Hi CRJ

Did you buy in Wagga as well?

We just had new tenants move into our Wagga property – I've been told they're a lovely old retired couple……which is reassuring.

Not that I know of – would make for a pretty dismal investment if that was the case

Haha, you have to love spell checker. On a completely unrelated note – I was sending an email from my iphone today – the autocorrect changed the clients name to Seaboat……

Hi Dean

OTP purchases can be higher risk/higher reward.

In a rising market, an OTP purchase can do very well. This is due to the lengthy time between exchange and settlement – during this period, your OTP purchase may have experienced some growth and could be worth more upon settlement – everyone loves instant equity!.

However, on the flipside, what happens if the market goes backwards and your left with a property that's worth less than you've agreed to pay for it? It's not pretty.

Banks will lend on OTP – no dramas there.

The deposit required is generally 5% (if using cash) or 10% if using a deposit bond. To be elligible for a long-term deposit bond, you'll have to demonstrate that you have sufficient equity within other properties. You can get a a quote for a deposit bond on the Deposit Power or Deposit Access websites. I think it was Deposit Access that requires less equity in existing properties.

Do a search on this forum (and some general googling) and you'll find more in-depth info about the pros and cons of this approach.

Cheers

Jamie

Hi Mentobe

I don't think the bus is going to be a hit. However, do stick around and tell us more about Wagga – questions do keep coming up about the HC areas and buying CF+ out that way, so it's good having someone on the ground who can answer the questions…..but in the spirit of the forum, it shouldn't have to be paid for.

Hi propertyboy

It might be best to call whoever regulates tenancies in your state. You could call a PM and ask also.

If they can't be "bothered" to may monthly rental repayments, get them to set up a direct debit and be done with it.

Cheers

Jamie

Hi Coach Garvin

Welcome to the forum.

It's a frustrating situation. If you're comfortable with shooting me an email with some more details I can make some calls for you tomorrow.

Do you have a mortage of only $25k or have you paid $25k off your mortgage? I'm just a little confused about the word "own" in the first sentence – I think you have meant "owe."

Yep, if you have that sort of equity at your disposal, then it's ideal. It helps you avoid mortgage insurance on your IP.

Small lenders can be ok. What are the particular issues confronting you with this lender?

That's good news.

That's not so good. No, it's not the ideal structure. Ideally, you want to keep your securities separate (uncrossed), in this instance, the lender is saying "sure, we'll give you the loan for that IP but we want to take your PPOR as security as well". Instead, depending on your current lender, you could do a "top-up" on your current loan for an amount that covers the 20% deposit plus purchasing costs. You can then go back to the same lender and say "guess what, I have this deposit, will you give me the rest of the money?" In this situation, the new bank is only taking your IP as security for that IP loan (not both your PPOR and IP).

Get a good mortgage broker that understands investments and save yourself the stress and hassle of setting it up correctly.

Not all of it, most lenders will only go up to 90% LVR and a large cash out like that, in the current lending environment, may not be a walk in the park.

It's there breakfree package.

I hope that helped.

Cheers

Jamie

Din's right – the beauty of negative gearing will reduce the amount you have to fork out of your own pocket. Make sure you grab a depreciation schedule and it might also be an idea to convert the entire loan to IO.

Cheers

Jamie

I think Richard might be posting from the otherside of the world (Europe) at present.