Forum Replies Created
- rb2011 wrote:Hi,
My mother has recently acquired half of her family home and wishes to buy out her sisters half of it. The propety is valued at $260,00 at the present time. She has no credit history at all and the bank has refused to lend her the remaining $130,000 due to her income. Is their any financing in Australia that would allow her to take the loan with the collateral being the house, with interest rate that would be reasonable?
Thanks.Your post indicates you mother has approached the bank directly.
Recommend she speaks to a broker as there may be other banks who are a little more friendlier. At the end of the day your mother will have to show she can service the debt. Is this an issue for your mother?
Pretty rough maths here people but for a new townhouse you are looking at approximately 66% of purchase price as being depreciable.
Is it worth spending ~$500+ damn right it is.
Another thread with a few comments
https://www.propertyinvesting.com/forums/getting-technical/finance/4335330
We bought our first HOUSE when we were working in the bush – rented it for a year, then moved into it for two years before reletting it for a further 10 years.
Sure it wasn't as good as it was when we left and I spent 7 weeks doing some renovations and general tidying up on it and then we relet it again for a further 9 months.
Looking back we had problems with tenants, property managers, maintenance, and so on but we sold it and used the profits to build our DREAM HOME (as distinct from the other property which was simply a house)
We would have done nothing different. The key for us was the house wasn't going to be our home and it was really only a stepping stone to something bigger and better in the future. We achieved this and the ends justified the means.
Our first PPOR to IP was a great launching pad for our future.
Hi Intrigue,
A buy and hold on a 60's property means the property will have to have something special for me.
If you are worried about the cracks get a full inspection done and consider a structural inspection as part of your due diligence.
I would also check all lights, electrical fittings and fixtures all work properly. Oven, all burners, extraction fans, etc etc
Then there is the plumbing – we had a house built in the 80's some years ago and had never-ending problems with the plumbing. Shower used to back up as roots had blocked the drain. This was an expensive fix. How to the taps operate, easy/hard to turn off, toilet flush OK, sink, basin etc all in good working order. What about the outside taps.
Anything 50 yrs old it is reasonable to expect there would be some cracking in the brick work. As the cracks only sound like they are in the mortar then it is probably just typical movement in an old building. Generally the weakest point is around window corners so it is probably OK.
More and more 'households' are well suited to two bedroom properties. Check to see how the vacancy rates for similar properties are in the area. The days of investors only buying 4 X 2s are long gone. We live in a different society.
Fees & conditions are negotiable despite some agents suggesting otherwise.
Terryw wrote:(ps welcome back Derek!)Thanks Terry – been awhile.
PS many of the bigger QS/depreciation companies work closely with the ATO so they are on the same page.
Your accountant basically only needs to open the report up and transfer the figures from one piece of paper to another. Makes life pretty simple.
Hi Frank,
I recommend you call a Quantity Surveyor – for around $500 +- they will provide you with a report detailing your claims for 40 years. This report will be more comprehensive than the builders report.
Money well spent.
Hi Fword,
That is pretty standard for most (all?) banks.
They do want proof of sufficient building coverage before they pass funds onto the purchaser. On top of this they also want their financial interest declared on the insurance policy.
Not that different to cars where finance is involved.
The key issue here is that in most states it is advisable to have building insurance in place often even before the loan is approved.
Yet definitely need it in Vic after unconditional stage has been reached.
Also recommended to have as soon as contracts have been signed by both parties. Might be a bit early but……………………<moderator: delete language>
True Scott – certainly an angle I hadn't considered.
Like most decisions we make they should always align themselves with the preferred strategy.
stoj wrote:Aim is to reduce strata costs on general maintenance costs like getting washers changed on taps in common areas. thank you for your helpSeems to me your focus is wrong and some re-thinking is required.
Sure strata costs can be a PITA but provided they are not excessive there are significant all round benefits to keeping the common & personal property well maintained and attractive.
Maintenance costs should be seen as an ongoing investment in your own property, irrespective of whether or not you are an owner-occupier or landlord the principle remains.
Be careful you don't adopt too much of a 'cost cutting' approach which leading to reduced increases in values and/or rent return.
