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I like to look of this approach….hope it works out for you
Plenty up here in Brisvegas…there are further bargains even cheaper up here…mine is at Kingston, which is in the Logan area between Brisbane and the Gold Coast…I keep telling people its a gold mine…
No one seems to be listening though…Nah, old corollas are crap…
L.A Aussie wrote:Based on those figures you are going to be out of pocket $500 per month on your rent versus mortgage, and that is GROSS rent. You need to factor in around 20% of the rent to be swallowed up in holding costs.
This means you will be out of pocket around $700 per month (approx $162 p/w x 4.3 weeks), and you will have another loan amount on your new PPoR to service as well.
It is hard to work out your financial exposure/position without other figures such as how much income you have; in your case you will be paying a new mortgage on a new PPoR, and there is no tax relief for this new loan amount.Basically, the Banks will take into consideration two main factors (there are others, but two main ones):
a) serviceability
b) LVR.Serviceability is your ability to repay the loans you are considering. Some Banks take into account the rental income, and up to around 80% of it (some will consider 100% I'm told). As a general rule, without factoring in rental income, you should work on no more than about 35% of your gross income to be used for servicing all loan repayments. More than this will probably incur undue financial strain.
Of course, these days there are numerous ways to finance property purchases, and when the rent is considered the equation changes.LVR is the Loan to Value Ratio; how much you owe divided by how much you own, multiplied by 100. This is the percentage of your ownership, and generally most Banks won't allow you to borrow more than 80%.
of course, as above, there are different financing rules and policies for each lender. Some lenders will allow you to borrow 100% LVR. Personally, I think this is a very dangerous level of exposure for most people. Life happens and if things go wrong you could lose your house.A basic calculation to help you work out your own answer to the SERVICEABILITY question would be to see if your total loan repayments for the two properties will be less than 35% of you gross income including the NETT rent income added to it.
Then add the two loans together and use the LVR formula (loan/value x 100 = LVR%) to see if you are under 80%.
If you are over 35% and 80% then this is dangerous exposure levels in my opinion. The problem is there are banks that will say "yes" and give you the money, but they are not putting their house on the line – you are.
What he said…
I think there are many n00bs on his site…in the same shoe as you Barnsey…
A quote for you from my website:
"MEGA IMPORTANT TIP (linked to tip 4): The greatest risk is doing nothing! Full stop."
Do not be afraid young one, for the greatest risks is to have no IP!!!!
(I was looking for an appropriate emoticon, and found this: look at the little fella strum his guitar!!!!)Um, if you can renovate an IP, you can claim it on your tax. Renovating your PPOR is not very smart for a tax break…I know, I'm doing it right now!
But yes, it is one way to value-add, just pointing out that it would be better if it was an IP…
Hey Ken…you can't go worse then visiting my website for some simple, easy to follow tips. I've done some of the research, some of it you may find useful, some of it may be useless to you. You are 100% correct, do you research, read the forums, visit and talk, find a guru or a mentor. These will all add up to a successful purchase.
Good luck, and may the force be with you…
My car is a 1998 Holden Combo (a Barina with the van at the back, aka The Tardis) – excellent car for renovating. My missus's car (our "real" car) is a 2003 BA Falcon we bought last year from the govy auctions for $11,000. I swore I'd never buy a falcon again, but somehow, this is now the third piece of crap in my garage (j/k, its OK).
Vendor bids are bullcrap…auctions run this way are bullcrap…does not follow supply/demand theory. I've seen these on the telly and was just laughing at the stupidity of it all….setting a stupid reserve is like saying, want this house for $XXX,XXX? Waste of everyones time…phew, glad I got that off my chest.
Mortgage Hunter wrote:Why not both in your portfolio? Thats what I do. Simon Macks Residential and Commercial Finance Broker [email protected] 0425 228 985 Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.I read the first few posts…and finally someone has some sence to make this statement..congratulations….you are the winner in the "common sense" competition!
No one seems to be listening though…
(I was looking for an appropriate emoticon, and found this: look at the little fella strum his guitar!!!!)
