Forum Replies Created
Hi,
Also if you live in a strata complex you may need permision from the body corp. As above if its just you working on your own – no probs, but extra visitors or parking and this will raise some concerns in some complexes.
Regards
Gibbo
Without knowing more…run
Hi,
Not a lot that can be done to enforce the contract with that clause. The main thing is to learn from it and not accept a clause like that in the future.
Regards
Gibbo
Hi Jaq,
At best with a OTP, you may have a 7 day cooling off period but they do become pretty water tight once the offer has been accepted.
Regards
Gibbo
Hate it when when facts get in the way of a good story
Also what Terry has quoted is current regulations, not a bill that may or may not get passed in current form
Without a break fee, banks wouldn’t be able to offer fixed rates. Over a period of time the bank expects the fixed rate to balance out. If a consumer could get a cheaper fixed rate now and then change to a cheaper variable rate in the future without penalty…why would banks offer the cheaper fixed rate.
For some people fixed rates are an insurance policy for certainty. Others either take a gamble/educated guess on what rates will do. Sometimes they get it right and pay less in the long run, sometimes they get it wrong and pay the price (either higher interest rate or break fee)
The banks said the rates could raise, an agreement was entered into. To break the agreement, there is a fee payable.
Hi,
What a good broker will do is place your initial properties with lenders with tighter credit policies, as you borrow more then use other borrowers that have credit policies that allow more properties, take a higher amount of rental income into consideration, etc.
Regards
Gibbo
Hi,
As others have mentioned the broker will have to payback the commission. If you talk with the broker about what your aims are they can arrange a service fee to ensure they make money but a good broker should realise that you will become a regular customer in the future and help make it beneficial to both.
Regards
Gibbo
Hi,
Different properties will achieve different returns at different times through the property cycle. 8% rental yield is a great bench mark, but just because its not achieving that doesn’t mean its not a good investment. Definitely keep an eye on the property to see what you can do to be able to increase the rent charged but don’t try and cut back on other costs to achieve the 8% return.
To invest you need a good team of people with you – mortgage broker, property manager, accountant, etc. If you get the cheapest – the service may be lacking or the product/service they give you may cost you down the track.
A property manager can make a big difference to your returns. The amount of screening they do, ensuring rents are prompt and the effort finding new tenants soon after a property becomes vacant.
If you have a PM with two empty properties – both owners of a few properties managed by them. One is paying the asking price the other 1 or 2% below. One sent them a case of red wine for christmas the other rang to complain the rent cheque was a couple of days late in january when the office reopened from christmas break. Which property will the PM put more effort into securing a new tenant? Just one week longer vacancy would wipe out the entire saving of a 1% discount.
For most property investing is a medium to long term investment. Be careful of focusing on short term to much. Some people in Perth are getting people bidding on properties at present due to the rental market. I had a family member the other day being offered $20 – $50 a week more then what she was asking. The highest bidders didn’t get the property. The person offering $20 a week more is someone who will be long term and will look after the property as they know how difficult it was to secure this one. The couple of people who offered around $50 more are people were younger guys on the mines who were likely to move on after a short time and showed little respect for the property during the inspection (walked through with muddy boots).
Regards
Gibbo
Hi,
If it is your PPOR then you want plenty of capital gain as you wont pay any CGT on it.
Regards
Gibbo
Hi,
This probably is the opposite to what I posted on the thread about defense force housing.
Once again it is risk / reward. Mining towns are giving some great returns…but there are risks. Julia and Swanny love mines so pay for endless cash handouts to by votes. Some mines may become unprofitable overnight with a tax increase. I used to work on a lead mine that shut down due to regulatory issues. Events like this may change a IP overnight – loose the tenant, have the capital value halve and no bank wanting to secure finance to the property.
If you are to invest in a mining town you really need to do your DD. Is it more then one company that has mines around the town, how cashed up or those companies, what commodities are being mined, what’s the life of mine?
