Probably not 🙁

The valuer can’t know if your parents did a reno (for example) before or after they left the property.

My guess is that your parents are now at the mercy of the ATO 😕

Hey mate,

All good, live and learn and you’ll be (more than) right 👍😎

Just one more comment:

JB wrote:

You are right Ethan I shouldn’t be disgruntled over not having enough of a deposit in the first place. In hindsight I should have A) Saved more for a deposit or B) Adjusted my budget prior to purchasing.

LMI is not necessarily a bad move! Let’s say LMI is 3% and you have only 5%. If you save 5% p/a it will take you 3 more years to get to 20% (this is taking into account that in addition you have the circa 5% purchasing costs).

So, in our example only if the market didn’t move up more than 3% in 3 years (…), only then it would have been a smart move to wait until our borrower has the magical 20%.

In a funny coincidence, I scheduled a post on our website talking exactly about that. It will be published Wednesday week and it was promoted from an expert advice I read in some magazine telling the borrower to wait for a few more years until she has 20% because “it’s important to avoid LMI” 😱😱😱

Hope this helps? 👍😎

Cheers,
Ethan

RMAA wrote:

We were told “market value” or potential sale price by our Local REA should be $520-$550k.

No offence to the RE agent but I wouldn’t count on their estimation of market value more than the valuer’s. RE agents many times state the ‘hope’ price which the market may or may not accept. In short, RE appraisal can be worthless. Lenders rely only on the valuation the valuer does. Even if you guys manage to sell it for $520k, the new valuer might say it’s worth only $460k so the buyer’s lender won’t give the buyer the mortgage amount s/he will be after either.

I personally wouldn’t buy for $520 something the bank says is worth $460, which is what you are considering to do? (Delay payment of additional $30k)

A lot of land = low CG. 2% p/a makes sense to me based on what you said and I don’t see the value jumping much in the next few years. Do you? 460 to even only 504 is 10%. That could take years…

I much prefer a property that I can manufacture its growth (reno, subdivide etc). It’s a much quicker way to build wealth IMHO than the good old buy and hope.

Going back to the RE appraisal:
would you be happy to sell for $550? If so, why not put it on the market? Either it will prove to all parties that the RE appraisal isn’t worth the paper it was written on (poor trees…) or everyone will be happy and full of joy by selling at 550 or $500+ And use their funds elsewhere where they can return a higher yield.

Bottom line: there are a few options but nobody knows which option will pan out to be the best. The choice is up to you guys.

Will be very happy to hear how this matter progressed and resolved.

Best wishes,
Ethan

Tyzzer1983 wrote:

Do you or anyone else know a really good broker or financial advisor in Perth that I could discuss some ideas with.

Colin Rice is from Perth (I don’t know how to tag here, sorry).

Richard M wrote:

Hi All,
I have got 2 properties currently cross collateralised into one loan. I have had this loan for 3 years and a significant amount of debt has been paid off leaving me with about $100k of equity. Moving forward I am looking to do a few property trades with some capital i have saved up to help reduce my remaining debt to zero. My question lies in the following. I want to maximise my finance position to ensure that i can proceed with the property trades (reno’s and subdivisions). The two options are as follows:1. Leave the two properties cross collatoralised and borrow against the equity built up, use my cash reserves ($30k) to fund the property trade2. Pay $17k into the loan (leaving $13k cash reserves), unembcumber 1 property security leaving the remaining debt on only one property at 80% LVR. Now use the unencumbered property as a single security to draw down equity for a loan to complete the property trades, or3. Anything else that you bright people can think of beyond my knowledge
All help is greatly appreciated. Though i like the idea of owning my first investment property outright it will defeat the purpose of unencumbering if i cannot maximise finance to move forward.

Generally speaking, I prefer my loans as ‘stand alone’ for maximum flexibility. That said, some lenders provide better terms if you cross with them so in your case, I would probably sit with a great broker and run the numbers in various scenarios. Then you should be able to make an informed decision 👍😎

Hope this helps?

Cheers,
Ethan

Sam Diamond wrote:

Hi Ethan,
Sorry, I didn’t quite understand this strategy. Can you please elaborate?
Thanks,Sam

Hey mate, my comment wasn’t so much a strategy but more of a warning. If the contract you have with the developer says that you need their approval to on sell, then the developer may not agree, especially if they know that you are not in a position to settle and that the market value at that time is higher than the agreed price.

I guess my bottom line is this: if you plan to on sell, I suggest you make sure you can do it (written in the contract) without relying on the developer to agree to do it.

Hope this helps? 👍😎

Cheers,
Ethan

San wrote:

Hello all,
I am looking at a property close to CBD in Adelaide and there is an house 300 m away on the same street rented to housing commission. Will this affect the value or turn away tenants? Does it make it a wrong investment?
Thank You in advance.
regardsSanthosh

I could be wrong of course but if it bothers you, it could bother other prospects (tenants and buyers down the line). I know it would bother me enough to investigate more in depth. It’s not necessarily a wrong investment (especially if it’s reflected in the price) and as Corey mentioned they are being sold off by the government so that could also work to your advantage in the future 😉

Sorry can’t help with a clear yes or no answer but hopefully the above helped anyway? 👍😎

Am interested to see what members will think. If I were you, I would probably discuss with my solicitor and the local council.

Nobody knows really. Why waste time on loose theories about an unknown future (and if there is one thing we know about Trump is that he’s unpredictable) 😉

dtrain28 wrote:

Just wanting some advice regarding selling it.Should I try and sell it currently tenanted? or wait till the lease is up do some touch ups and then put in on the market? my worry is how long it would potentially sit on the market & therefore not be bringing in any rent.
Cheers,

I can’t comment on the local market over there but generally speaking I would prefer to vacate the tenant, do a Reno and thus increase the sale price. If the property won’t sell relatively quickly, then I would consider putting a tenant in on a month to month basis.

Hope this helps?

Cheers,
Ethan