Hi and welcome to the forum Josig. If you are looking for a Queensland based specialist investment property broker who is also a property investor I would recommend Richard Taylor. Richard is a property investor. I think is the most significant qualifier when selecting a broker ( if you plan to invest ). I see that Richard has also made a comment in this thread so you should have no trouble getting in touch with him. All the best.
Hi Bullen -in the spirit of sharing I would suggest to stay clear of relocating a home for a first project. There a too many potential problems to list. Once the building arrives there is usually a lot more renovation work than expected.
An alternative would be to buy a property below bank valuation and renovate. It will be much easier to finance. Budgeting the renovation will be more accurate as well.
Again – it seems all I am doing lately is agreeing with Terry when I come on this forum but with Mebank withdrawing from certain niches the are really of zero interest to investors atm.
This reply was modified 9 years, 2 months ago by Don Nicolussi.
The valuation question is fairly easy to answer. We do them upfront to determine the on completion valuation. I regularly see these value up. In some cases it will be difficult for a valuer if there a few comparable sales but if there are they will have no trouble at all.
There are so many variables. The projects are really just micro property developments. Some are done well and some are done very poorly and value accordingly.
The strategy is very sound.
The granny flat strategy is a tool to balance cash flow across your portfolio so that you can continue to invest.
Kieran – api magazine ( I am pretty sure it was them ) did a compilation of case studies on small developments. The numbers will be old by now but the percentages spent on certain items should be fairly consistent.
Also, on my desk right now, Australian Residential Property Development – Ron Forlee and Real Estate Development Principles and Process Mike E Miles. Both a good read with case studies.
Kieran – api magazine ( I am pretty sure it was them ) did a compilation of case studies on small developments. The number will be old by now but the percentages spent on certain items should be fairly consistent.
Also, on my desk right now, Australian Residential Property Development – Ron Forlee and Real Estate Development Principles and Process Mike E Miles. Both a good read with case studies.
Honestly, I think it really depends on your personality and mindset. Sorry if a non technical answer is not what you where after.
Some people will be able to remotely invest and others just won’t be able to cope with the lack of control and the additional complexities. To others it will be a breeze.
I was just looking a facebook page that nigel runs just yesterday. He has a lot of information and you can see the types of deals they are putting together.
I’ll add just one other thing that is also just an opinion. Unless you are planning to build a portfolio it is probably not worth while. If you are going to build a portfolio start as soon as you a certain that you know enough to ask the right questions of the people you are working with.
Benny – my vote was similar to today if the question is about the national average – nation median price. Looking forward to the next part of the cycle to be honest – a much better time for buyers.
This reply was modified 9 years, 3 months ago by Don Nicolussi.
Yes Griffo you can ( and well done for knowing what to look for as Terry said). I agree with all above but want to add why would you? If you broker is an investor it is going to be gut instinct for them to avoid cross collateralization and also avoid a one bank trap.
Is there any advantage to having equity when starting that I’m not seeing
Tiger, Well in short yes it really makes a massive difference. On the one hand the bank does look at your overall financial position. Assets and liabilities. The whole picture.
Sure high Loan to valuation ration LVR lending ( 95% investment loans ) is still available but having equity means that your finance broker will be able to structure a series of loans for you that do not involve LMI or lenders mortgage insurance.
* Some lenders use LVR to determine the rate they charge you – or the discount you can negotiate
* Yes your income will limit your borrowing but your equity will assist in helping you achieve a better loan structure, products and prices ( interest rates) and even fees. Your broker will be able to negotiate many aspects of what you end up paying. The stronger your position the better it is for you.
This reply was modified 9 years, 3 months ago by Don Nicolussi.
Absolutely not! I would look for an aspirational suburb next to and similar in price to your so called “dodgy area”. Some areas are just not great. Find your dodgy area and then look at places where people who live there aspire to live in (realistic people).Price will be similar and yields will be the same if you work hard and finding the right property.
Lets face it some areas are in decline. They have problems that can’t be fixed. Avoid and avoid. Some area’s a set to change with concrete plans for change.
Long story short, your spreadsheet is going to tell you around 10% of why you should invest in an area.The other 90% will come from contact with actual human people and research. Dig and talk.
You will win if the area people think is dodgy turns out to be a “hidden gem”. The only trick is you have to trust your gut and do it before the herd.
This reply was modified 9 years, 4 months ago by Don Nicolussi.
What to do if your valuation comes in low? I agree with the comments that in the majority of cases the bank assigned valuation result will be the same as the contract price. In fact, at loan to valuation ratios of 80% and in some cases 90% lenders will accept the contract price as the value and not require a formal valuation at all.
However, this comes with certain cavets such as property use, location and property type.
But what do you do if you are all ready to go and the bank valuation is low. First and foremost this is an issue that hopefully you have addressed before the purchase is unconditional. That is, your broker may have ordered and received the bank valuation for you prior to you committing to the purchase. This is available free with most lenders and for a small fee with others. However, if it is low you can a) form and argument about why it is wrong – some people will say this never work when it does work in strong cases but only if you have a very strong case or b) Simple go to another lender.
In all cases time is of the essence re valuations. You need time to dump and move on if you a result that is just plain out there.
Valuations are necessary to gain our finance but as investors it is important for us not to treat them as anymore than a tool for us to buy the property we need and to get out the equity we need to buy other property or in fact simply create liquidity pools that can be used as a rainy day reserve.
In niche areas of property investment valuations can be problematic. This is why you need to give yourself time and if using a broker give them the call early in the negotiation process to get your upfront valuation done. In rare cases real estate agents may stall access for various reasons in the early stages but usually getting your valuer through will not be an issue.
This reply was modified 9 years, 4 months ago by Don Nicolussi.
This reply was modified 9 years, 4 months ago by Don Nicolussi. Reason: having a lot of trouble on this keyboard
A few of the smaller lenders are moving to fill these gaps with the odd lender increasing LVR on investment loans. However, agreed that overall the changes are significant for certain investors with specific gearing requirements.
Redwood – suppose I am not really arguing or questioning the validity of gearing inside the fund. It’s just that I get that cringing feeling when you go to a bbq and meet someone and they start talking about their smsf and the conversation goes something like, “We’ve got one of the smsf things but I have no idea how it works, hubby bought some apartment and it will be finished in 2017. There’s supposed to be all these tax benefits and things.”
I just feel it would be better if people had a grounding in property investment to start. That is, be comfortable with how real estate works before they use it as a strategy inside their SMSF.
BM 17 – your question seems really just double checking your gut instinct – which is correct. Yes you can keep your loans separate at the one lender. No problem. However, with the structure you have now I am guessing that the reason you want to move is price or rate. Serviceability (or the way banks calculate what you can afford) will be slightly different across a panel of lenders. With multiple properties a consideration is whether the bank will use your actual repayments to calculate your affordability for a new purchase (or the refinance) or their assessment rate.