourselves.
If you are looking to do some work on a property to add some value, and you are planning on doing the work yourselves then you definitely want to consider location because you dont want to spend to many hours travelling to and from your IP. If you want to do the whole subdivide and develop thing then you probably want to sit on the original house for a little while especially since it is your first IP. You can always do a little reno, add some value and in 12months get it revalued. With the extra value you add plus any capital growth, you may be able to borrow more money and look at doing your development.
As for the CGT, I think you will find it is the opposite of what you thought was the case. If you sell withing 12months you pay 50% CGT.
Hope this helps a bit. It sounds like you have done your fair share of research and sometimes people will just keep on researching because the fear of taking the plunge is too great. If you are comfortable with your decision then just do it. Its better to begin investing sooner rather than later.
Corie
Wattoette,
It is a liitle bit hard to say that "melbourne" prices were around $300 -400k ten years ago and still are now. What do you define as Melbourne? Richmond, Camberwell, Kew, Footsgray, Sunshine, Altona, Knoxfield, Boronia Ferntree Gully, Frankston, Seaford, Mornington? It is a little bit hard to compare inner city to northern suburbs to Sth East suburbs to bayside. I would be very interested to see any suburbs in Melb that were $3-400k ten years ago and are still the same today. Especially with the exceptional growth Melbourne has seen in the last 12-24 months
The rule that houses double every 7-10 years is not something that is written in stone, but history tell us that it happens more often that not. Some examples of this areSuburb median 2004 median 2010
Richmond $465k $880k
Boronia $258k $443k
Frankston $250k $410k
Altona $330k $616k
Ringwood $297k $558kThese suburbs are a broad range across melb CBD and you can see that in only 6 years most of them almost doubled, if not doubled. I believe that at the beginning of 2010 the median house price in melb exceeded that of Sydney at around $560k due to their exceptional growth. It is almost inconcievable to think that in another 10 years house prices may double, pushing the median in Melb or Syd to over $1M, but if trends continue the way they have this is what we will be facing. Who would have believed 10 years ago that the median house price in most capital cities would be around 500K or half a million dollars!!
Choosing the right suburb can see you double your money in less than 10 years. This is what makes a top IP stand out above the good IP's. People in Perth saw their property prices almost triple within 2-3 years from 2003 to 2006. Obviously the Perth market has been flat for quite some time now as the market has to correct itself but Im sure they will begin to see prices start to move in the next 12-24 months.
Hope this info has helped answer some of your questions
Corie
Yeah Paullie you are right, it doesnt matter where the money comes from, it depends on what it is used for. If you use it to buy a new car the interest component will not be tax deductable. But if you use it for an investment property the interest IS tax deductible.
As for the higher interest rate, it may be slightly higher like .2 or .3% higher. For the flexibility and convenience who cares about .3%. You should be able to negotiate a .5% discount at the moment anyway. Speak with your broker.
Corie
Paullie,
Sounds like you have a lot of equity sitting in your PPOR. If I were you I would be looking to take out a line of credit against your PPOR. I cant see why the CBA wouldnt give you at least 600k line of credit. The best thing about a LOC is that you only make repayments on the money you spend rather than the whole amount. In some situation you can use you LOC as a deposit and then borrow more money. Obviously you have to make sure you dont get yourself into trouble but a LOC can be very useful.
Hi Like,
Cant believe I am sitting around at this hour on Christmas eve talking property with strangers. Come to think about it, its not christmas eve anymore!
We have a good relationship with our bank manager and we have spoken with the guys down at Acceptance Finance and have basically got the same answer. Im sure there are some lenders out there that would lend us some money but at the same time we want good service(sounds like a contradiction when talking about banks) and competitive rate. I think patience is going to our best friend at the moment.
Corie
New Investor 01 wrote:One thing I need to better understand is borrowing power – for example, once we already have a couple of properties and want to buy a third (say), but of course our disposible income will probably be down to $50k/year since we'll occupy one of the properties. If the 3rd property will provide positive cash flow, does that necessarily mean I will get the loan? From what I understand, banks only take a portion of rental income into account when assessing risk.
Liv,
Just because a property is CF+ does not mean you will get the loan. The banks will only take 70-75% of the rent into account. If they are still CF+ after only accounting for 75% of the rent then you are doing really well and they may just say sure have some money.
My girlie and I have just bought property #6 and although most of our properties are CF neutral we are basically maxed out. We know we can afford more but unless the banks change their lending criteria, we sell a property or find some equity we basically cannot borrow any more money. You mentioned that your disposable income will decrease and this will make your situation worse.
If you want to become full time investors you need to be generating income through your property investing. One of the easiest ways to achieve this is through adding value/reno's. It is not beyond anybody to be able to complete 2-3 reno's within a year and once you get up and rolling with all the right systems in place you can be doing multiple renos simultaneously. Before you know it you will be finding properties that have development potential and if you want to make serious coin from property then developing is where you want to get to.Corie
Marnie,
If you still want to find out what the last sale price of the property was I can tell you, assuming that information was made public. I have access to Price Finder. If you dont want to put the property address in the public forum send me a private message. It will only take me a few minutes to get the price.
PJ,
You are right about the article Charles presented. This is good news for Perth. There is an over supply of houses on the market in Perth and we are currently seeing Perth move into a buyers market and negotiating terms are good for investors.
When you talk about the correct strategy I dont believe there is a right or wrong. Different strategies suit different people and different situations. Many savy investors use more than one strategy. I believe in Perth buy and hold or adding value are the best stratergies. Unless you want to go to the mining towns like port hedland or Karatha and look at a CF+ strategy but this is very hard to achieve around metro Perth. You could also look at vendor financing and help people who cant afford their own homes but this stratergy is a bit more complicated.
Whatever path you decide to go down I think you should be getting your affairs in order because early next year around Autumn is going to be a great time to buy in Perth so you want to be ready before then. You might even want to look at getting some expert education to help you develop your master plan. I know Momentum Wealth in Perth have an education program and Damian Collins who runs it is a very experinced investor who knows the Perth market better than anybody. I have a good friend who works there so let me know if you want me to put you in contact with him and Im sure they could help you out even if it is just for a chat.
Good luck,
Hi engelo,
A friend of mine bought a property in Mildura earlier this year and he went up there twice to get a feel for the place. I think he knows some of the better areas. Maybe I can put you in touch with him if you are still up there. how long you staying for?
Dazz,
One way to fast track your search and maximise your time is to use a dedicated property search engine. With a good search engine you can look specifically for OTP, renovatable opportunities or positive cashflow.
Check out this link
http://www.realestateinvestar.com.au/odau/?a=SP30
If you have any questions about this I would be happy to answer them for you
Hi Johnny,
Good work on finding a +ve cashflow property on realestate.com.au. How long did that take you?
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