Loui wrote:

Hi guys,
Are all banks now assessing servicing around the 7.50 per cent? Do they provide flexibility if your fixing in your loan say for 3 or 5 years? Speaking to my lender they said no. Also it’s ridiculous to think all investment loans are assessed at principal and interest and not on interest only if that is your long term strategy. I can understand home loans but investment loans? Looking forward to what we people think.

Hi Loui,

Yes, most lenders assess servicing at 7.25%-7.5%. There are differences between the lenders as to how they assess existing (and new) loans so it’s worth checking with a few lenders (or, better yet, a broker).

Yeah, the P&I assessment for INV is annoying but it does make sense. It’s a way to ‘stress test’ the borrower: if you can handle P&I and higher rate, you’re solid. As mentioned, not all lenders are the same but the idea is (APRA).

Hope this helps? 👍😎

Cheers,
Ethan

Max wrote:

Hi Ethan
Thanks for you message.I’m on a buy and hope strategy.

That strategy is honestly completely out of my area of ‘expertise’ as an investor.

Generally speaking, as I’m sure you know, the only way you’ll see a profit is if the local market where you’ll buy will rise and/or if you’ll buy under market (vendor that has to sell etc).

So, which area do you think will do better over the next x years that your strategy is aiming at?

Personally, I don’t have a crystal ball so I have no idea which of the three capitals will perform better over the next x years, not to mention which suburb.

Hope this helps and sorry I couldn’t help more 😕

dibektemir wrote:

Hi guys,
I am a little bit confused about collateral mortgage. I tried google it – it did not help. I would highly appreciate if someone shed my light how does it work.
So, we will have around $130,000 savings by the end of this year. We are saving up so we could buy a house in Brisbane. We have 2 options here:
Option 1 – save up, put it as a deposit – so we do not have to pay mortgage insurance;
Option 2 – buy an investment house in Tasmania, which will be mortgage free, and put it as a collateral for our new house mortgage in Brisbane. We will keep the investment property to our daughter (1 year old). I hope by the time she will be 18, the house will add value. It looks like better option as we end up having one more property ( which most likely increase in value over time) rather than we deposit to the bank in cash and it will be stuck there. In fact, in both cases it will ease loan insurance. Would be good if someone share their knowledge about the drawbacks& benefits of collateral mortgage. What option do you recommend? Thanks

Welcome, welcome!

Alright, so here’s what I’m thinking:

1. Each property needs to have value in its own merit. If, for example, the vacancy rates are high in TAS and you won’t be able to rent it out, you’ll be out of pocket on the mortgage of it.

2. Now, I know yo mentioned buying without a mortgage but the best way forward in such a case, IMHO, is to take an 80% mortgage on the IP (in TAS) and ensure you have a redraw facility (offset would actually be better) and park your funds there until you find your PPOR. Once you find it, you can take the funds from the IP to be used a deposit for your PPOR. This way the properties are not crossed.

3. Any available funds after the above should probably first go to offset the PPOR (as its non deductible debt) and once that’s done, offset the IP Mortgage.

4. Sounds like you’re after “buy and hope” in TAS. Is that also the case for your PPOR? I personally like to manufacture growth and enjoy the market instead of fully relying on it.

Hope this helps? 👍😎

Cheers,
Ethan

Anthony Zanatta wrote:

I haven’t spoken to anybody who actually does it – is anybody on these forums rentvesting at the moment?

Not at the moment, no, but that’s how we started. We couldn’t buy where we wanted to live so we invested elsewhere while we were renting.

Anthony Zanatta wrote:

I’ve been told that rent I pay to a landlord is tax deductible – I can’t find a single shred of info to prove this though, do I smell a porky?

Not all of it, as far as I know but generally speaking I would take accounting advice from my accountant, not guests at dinner parties or even forums.

Anthony Zanatta wrote:

2) Realistically speaking, will I be able to duplicate my portfolio based off capital growth of a single property alone??

Doubt you could find positively geared property that will come with a big capital growth but you could create that.

Anthony Zanatta wrote:

Before anyone suggests it, I don’t want to invest at below 80% LVR as that’s one of my safeguards I’ve put in place to combat possible depreciation.

Why would anyone suggest that?

If at all, investors may suggest to look at over 80%, not under.

Are you worried that property price will go down in value and you’ll be in negative equity for a while? Say that happens. If you don’t sell, no sweat. unless you’ll miss your mortgage payments, you probably won’t hear anything from the lender 😇

Hope this helps?

Cheers,
Ethan

Terryw wrote:

Mido wrote:

I sign th epre sale 2BR apartment in level 20 with good view, I think I’ve got good deal with price and time frame bcuz I can rent it easy with condition and location and clain it on tax

But will you be able to get finance to settle in 2019?

Too true.

And what will be the valuation in 2019?

Risky business IMHO

You mean you are dealing with the council yourself? 😱

I generally like pros doing their thing instead of amateur me doing it. Maybe consult with a surveyor or a town planner?

Good luck and happy new year!

RMAA wrote:

Have asked my accountant but have been waiting quite a while for an answer.

Might be time to change an accountant?

Excellent post, Terry! Thank you! 👍😎

Welcome, welcome! 👍😎

Agree with the above.

The main pros of trust are asset protection and distribution of profits while the main cons are costs, serviceability, waive of negative gearing and land tax from first cent.

The vast majority don’t invest via trust and the vast majority of them fair well without it, but anything can happen so ultimately its an individual choice.

This point nailed it right on the head:

Corey Batt wrote:

Overall I do see a lot of text book educated first time investors bring it up as it’s something they’ve read, but not a whole lot who are advised from their lawyers/accountants etc come out the other end setting up the structures as the cost/benefit isn’t necessarily there.

Most trust talk I see are coming from ‘about to be’ investors that the idea of a trust calms their nerves and makes them feel safer about the ‘risky’ business of property investing. I totally get where they are coming from (heck, I had the same ideas when I started 😂)

Hope this helps?

Cheers,
Ethan