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There is an article written about this in this Feb 09 Australian Property Investor magazine comparing the two options.
You could surf the internet for newpapers.
see
http://www.propertyfinda.com.au/buy/residential/results/?category_id=1&ChangeSearch=1&state=QLD&SearchButton=Search&TrackSearch=Search&&
and
http://www.newspapers.com.au/townsville.html
and
http://www.domain.com.au/Public/ChooseRegions.aspx?mode=buy&state=QLDI am sure the floods will recede soon and your newspaper will be back soon.
Elliequinn, You need to start off with a small investment price wise so that you can pay off the loan and build up equity and passive income. The more passive income the less reliance on employment. It is hard to start and you will need a good deposit with a second tier lender. So the LVR is 70% or 80% you have to check with the lender and allow for stamp duty and legal costs.
In Australia it must be different to the USA and is probably prohibited due to the privacy act.
Usually it is a good idea to prepare before going to an auction. By having previously approached a lender to find out what is the maximum amount is they can borrow from a lender. This way they know what is the maximum they can bid and what the maximum the deposit will be.
I know I am stating the absolute obvious but you do not want to risk getting into a position where the hammer comes down and you have purchased a house and then you find you can't borrow the amount you won the bid at.
I have heard of some lenders that allow you to transfer the security on the loan from one property to another property.
So this allows you to buy another property and sell your old property without breaking the loan. .Press CTRL – ALT – DEL and select restart all will be solved !
I have been reading an interesting book called
What I Didn't Learn At School But Wish I Had
by Jamie McIntyreNarelle,
Mortgage insurance is done by a third party to the banks and there are two major insurers .It is based on the LVR loan to value ratio as to how much LMI you will need to pay. Unless you go to a non-bank provider who may self insure but usually the interest rate is higher.
When comparing interest rates you have to look at the real cost of interest when comparing loans – banks have to provide a comparison rate. (this rate takes into account the fees charged)
See if you can get a professional pack. Ask them if they will provide one.
Ask if you can get a discounted interest rate,
Ask them what early exit fees will be incurred.
Ask what the establishment charges will be.
Ask them what extra features are attached- offset , EFT cards, redraw, extra repayment, fixed term or variable.
Another trap you may need to know about is what value the banks valuer will come up with on the house you are buying !You may find using a mortgage broker useful for being able to check many lenders and comparing rates and fees and features and saving you racing around (make sure broker's fee is provided by bank rather than by you)
Get a re-valuation done on the house by the bank (costs approximately $400) .
You owe parents 300k plus 200k of reno loan. So 500k/700 (expected value) equals 71% LVR.
If you can afford a 500 k loan. May need to get a boarder in to help you pay off mortgage.Check with Parents . Do they need to have $300,000 up front from you?
May be Parents would be happy on a 100k payment plus a cash flow payment for the interest on 200K that is remaining until you can pay them the outstanding amount. (This is known as vendor finance and gives them some cash flow and some capital).If I could travel back in time 7 years I would have never gone to University and done a degree in Commerce. This resulted in me not being able to Participate fully in the last property growth due to low income and not being able to purchase in growth areas.
However having done economics at University I could detect the next downturn that was approaching and prepare for it.In the last 2 years I sold most of my shares when I detected the share market had changed and paid down all my debt except the HECS debt which I plan on never paying back until I get the job I was promised would help pay for it.
At the moment I am looking for employment as my daughters are going to kinder this year.I have enough equity to borrow once I get a stable job and I am expecting the next recession to really bite with increased unemployment which will force people to lose their houses as they will not be able to afford their mortgages, car loans, personal loans, equity loans or credit card debts anymore.
Another thing I did was I changed the superannuation that had most of my money in it to conservative when the previous stock market crash occurred as they were losing 10% a year when I was making 25% a year in the stock market. So when the market crashed this time I have retained most of my super.
The world of yesterday has gone ( living beyond your means, buy now pay later.)
One thing I have learned is history repeats itself, this current turmoil is 1992 repeating itself. As I was working then I remember the unemployment, property price drops, high interest rates and high oil prices (Gulf war)
96% of the population will once again live beyond their means when the economy turns around again and once again recreate the required over borrowing to bring a halt to the great times that will reoccur again.
Don't forget that a new generation will come into the work force that has not experienced this down turn as well.What you need to consider is how much the property is costing you to hold it each year.
Say your rent is 17940 a year and the interest costs are about $26,000 (guess) then you have to find about $11,000 a year assuming $3000 a year for extra expenses.
