Forum Replies Created
I'm sure that their line will be "we need to make sure that you are serious about doing this rather than wasting our time. If you put some money into it then you will be more motivated to find the right deals". This is the typical message of this type of promoter.
Wow 6.19% was a great 10 year fixed rate.
The availability of credit will be the key consideration.
What happens if banks only lend 3 times your income as has been the case historically and require you to have saved a 20% deposit and actually prove your income to repay it? How much can people then afford to pay for a property with the new criteria? What would that do to house prices?
We are already seeing moves in that direction from the banks.
Westpac have announced that they are looking for $2 in deposits for every $1 lent out, to significantly lower their reliance on international funds . This means that to give me a $300,000 home loan (my current borrowing capacity is well over twice this amount), they need to have a number of other people deposit $600,000. Staff targets are being set in accordance with this strategy in mind. When the major lenders don't want to lend to everyone, and only the select few that are the very best credit risks, we will see tighter and tighter conditions on lending.
I am discussing with a couple to get them into a wrap loan at the moment. They have a combined income in excess of $150k and stable jobs, are eligible for a $26k new home grant and want to buy a house for around $380k, only 2.5 times their income. None of the banks will loan to them as they can't come up with their own saved deposit while paying off a $10k personal loan and a small car loan. They are easily able to service the costs of the mortgage.
Personally I am looking for property prices to be flat over the next few years given my investment strategy, but there are no guarantees in the current environment.
Thanks Richard, appreciate the input.
That is really great news then, I am actually increasing my borrowing capacity with every wrap I do.
I have tried 2 lenders, after checking with their head office, one said yes, so I placed a deposit on the property, then they later said no they couldn't after all. After a lot of discussion they have said they will look at it, but want to review the contracts and get lawyers and credit experts involved. Too much hassle to go through every time I want to do another deal.
I went to another lender and they have said yes, no problem, so it is looking likely that I will go with them.
I wasn't sure how I was going to get on either, but I am being advised that I can do it by my mortgage manager at the second bank so I will take it.
Cheers,
MattHi Eric,
Purchase 1999 for $135k, positively geared, sold 2005 for $235k. Worth a similar amount now as it was in 2005.
Cheers,
MattHi Eric,
I bought my first investment property at 23 in 1999.
Cheers,
MattThanks Eric,
At the moment in Australia the house price to household income ratio is very poor. If I earn $80k today and stretch to get into a $500k home now, who is going to buy it off me in 7-10 years for $1 million, and what will they be earning for the equivalent job? In 7-10 years after that, who will buy it off them for $2 million and what will they be earning?
We need to be very careful looking at "historical data". To me the past 30 years isn't a long enough timeframe to anticipate what may happen in the next 14 years.
At your presentation you said that there was historical data stating that London prices had doubled every 7-10 years for the past 700 years. This is factually incorrect and it is easy to prove it.
Let's say you could have bought your average family home in London for only 2 pounds 700 years ago. Based on only doubling every 10 years, that is 70 periods of 10 years.
The equation is 2^70 = 1,180,591,620,717,410,000,000 pounds. i.e. 1,180 billion billion pounds. There isn't this much money on earth today, to buy that one house.
The easy credit availability of the past 30 years is not going to continue after the current crisis. Unless US money printing, trying to get them out of this mess creates very high inflation rates, it is hard to see prices doubling every 7-10 years any more.
I still see real estate as a good and worthwhile investment, but I don't think the expectations you are setting in your seminars are realistic.
Cheers,
MattI attended Eric's seminar at the weekend in Melbourne and just placed a deposit on a property that one of his agents is selling on behalf of his company. I have set up a wrap deal on the property, where I have already got the eventual purchaser lined up and they have been able to select their own personalised inclusions in the house and land package.
I would have to say that his sales agent, Shanti has done an exceptional job with a complex transaction and I couldn't be happier with the service I have received from her and have been very impressed with how well she has treated my wrap client.
I did find however that in his seminar presentation, Eric's expectations of how fast the property market is likely to grow over the next 7-14 years (doubling every 7 years) were very optimistic. I had to talk down my client's expectations of future growth following the seminar, so he didn't walk away from the seminar with unrealistic ideas.
