Forum Replies Created
Cabo,
If you are considering increasing your current loan to 95% … I have a couple of questions:
1/ Is this loan over your primary place of residence at a managable level?
2/ Do you have sufficient equity in the first investment property to finance the second?The first thing is to consider is the state of the economy and the state of your finances … ie cashflow. Are you in a position to purchase and maintain the repayments of a second
investment property if finances get strained?It can be very risky in the current economy borrowing above or even at 90% if the market drops and you need to refinance … make sure you do your research on the market prices, suburbs and regions of growth …. try to buy in an area that is less prone to prices reducing…. preferably a stable economy, good infrastructure and positive migration.
I've just started reading his book Co-written with Donald Trump … 'Why we want you to be rich!'
Lo Doc and especially No Doc loans are harder to get since the sub prime crisis and this will continue to get tighter.
With any loan you must be able to demonstrate that you are capable to support the loan required. The broker needs to be, as duty of care', confident that you can repay the loan even if he/she doesn't need to supply full income documentation for the lender/ mortgage insurer. Firstly, you will need an ABN to demonstrate that you are in business … I'm assuming you already have one … otherwise a Low-Doc loan might not be for you. Lo Doc loans require an ABN for two years minimum and up to 80% lend in most cases. No Doc loans can go up to 70% lend. These loans are not for people to try and get around not supplying the lender with supportive documents to show affordability. A lot will depend upon the value of the property you wish to buy and therefore the lending ratio you wish to apply for.You will be able to use most of the rent on both properties to show affordability, but lenders also would like to see supportive income other than rent in case you have a period with no tenants. For this reason it might be a good idea to get a job again and build another income history to support the loans.
Robert is an internationally recognised best seller. That's one sign that he does his research and gets it right. He also partners with many other top guru's and writers in a range of his books. They are all a good buy!
Heaps of emotional hype and pitching … etc etc etc … not unlike Empowernet and their REM Real Estate Mastery course. Nothing you can't get by reading a good book or two or three.
Bank loans are definitely more attractive than most Non-Bank loans at the moment.
Although, First Mac are about to release an 8.77% fully flexible variable loan into the market. As the exit costs are usually higher with most Non-Bank loans, you need to be certain of your intentions of the loan over the reasonable term (first 4 years) to benefit … which means sometimes it can be worth paying a slightly higher rate to get an overall better deal which you can change easily if you have a horror story with the lender or broker. There are a number of banks offering around the 8.6's to 8.8's …. you might want to investigate any reduced interest deals for 1 or 2 years as the exit fees may be incurred for up to and including the 4th year……. read the fine print!Somewhereoverthere,
You mentioned the income for last years tax return, but what is the income for the previous year?
You would be required to provide two years tax returns to be eligible for a sole trader loan with tax returns that are suitable for serviceability. It appears that the previous year could be lower than the other. The mortgage insurer will usually go by the lower of the two or average it at best, if you massage the deal with a good relationship and good add backs.
Spot on forecast Chris White!!!!
People, sorry for the delay … been busy helping my clients!
I wasn't implying that tax cuts would reduce interest rates … they wont. Nor was I implying they will directly slow the economy down …. they are likely to have some upward pressure on inflation. This can't be avoided.The point is the unemployment figures and the massive effect this will have on the economy if the unemployment figures go thru the roof. if you continue to raise interest rates you deepen the wounds of the jobs /unemployment sector …. ie fix one problem on the arm … and loose a leg!
The idea the govt are working on is redistributing the wealth to the lower and meddle class workers a little so the whole economy doesnt go belly up! There are no quick fixes in all of this.
Soloinvestor,
It's called 'Arms-Length' ruling!!! Placing it in a trust structure would be a good idea to consider for other reasons too … speak to a good property investment privi accountant.
Get a very good finance broker and make sure you have pre-approved finance. Meaning … everything as submitted without and surprises … finance will go thru fine. An independant valuation ASAP would be advised to make sure there are no hidden traps there. You broker should be able to go thru these and any other concerns or considerations with you.
Quickest purchase I've ever done is 2.5 days …. not easy though and not possible all the time …. takes a lot of negotiating, relationship building and ducks lining up in a row! eg everyone doing their part of the job on time and as promised, dotting the I's and crossing the T's. Good idea to have a subject to building inspection clause …. you may also like to try to add a subject to satisfactory valuation clause. The real estate agent may get nervous with this request, it's because the definition of this is to 'your' satisfaction. That's why a seasoned real estate agent will not like this word added. I can choose to be unsatisfied for any reason I like!
If the real estate agent reacts … change it to subject to the valuation being no less than the purchase price. This way you ensure the property is worth no less than you are prepared to pay …. and have no problems with the valuation causing you to have to put in a large deposit that you might no have in relation to your finance approval Loan to Value Ratio.
Finance may be approved, but you still need to come up with the required deposit. Not the R E Agents problem if you dont have it and without this clause the finance clause wont get you out of the purchase. A good broker will also be able to guide you trhu this.
There are regulations around foreclosures being 'fire sales' at bargain prices …. I agree they are very hard to find as the banks have responsibilites to sell the properties at as close to market value as possible or end up in court!
