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You need to do the research. I would be reluctant to direct a client to such an OTP property as a 1st investment. You would be better looking at more a boutique development of 4 to 20 apartments in inner suburbs, where once completed, you will have a mix of OO and Investors, where not literally hundreds of apartments will be coming onto the rental market at the same time etc.Lenders don't like the Southbank area and restrict lending, so borrowing is tougher, revalue and refinance strategy will be harder. It doesn't mean it won't work, it just means the probabilities are higher that it will be more difficult.
Good luck
GregRick,
I have just refinanced a client with a lender and they certainly discriminated on age (think little green dragon) as the clients easily serviced, no debt, one 55 and other 65, LVR was only going to be <50%. After many hoops (most simply ludicrous) they said they would not lend 1 cent. After threats of going to the discrimination commissioner, we negotiated for a facility of $120k, far less than they originally requested but sufficient. In retrospect the 55 could have borrowed in her own name for more than they finally agreed to. Just stupid.Be careful as some lenders have unwritten policies. I had run the scenario with their BDM who said they could do it and he was surprised at the rejection.
Most seniors over 65 can obtain a reverse mortgage if they need further funds and they own their PPOR. Whether it is worth doing depends on how much $'s they want. The NSW gov't concession on stamp duty will help people make the economic decision to downsize without the costs that existed previously. As mattnz said, it is intended for seniors downsizing and freeing up equity. If you think about it, it may push some from full pension into part pension as they then may have an issue with the assets test.
WRT off-the-plan, there is a section of investors that it can work for. In Victoria the benefits are significantly lower stamp duty, higher depreciation and potentially lower maintenance costs. In a rising market where the COS has been signed > 12 months previously, some lenders will allow the higher of valuation or COS price. This meant for one of my clients, he only put in $16k all up and ended up with a property valued at $410k at an 80% lend. The risk is the market moves the opposite way or you simply got conned by a sales marketing company and paid too high a price and valuation time, it doesn't stack up. Think Docklands.
The investor it suits is high income low deposit.
GregThey have a strategy that worked well for them back in the 90's when they started and finance was easier to get.
I had a client who I introduced to TIC and he purchased a property from them, but it was a second hand unit on Gold Coast (which is not their normal property type). He would not use them again. I am not a big fan of large house developments which they seem to specialise in, mainly in SE Qld.The commission issues is sometimes glossed over and they act as it is a volunteer association.They get paid by the developer. It may depend on how good the area manager is and who he has speaking at the meetings.
As was said before, it is an easy first time purchase and they do have their preferred professionals but do accept some buyers have their own team. They seem to have used some of the MLM industry tactics in building their following. The one size fits all approach is an issue that I have trouble with.
Good luck with it.
GregToyah,
Have you considered whether you can refinance and extract equity?I would look at freeing some equity and depending on your borrowing capacity, purchase again or do a development or renovation if any of the properties need it and the numbers make sense.
You can also then use debt recycling techniques to increase your available cash flow.
Good luck
GregEnzo,
It may simply be that you are going through the banks business channel rather than the residential channel.
They have different rules even if it is the same property.
For a 2 unit development, you should be able to use the residential channel for this and they will do 80% lends.
Good luck
GregI did some work for a client a little while ago, she had a PPOR with mortgage $277k and $170k in offset. We refinanced and set up a LOC facility for her of another $120k. She then got a loan with another lender to fund the purchase of an IP (loan $360k). She used $90k of the LOC to fund the deposit and costs.
The after tax difference in doing this was $17k pa she was better off than if she simply used the $90k from her offset to fund the deposit and costs of the IP.
It depends on your goals and timetable, but in my opinion creating wealth is about using other peoples money to invest in capital growth and income producing assets. If you have the safety nets and risk insurance measures appropriate for you in place, the return on your own funds can be very high.
Good luck
GregSlallen,
I agree with Richard, get the pre-approval in writing before you purchase.You appear to have sufficient overall equity to refinance but the difficulty is the 2 IP's with Homeside are already at 77% and your PPOR is at 76%, so not allowing much room to move. Refinancing at > 80% brings in the mortgage insurers and you need a reasonably strong case to get approval through to set up a LOC facility.
Homeside must have one of the worst back offices going around, perhaps due to volumes as they offer a decent rate. It was not clear that all the loans are with Homeside or just the IP's. If your PPOR is with Homeside, perhaps look at refinancing it with another lender but you will be limited to 90% most likely including LMI. You need to decide if another potentially $50k or so is enough to go through the hassle, then make sure if you do, you can borrow again for the balance if you are wanting to purchase another IP.
A good broker should be able to run these numbers for you and show you the outcomes.
Lenders look at income, debts and liabilities as well as credit files. As lenders funds are still limited, you need a strong case to present to obtain finance if you are in the 'just meets servicing' group.
Good luck
GregCBA must have the worst offset account available.
I agree with you, look to swap lenders for your existing property and set up an IO loan with offset and a separate LOC used just for investment purposes. Then use CBA again if you want to to fund the next investment purchase. In that way you can combine debt finance and debt recycling with the use of the LOC and offset to your benefit.Depending on your personal circumstances, this could be worth far more in after tax dollars than a slightly better interest rate or lower fees. I recently did this for one client setting this same structure up with their existing lender (fortunately not with CBA) and while they had $170k in an offset, we set up a LOC for $123k and using this method above, the benefit to her was $17k pa in after tax dollars by using finance wisely.
While you could possibly get a second mortgage for one property from another lender, it is messy and costly
Good luck.
Greg
Reid ConsultantsSalee,
I have attended a couple of their 3 days seminars. There is plenty of razz and daz but a significant amount of very useful information. At these events they also have speakers talking on investing in the share market to increase cashflow, some motivation type speakers, a couple of client stories. These are long events but worthwhile. They have a mortgage broker on talking about leverage and finance as well.They talk about what type of property and why. Their model is median priced flat/apartment generally 2-12 km, close but not across the road type property. It is about capital growth over the long term. They also discuss their financing strategy through debt.
I know they do some one day events and have a three hour seminar on soon.
Good luck.