Cheers,
MattWho is offering this product Richard?
My inclination would be to go with the one that has the cheaper fixed rate. A fixed rate is exactly that, fixed. The margins on variable loans could vary significantly during the current credit crisis, especially if it gets much worse. Also if at some point in the future you desperately had to get out of the fixed portion of the loan, the break fees would be lower.
Not too familiar with somerset, but the creator of this forum was Steve McKnight, (author of a few books) so you will find the vast majority of investors here would have cashflow positive property portfolios.
Its only cashflow positive if the net payments are lower than net cashflow. You need to include strata costs in the equation.
Hi Steve,
I just found this post.
Where is the free information you were planning to provide on wraps? Have you posted it somewhere?
Thanks,
MattFrom what I have read, they will lose their rental assistance if they buy a home. Something that they need to be aware of. I wouldnt see that as interfering, simply advising them of the facts.
I'm just looking into the Carr government land tax in 2004.
It's very interesting to note that the doubling of Sydney house prices from 1987-89 coincides with negative gearing against any income being reinstated in 1987.
Its quite scary to think that every major movement in price growth (and losses) of Sydney houses can be clearly linked to significant changes in government policy over the past 25 years.
Watch this space… if the additional first home buyers grant eventually becomes entrenched, or stamp duty is decreased, this could have a huge effect in a short period of time.
They have already recently provided huge benefits ($8k per annum per property) for large scale purchasers of property who are willing to lease at 20% below market value (detailed in the thread below). Apparently 4000 homes have already been purchased under this scheme.
Thanks for your response Steve, much appreciated.
I am planning to take advantage of the current conditions. Working for a bank in a well paid job, I have access to credit that others don't, and at preferential interest rates. I see fantastic opportunities given my current situation and the overall environment, especially with large first home owners grants and many credit worthy people unable to access credit. I'm planning to do a number of wraps in the next couple of years.
Btw Steve, any plans to sell more copies of your wrap kit? Have a spare sitting anywhere?
Cheers,
MattLast shot, anyone else have a copy they wish to sell, otherwise I will wait for Terry to arrive back from overseas.
Thanks,
MattHi Toree,
I would recommend discussing this with Richard. I have always been impressed with his contributions on the forum and he seems very knowledgable.
Richard, my comment on being able to do much better deals than any others I have seen out there was not in comparison with banks, but from observation of what other vendor financers have said they could do, as in this thread which you responded to.
https://www.propertyinvesting.com/forums/property-investing/help-needed/4327690
I was able to negotiate a deal with them when no-one else was able to, due to having access to preferential deals for financing through working for a bank.
Cheers,
MattHi Toree,
I am currently working through vendor finance deals myself. Stamp duty is a killer, (not for you as a first home owner, but for your friend who would need to buy the property for you first). Here in Sydney a $450k property would have approx $18k stamp duty. Your friend would need to add that to the property price they pass on to you, plus their profit margin.
Where do you live? Stamp duty varies significantly depending on where you are. In Melbourne you could get a brand new 5 bedroom home out west for $400k (20k from CBD). One advantage of purchasing new is that you avoid lots and lots of stamp duty. i.e, $150k land only attracts $4k in stamp duty and you could get up to $26k in grants.
I am in a position where I can access mortgage finance at better terms than others (I work for a bank and get a great employee benefits package). I am able to do much better deals than any others I have seen out there. If you struggle to come to an arrangement with your friend that works for both of you, I could do you a deal at your desired interest rate for a new home.
Feel free to contact me on [email protected] if you have any questions.
My suggestion would be to keep an eye on the market, if you find a fantastic opportunity, grab it, otherwise wait till there is less competition. You may want to look at ways to buy property that no-one else will realise is on the market. Anything that is reasonably priced on domain or realestate dot com you will have significant competition for, but not everything is listed there.
I'm a tenant and am getting sick of the agency trying to lock me into a new 6 month term. I feel I already served my time in the original 12 month lease, I have had a rent increase, but won't agree to any additional time locked in. If they insist I will look at moving from the property.