A lot of these ideas of buying thru foreclosures comes form the US …. the Australian economy is not the US economy and I agree with Linar …. they usually go to auction or to public trustee sales depending on the circumstances and are handled by solicitors.Linar,
You simply can not 'assume' anything these days anymore based on the past. The past will only aid in your research, not govern the outcome. Especially with rapidly increasing fuel costs, water shortages, rising costs of materials … everything fueling inflation …. that prices will continue to double at the same rate that it has in the past. A multitude of changes must occur for this to happen including to finance/loan structures and conditions eg loan terms, interest rates etc.
It's all relative to income and supply and demand…. and global forces eg immigration and foreign investment just to name a couple.
Neil,
As long as you are passionate about your career in finance and are proactive …. you will do fine in the finance industry in any state of economy…. your business is what you make it.
I've been in finance for 8 years now and my business has grow well more than double over the past 12 months not shrunk as many would expect…. so don't pay any attention to the 'dooms day theorist, scamp! Yes… me again scamp! Would love to know what you do for a living scamp???
I agree that up to 50% of mortgage brokers will exit the industry … more like in the next 12 months …. why?
Because firstly, many brokers are lazy and dont want to market themselves …. and dont want to study again as they will have to do. As of July minimum qualifications will be Certificate IV in finance and mortgage broking (and next July for Existign brokers over 2yrs experience).. people do hate change don't they …. lots of changes to come!!!!
When this tightening of qualifications swept thru the insurance/finance planning industry a few short years ago …. the same thing happened there too! One report showed membership of about 2000 members and after regualtion only 900 renewed … the rest left the financial planning industry … either because they had enough and retired and/or refused stubbornly to become accredited.
Means more opportunity for those that hang on … and maintain their passion for the industry. Adjustments to business strategies will need to be made.
I also agree that value adding is ever more essential to your business ….. what you also may not know is that as well as banks cutting commissions, they will almost certainly all cut out the trailing incomes for new loans within the next 12 months ….. since your companies business is based on aggregation and trailing incomes to survive (the parent co. not yourself) …. with great respect, I suggest you be aware of this … because this may affect your business in the futre. Many aggregators will fall over in the near future when this happens unless they value add and diversify…. if their whole business model is based on trialing incomes as most aggregators are.
You should also know that asic will continue to regulate advise and will continue to clamp down on those that are giving advise and are not licensed to do so. Even using such words as investment property and investor will come under very close scrutiny for those using such words and give advise. eg …. how can you class a property as an investment property if it can lose value over the next 12 months?? Isn't an investment supposed to make money?
Do you want to be the first case to have to pay the clients loses after their property value drops and they deem you to have given them advise to buy that property? I'd start dropping the use of these words and start reinventing better ways …eg rental property does not give advice on making money or losiing money …. it simply states that it's a property that you own that you dont live in and receive rent on. It may gain or lose money …
Hmmm … something to think about???
It gets a bit old when staff/ contractors come on the site just to spruike their company …. if you're in business and your proud of who you are and what you do and offer … what's wrong with using a signature????
It's worked for you for quite a while right, Richard?? And might I add just by giving unbiased healthy tips and experience?
It's human nature that people like to buy … but hate being sold on!This forum is designed to share info and have a bit of fun with it!!!
It's always a case of doing your homework …. Not all agents are crooks … there are some very good RE Agents around. Their job is to sell properties for the highest possible price given the market conditions.
A valuation will always give you an accurate price (usually with in 10% each way) but remember a R E Agent usually on gives an appraisal … very different from an independant valuation, unless they are licensed valuers … which some are.
If you reaearch similar properties you will get a good idea of the asking prices and selling prices and therfore can tell if an agent is working for the seller or the buyer… they can't do both!
The key is to ask lots of questions of the R E Agent. Try getting a friend to ring the agent anon inquiring about property.
In a health market ….. dressing up your property will gain value … but in a downward market …. dressing up your property will usually only protect your value …… you need to look at what the other proerties in the area are offering in features, what is expected as a minimum and be careful not to spend too much dressing up!!
The fine line between profit and loss is …… attitude plus research, research, research.
As I dont know the dimensions and layout of the block … I cant tell you how much the road woudl cost and even if a road is required, but it's usually very difficult to cut 8 blocks out without at least two frontages … without an access road built. $100k as an example would only add $12,500 in costs to each block!!!
God,
That's exactly my point …. that's why it's a delicate balance …. short of writing an essay here!!!
The reason it is less likely for rate rises is because fo two reasons ….1/ If you fix one problem you worsen another …. unemployemnt figures and you can weaken the economy severely,
2/ Interest rates is not the only way to slow the economy. Tax cuts for example will also achieve this …. and this is exactly what the govt is speaking of.
Contrary to belief … it is not the intention of the govt to see mass forclosures.
The problem wioth Perth is that the last boom was artificially boosted by the mining boom and caused many lower priced homes to heavily inflate off the back of high end property sales. This bubble is now bursting.
I have a close friend in the same predicament down by Rockingham …. been trying to sell his house for over 12 months now.
Rudy,
Unless privacy laws have changed …. you can go to the council and they will usually give you the contact number for the owners and you can ask them. I did this with a Property I was interested to buy in Adelaide ( I now live in Brisbane) and had no problems at all.
