Forum Replies Created
From the information in your post I would sit on them. At the moment they bringing in rent and appear to be CF+. You have gained some capital gains to help fund further expansion of your portfolio.
As you said if you sell them you wont be able to do anything else, so you wont be missing out on a better opportunity.
As longs as they dont cause you headaches and they pay for themselves then keep them their to help boost rental income to pay for your next property.
I was going to type a long reply but will save my breath. I cant see this thread improving
Michael,
Just something a bit of topic. Assuming all brokers charged an upfront fee for the service and rebated 100% of the commission. How long do you think banks would keep commissions for?
If banks stopped paying commissions do you think that borrowers will receive a cheaper rate?
How many borrowers may go with the cheapest upfront fee and get into the wrong product for their situation?Depending on the size of the appartment it could raise some difficulties in securing finance or LMI. Also depending upon how many units are in the complex and the level of exposure a single lender or insure has may also raise difficulties.
This is on top of other issues with student housing. If you do a search of this site for student housing you will find a few threads. Some areas you may find you can only fill the accommadtion for 40 weeks of a year (the higher rent for this 40 week period dosen't look as flash when averaged out over a year)
I'm with Maree,
What you need to do is create a win-win situation.
The two issues that the vendor has is they need cash now for their business but if settlement occurs immediately they will be out of pocket for pentalty fees for the fixed rate loan.
Your issue is you dont want to pay more then $210K.
The agents issue is they want the commission from the sale.
If you find out what the amount of cash they need for the business and offer them that for the deposit. Set a settlement date when the fixed rate ends. The sale price is set at $210k. Benefit for vendor is they have cash now and pay lower fees breaking their loan. Benefit for you is you get the property at the price you want to pay for and by the time it settles you may have a capital gain. If it took a year to settle and a 4% growth it is worth $8k more at settlement which depending on your situation this could save costs on LMI if you have a high LVR.
Main thing is to find something that works for both parties. The price isn;t the only thing that can be negoiated.
Depends upon your timeframe. Worse thing when you go out and target a specific property, the vendor will know how much you are wanting to get in to it. You will then probably end up paying a premium. If you have a couple of local REA that you know ask them to keep an eye out, but some of them will then end up doing letter box drop/sending letter to the owner once again ending up in paying a premium. Find out when the next AGM for the body corp is, make general conversation with some of the other owners to see if any are thinking of moving on. Do regular searches of different property websites – set up alerts to receive new properties matching your critea via email.
Got to be careful of including utilities, especially when your not living in the building. Its amazing how many fan heaters, plasmas, computers, stereos, etc can be run at the same time in a 3 bedroom house. If you have international students coming from a "hot" country living in a cold state – fan heaters at $20 are a good option when they dont pay for the electricity.
Be careful of how you word the paragraph about falling 2 weeks behind. As soon as they are two weeks behind the bond is all gone – they probably wont care how much damage they do when moving out. They could also be very vindictive and move out as requested but also take all of your furniture and your landlords kitchen sink
Nowadays many tennants expect air-con. They have trouble remembering 10 years ago without it. I believe if you have happy tennants then you are more likely to reduce the amount of vacancy. Spend the money on a decent unit.
There are many different strategies used by different people. One of the advantages of 20% deposit is reduced lending costs. One of Steve's main aim's is finding CF+ properties, this is easier when borrowing smaller amounts.
Another strategy is to borrow the maximum amounts possible (nowadays still a cpl of lenders around the 93-95% LVR) borrowing the maximum amounts is giving you a larger potential for capital growth. This then enables accessing equity to fund future purchases. As the process continues your maximum borrowing in individual properties is reduced. If you have a PPOR and an IP its possible to get a 95%LVR on both depending on the security of the property, income, etc. Down the track lenders wont like you having 30 properties all streched out to 95% LVR. Here they acknowledge the additional cost of LMI but this is weighed up against the capital growth potential and future buying power of that additional capital growth.