4 years * $11,000 = $44,000
Say another 4 years without growth = $44,000
say 30% marginal tax rate . $61,000 out of pocket expense taking 30% tax claim on the 88,000 over 8 yearsSo you need to make $380k + $72,000 = $452,000 taking capital gains tax into account at 30% plus 50% discount in eight years
time to break even. this is about 18% growth
IF the market turns around this could be achieved but I do not own a crystal ball so I can't predict if this will occur and if so when it will occur, so what you need to consider is can you afford the cash flow cost of $11,000 (or whatever this figure works out to be) a year hoping that the market changes over the longer term time frame of 4 to 10 years.If you sell it you can carry the capital loss over to use against the next property that hopefully makes a capital gain in the future for you.
But if you are selling it, you will have to make up the difference up between the loan amount and the proceeds from the sale if less than the loan amount balance.
What also may need to be considered is if the bank will accept the LVR of the loan increasing as the value decreases.What also has to be considered is the property falling in value each year or has it stabilised with zero growth at the moment or will it fall in value next year. (consult with your crystal ball as hard to predict )
I can't give you specific financial advice as I am not a licensed financial adviser but rather I have given you a way to tackle and assess your cash flow and for you to decide if you can afford the cash flow loss each year.
I live in Forest Hill Vic and my neighbors wanted $510,000 for their house and only got $410,000 at auction so it really is the state of the current property market cycle at the moment. You could put it to Auction and get the same result or worse get no sale.
If I was you I would make enquiries with a mortgage broker
see for some examples of possible banks that lend commercial
http://www.ingdirect.com.au/home_loans/home_loan_products/commercial_loans/priority_commercial_mortgages.htm
http://www.bankwest.com.au/Business/Business_Loans/Fixed_Interest_Commercial_Loan/index.aspx
http://www.membersequitybank.com.au/business/business_finance_solutions/commercial_loan.htmlA mortgage broker might be a way to have access to many lenders that the broker matches your requirement with the banks requirements.
As some of the above mention links do not specify LVR amount.There are Mortgage brokers who regularly post in this forum go to the finance section and check out their postings.
see
https://www.propertyinvesting.com/forums/getting-technical/finance/4326254
https://www.propertyinvesting.com/forums/getting-technical/finance/4326919
https://www.propertyinvesting.com/forums/getting-technical/finance/4326895
https://www.propertyinvesting.com/forums/getting-technical/finance/4326813The banks usually deem multiple dwellings over a certain number as commercial I think the number may be over 4 dwellings but I can't remember and it may vary from bank to bank.
see this forum posting below
https://www.propertyinvesting.com/forums/property-investing/help-needed/20407?highlight=commercial%2Cloan%2Cmultiple%2CdwellingI have a bank account that the rent goes into and then I just log into the internet banking and schedule the repayment to the amount required for the mortgage repayment. I can even do payments into other third party bank accounts.
Knowing the tenants makes it hard if they stop paying the rent and you have to evict them.
Property managers also handle dealing with the tenants tribunal when eviction is required.don't forget if you make a capital gain in NZ the ATO will want their tax also
haven't done it myself but some ideas you might not have thought about
Central Heating (keeps tenant happy)
Decking
Pergola /Decking
A nice shed (Every Aussie bloke needs a shed!)
An extra bedroom (by adding a wall – cheap option)(Green additions)
Water tank
Solar Panels on Roof – cheaper electricity
Solar hot waterand one I am currently considering as it will keep my tenant happy
Evaporative Air conditioning – low running cost for tenant – ducted into every room (low humidity locations only)
(summers in Victoria are getting hotter)it is not on the purchase price it is on the original building cost – hence why quantity surveyor helpful.
Approx time
2001 – 2005 growth in some area was 25% to 30% p/a
2005 – 2008 Slower rates of growth 6 – 7% p/a
2008 – 2009 Negative growth in some areasCouncil valuations are done every 2 years. So the house may have dropped in value since the last council valuation due to the current market conditions.
My next door neighbor wanted $510 for their house but only got $410,000 at auction. Look at comparable houses in the same area and see what they are either selling at or what the auction results are.Personal situations of the vendor can also change the selling price. Job Loss, Divorce, Bank repossession looming, need for 320,000 for another purpose, ect.
Like in Victoria in Corio has a lot of houses for sale because Ford based in Geelong / Corio cut back their work force..
