Hi julloumar

Are you seeing a financial planner or a mortgage broker?

Is this person affiliated with the property investing company?

Cheers

Jamie

Hiya

I wouldn’t say purchasing under a trust is the norm – in fact, I’m seeing less and less of it these days.

It has its pros/cons and is something you should speak to your accountant about before deciding as it will be dependent on your individual circumstances.

Cheers

Jamie

Cold calling property related company = run for the hills

Cheers

Jamie

Corey Batt wrote:

Too many credit checks can raise a lot of eyebrows indeed. I’ve had clients who were originally using mobile bankers, who would put them through perpetual pre-approvals, applying for a new pre-app after each expiry. Add in a lender switch through the process, they had 6 pre-approvals over 12 months.

It’s a crazy approach. If the lender has granted a preapproval previously, and providing there’s been no major changes with their financial situation, then applying for subsequent preapprovals is just silly. Even if the client is adamant they need a new one – the banker needs to explain to them the ramifications of reapplying each month or two.

Cheers

Jamie

I’m mildly obsessed with photography at the moment. I purchased my first decent SLR a little while ago and it’s turned into an expensive hobby.

Cheers

Jamie

Hi there

What do you require from a mentor?

There are paid services offered by hundreds of one stop property investing shops – which I’m personally not a big fan of.

The other option is to educate yourself via free resources such as this website, books, etc and surround yourself with excellent professionals (finance person, accountant, solicitor) who will assist in reaching your goals.

Cheers

Jamie

Chris wrote:

Thus, my next question if you have time to answer is; If I can generate equity in the IP through renovation or other means, what methods are available to access that equity down the track to use as a deposit for a PPOR.

Hey Chris

If the IP increases in value – either via growth, improvements or a combination of both, you can access this equity by setting up a second loan split alongside the current IP loan. That second loan will fund the deposit/costs on your IP.

So if we take a simple example for illustrative purposes, let’s say you’ve bought an IP for $100k and took out an $80k loan (so loan to value ratio of 80%)

You then renovate and it goes up in value to $125k.

The bank will let you borrow up to 80% of the properties value – so you decide to take that $80k loan up to $100k (which is 80% of the properties value now – and it’s $20k more in borrowings). You borrow that $20k as a second loan (so you now have two loans against the IP – the first is the original $80k loan and the second is the new $20k equity release).

You then decide to use that $20k to cover the deposit/costs on your new PPOR – which is worth (for illustrative purposes) $80k. You then set up a third loan to cover the remaining balance for the new PPOR.

So all in all, you now have two properties and three loans.

Investment property (worth $120k)
Loan 1: $80k loan
Loan 2: $20k equity release (covers 20% deposit and costs on new PPOR)

New PPOR (worth $80k)
Loan 3: $64k (80% of the $80k purchase price – with remaining 20% deposit and costs coming from loan 2 above).

This is a very simplistic explanation and your PPOR will probably cost more than your IP – but hopefully this provides you with a bit of an idea.

It’s important to structure the loans like this because a) you can easily distinguish deductible debt (loan 1) from non deductible debt (loans 2 and 3) and b) you’re avoiding cross collaterising the two properties (I won’t get into that in great detail now because this post will never end!)

Cheers

Jamie

abrogard wrote:

W=
Don’t know. Don’t know enough about anything. Have a feeling that brokers are for people finding their way through complicated deals sometimes difficult to finance – and for which they pay extra, often. Not to the broker. This thread has taught me, I think, that the broker costs the borrower nothing? But to the lender, pays more for the borrowings because a hard deal to finance or somesuch.

Brokers can be used for deals of any complexity – easy and hard. Most don’t charge a free – and we can negotiate on rate, ect on your behalf. Using a broker doesn’t result in the cost being passed onto the borrower – that’s a myth.

All in all, do your own due diligence and find someone you feel comfortable in dealing with – whether that be your local banker or a broker.

Cheers

Jamie

abrogard wrote:

What’s the definition of income? That’s the point.

It’s money you receive.

Rent from the investment property is included.

Cheers

Jamie

Jpcashflow wrote:

Just remember demographics are changing every day and people are becoming a bit mor fussier

Spot on.

The suburb I live in was developed for the working classes back in the day. Now they charge $5 for a flat white at cafes and a run-down ex govvy house costs $600k!

Cheers

Jamie