This is why it is important to read up on many different strategies used by different people and then finding one that you are comfortable with. Borrowing larger amounts carries higher risks, you must judge if this will be balanced out by higher gains. Also some strategies work better in different climates. Some strategies are harder to finance in the current climate.
Lil,
If you redraw from you existing loan account then you will have a mixture of investment and personal borrowings mixed in together. Depending on your level of equity, another option is to take out a LOC credit secured on your PPOR to fund the 10%. This LOC can jbe used again to fund future IP's as equity increases. Depending on circumstances the LOC should be with your existing lender for the PPOR but you can use any other lender to fund the loan on the IP. Also consider setting up a offset account against your current loan on you PPOR – to reduce non deductable interest.
Regards
Linar,
Yes the leases had been terminated. This was in the days in Perth where 1 small advert in the paper was enough to get 10 people through a home open.
I agree with Linar regarding keeping the tennants happy. Small investments in quality appliances can save headaches down the track
Depending on the complex it may have a high number of renters, so if you place something into their letterbox then chances are the owner wont see it.
The problem is having both personal and investment loans mixed in one account, making it hard to account for the investment portion. If there was a seperate account then that should be fine to claim the tax deduction
Yes the PM may have 20 vacant properties on their books for that complex, but another may have 50 spread out between many complexes. When my complex settled the PM who had the majority of units available did a fairly large advertising compaign and most units were filled fairly quickly. What is more likely to be a factor is where your unit is positioned in the complex. Is it ground floor with a large couryard, top floor with views, near a noisy swimming pool or entrance gate, etc
Having the same property manager as the majority of others in the complex isn't necessarily a bad thing. My PPOR is a complex that has almost an identicle complex next door (same developer and settlement was 6 months apart) There is one property manager that was recommened to the buyers and many have gone through with that manager. I'm the chairman for the council of owners. Having one main property manager has made it quiet easy for us to ensure that lower quality tennants are dealt with quickly. We pushed to have a few breech notices issued for noise, using pool outside of operating hours, etc. This property manager is now quite aware that if tennants play up the council wants them dealt with. As a result this property manager is screening tennants quite well and laying downn the ground rules before they move in. Most of the issues we currently have are coming from units managed by REA who only have one or two in the complex
Alot depends on the current rental market,
I know of friends who going back a couple of years ago loved it when tennants wanted to break a lease – it was perfect time to up the lease. One such occassion original tennant paid up until Wednesday but final inspection done one the Monday and keys returned. The new tennant moved in on the Tuesday (number of days house empty minus 2) rent increased $80 and 6 months rent paid in advance.
Now this sort of thing is not going to happen in current climate – but put it back to them if they can secure a new tennant then break the agreement.
I think it also highlights the value of paying higher prices for household appliances – even when they are rentals. with a 1.5 star heater you could be having new tennants every year with a 5 star your tennants may stay on 3-5 years. How many weeks of vacancy would it take to equal the price difference?
Once you have been discharged you can apply for credit
Hi Gemma,
There are many different factors to consider, yes the financial side is one.
The time of the reno, what is required to be done, still working during this, current rental market, etc.
If you are living in the property and its a fairly major reno you could be having to put up with not having a functioning bathroom or kitchen for awhile, paint fumes, dust, can be cold during winter if replacing ceilings etc.
If you are both working during the reno, living in the house may make it more convieniant to do a little bit each day after work to save having to drive km's to your other place.
When you sell how easy is it for you to find another place to rent that is affordable.
Some of these decisions will be effected how long the whole process is.
Yiima,
Do you know why the vendor wishes to have a settlement this financial year? Are you aware of what the vendor will do with the property if it doesn't settle by 30/6/09?
Hi Yiima,
The delay is most likely due to the lender and not the broker. Chaning brokers most likely wouldn't make things any faster. As GOM said lenders are taking up to 6 weeks (in some cases longer). If they say you can get a loan on the website in 5 days i'm guessing the website is out of date or got some conditions attached. In the current climate it is important to allow for the delays that the lenders are causing when signing a contract. Prior to signing you should have all your information ready for finance and set a longer settlement date.