As someone once said to me – you don't buy a car never expecting to send it in for a service. The same could be said for property – you never buy a property expecting things to go wrong.
Hi Maternic,
Auctions are a different ball game as Jac has highlighted.
By all means go to the auction but keep your hands in your pockets – use this one as a learning experience and then spend some time understanding the legal intricacies of auctions. They are different.
duckster wrote:I was reading the newspaper the other day and it stated 11,000 houses ($2.5 billion) had been foreclosed on in the last 5 yearsHi Duckster,
Going back four years or so I happened to hear Michael Matusik speak at a seminar in Brisbane and one of the stand out comments for me was the number of people claiming 'mortgage stress'. At the time (mid 2007) a survey indicated 17,000 people were claiming to be experiencing mortgage stress. At the time 17,000 equated to around 0.41% of all properties owned in Australia.
Keeping to one side the impact on the individuals foreclosed on for a minute – to me 11,000 foreclosures in a five year time frame is very good. ESpecially in the dramatic circumstances we have experienced since mid 2008.
Fast forward to the end the middle of 2010 and CBA produced a stress assessment of their loan book.
Excluding those loans which were mortgage insured only 0.2% of all CBA loans were considered at risk of default. The stress testing undertaken included rising interest rates to 14%, unemployment rates at 10% (similar to the early 90's when foreclosures peaked at 0.5% ) and property values declined by 30%.
Combined these are very 'extreme' stressors and to think only 0.2% (exc LMI loans) were at risk of default under these influences is somewhat of a testament to our banking industry (never thought I would say that).
The CBA report also made comment on the average LVRs of 43%, 70% of all CBA customers are, on average 9 months ahead in their mortgage repayments and other generally solid figures.
On top of this the RBA regularly reports the foreclosure rates are steady and haven't deviated much from historical averages.
A slightly different perspectiveHI Igino,
Was with the big four – I understand the limitations are still (as at end of 2010) in place.
I don't live in Melbourne so I am not across all suburbs.
For me you need to ask yourself the question why Melbourne again?
For what it is worth I suspect Melbourne (in general terms) has run its race for a while, especially given the good performances over the past couple of years. Don't be misled into thinking Hoppers Crossing was a standout when pretty much the whole Melb market moved to varying degrees. The question to ask is can it keep going?
For example Perth in 2006 was going gang busters and many property investors did extremely well. At the same time there were many people who entered the market too late and arrived after the horse had bolted. Some of these people are still hurting – particularly those who speculated and bought sub-dividable blocks but can not get finance at the moment.
If you look at other major cities over the past 10 yrs they have each had a 'pretty good' time at various times. In pretty much every instance the good times were followed by slow times. My scratchy crystal ball tells me the same will happen for Melbourne this time around.
Don't be afraid to look further afield – technology today makes going further away from 'home' a little easier than it was. Certainly due diligence is still required but it can be done.
Hi BelleStar,
Admirable aims and goals for sure.
A key aspect of being a property investor is borrowing money. This should be your primary focus at this stage.
Maximise your chances of being able to borrow money by establishing a savings pattern, ensuring you have no bad debts, haven't taking out personal loans and/or motor vehicle loans which reduce your serviceability, keep any credit card (if you need/want one) limits as low as possible and sweep them clean every month if you have a card.
At the same time make sure your employment is permanent and you are establishing a solid work pattern. Many banks and mortgage insurers get nervous about people who regularly change jobs or who are on casual or temporary or on trial.
You should be aiming for a reasonable size deposit approximately 10% + purchasing costs 5% and with some spare left over.
While you are doing all of this spend some time learning, learning, learning.
We have always used QS that actually visit and inspect the property. They are the experts and know what they are doing. Remote QS reports – meh.
Need to be sure you can onsell – otherwise you will be required to settle on the property.
This stragety was marketed big time to many investors who bought into Docklands etc in Melbourne 7/8 years ago. The early birds did OK – the latecomers got caught holding the baby.
Also look at the ATO website for general tax information relating to rental properties.
http://www.ato.gov.au/content/downloads/IND00237831N17290610.pdf