Regards
Gibbo
Hi,
What state are you in? I know of a labatory that tests for it in Perth.
Regards
Gibbo
Hi,
Like most investments it comes down to risk/reward. If you deposit $1000 in a savings account you will have $1001 in a years time. Someone on gumtree may offer to pay you 20% interest so potentially in a years time you will have $1200, but also possible to have nothing.
Defense force housing is the easy and safe option of property investing. Since it comes with guaranteed income they charge a higher price on the purchase which gives you a lower return on investment. Low risk/low reward.
Regards
Gibbo
Can normally tell which posts are on the tablet. Terry maybe time for an iPad
Hi,
With the various options
1) you will loose some tax deductability, but not a bad option depending on various circumstances.
2) BAD option, search the forums – plenty of comments
3) Redrawing the money off the existing loan will then contaminate the loan as it mixes deductable and non deductable loans into one. This is close to the option I list below.
4) Still be a 100% LVR even though there is the cash offset.With option 3 take your 80% loan as suggested against the new property but the other 20% comes from a new loan secured against your PPOR. That way the loan is 100% for investment purposes. Both loans can be setup as IO and you can have a cash offset account against one of them.
Regards
Gibbo
BB2012 wrote:I am not clear about the issue if the bank cross collaterise the new loan with the investment loan. Can you please explain a bit more?. Thanks for the help.BB2012
Hi,
When they cross collaterise your loan they will give you 1 loan for 100% but secure it against two properties. This can be avoided by having two seperate loans – 1 secured against PPOR and the other against IP.
When a bank cross collaterises a property it will tie you up with that lender for future borrowings. If in the future you wish to sell your PPOR you will need to pay for a valuation on both properties. If you fail to make repayments on your investment property the bank can choose which property they sell.
Banks love cross collaterising loans and when questioned about it will tell you its the best way and if someone says that cross collaterising is bad they will then tell you the way they have set it up itsn;t cross collat. It gives them more security and locks you in as a customer.
Regards
Gibbo
Plus he dug up a three year old thread so he could advertise on first post
Hi BB,
Welcome to the forum.
Drawing equity of $75k will take the LVR up to 91%, so you will then have to pay LMI for that as well. The ATO will look at what the purpose of the loan is for – being purchase of PPOR it would make the $75k non tax deductible. If you do go ahead with this ensure that they are seperate loans so not to mix deductible and non deductible loans together. Also contact a decent broker to ensure the PPOR and investment property dont get cross collaterised.
Regards
Gibbo
Unfortunately most OTP contracts are pretty water tight and aren’t subject to finance approval.
Hi,
You will find most likely the developer wont negotiate. I bought my current PPOR as a OTP during the property boom in Perth. Some little event called GFC happened between me putting ink on paper and settlement. I would of been down around $50k at settlement and it did continue to fall. There were a number of people who bought a $600k apartment with a $5k deposit. Many had ideas of flipping the property or having value increase so they could get a decent LVR to secure finance. About 20% of people failed to settle due to difficulties in finance or life circumstance changed in the 18 months (marriage breakdowns etc). The developer resold all apartments and where their was a difference in value they took legal action to recover the difference plus additional selling costs. I did hear of one that ended up paying around $100k in costs and they never even got their name on the title.
Depending on how many properties that are all ready for settlement at the same time and assuming the similar drop in value, the valuer may be aware more properties are going to be hitting the market, some with desperate owners wanting to offload their property. I would look at making contact with a broker to assess your borrowing ability and then make contact with the developer to see what options the can offer you, but as I mentioned don’t expect a price reduction. Best outcome maybe they defer settlement for 12 months and rent it to you during this time. Another issue that may come up under this proposal is stamp duty, depending where you are. In WA stamp duty is deferred until settlement or 2 years – which ever occurs first. If they did offer you a delayed settlement you may be hit up for stamp duty during that time.
Regards
Gibbo
