Forum Replies Created
be very careful and ensure that you obtain independent specialists such as valuers and solicitors. People have been hurt badly by these companies flogging off grossly inflated properties to people from other states etc.
Understand also that you will be paying a premium to have all this done for you. The company may tell you that their fee is paid by the builder etc but in my experience you don't get much for free.
In a strongly rising market any mistakes are quickly forgotten but in today's market any mistakes may hurt for a long time as you wait for inflation to lift the values to cover what you paid.
Another idea might be for you to spend some time learning the scene, then buy a cheapie unit or similar so you get some experience. Look at a lot of properties so you get a feel for what is available.
Nothing teaches you more than the actual doing. You won't learn much if you pay someone else to do the doing for you!
Good luck!
To Australia?
There are certainly many of your countrymen here already!
I doubt you will find a business relationship like that on the strength of an post. I think you might have more luck if you applied for jobs and got started in the industry. You will make contacts and meet the right sort of people as you go, perhaps even end up with your own company perhaps in partnership with the sort of person you are looking for.
But in my experience these mentors don't waste their precious time teaching strangers how to compete with them. You need to be bringing something to the table as well.
buy your home.
This home will probably be modest and like many couples you will prob upgrade as your family outgrows it. Or you will move chasing opportunites. It would be quite a minority who buy a house for their whole life as my grandparents did.
So planning for this I suggest you buy with a 20% deposit. Get an IO loan and put your savings into an offset account. Continue to save in that offset account.
So you now are a bit more experienced. If you still wish to invest in an IP then start looking for one. I wont discuss what to buy, that is up to your research.
Buy this next IP with a 20% deposit. If your PPOR has risen in value then draw this deposit and costs from an LOC or split loan attached to the PPOR.
If it hasn't risen in value then reduce the PPOR loan from your savings and draw your IP deposit from the LOC or split loan as described above.
Repeat.
The object of the above is to maximise your investment debt.
Your PPOR debt is virtually reduced via the offset but you have preserved the PPOR loan so that when you do upgrade to another home you can use the offset savings to fund the new PPOR deposit and retain the maximum loan against the exPPOR which is now deductible.
Too many folks end up needing to sell their first PPOR as they had followed the old advice to payout the home loan ASAP. Having done this they now have all their equity tied up in an IP and a large nondeductible debt against their new PPOR.
There are other ways to tweak this strategy but this is where I would start if I was in your position. This strategy can be used for other investments such as shares or managed funds. Don't discount these out of hand as many property investors do.
I have a longer article I wrote on this that I can email to you if you like.
Cheers
A margin loan is like a LOC. You don't need to make repayments – the interest is added to the account each month and the balance increases. As long as the total balance is under the allowable limit set by the security value then you will not be asked to make any payments.
So to capitalise interest on a margin loan just do nothing. It happens automatically.
Does this answer your question?
I am in no way making any advice here – just commenting on the mechanics of the margin loan.
This is not real estate investing. You wont get a mortgage over it.
This is a business proposition like buying machinery and leasing it out.
Returns are high becasue the asset is not attractive to own. If the market thought it to be attractive then they would value it higher thus making the return lower.
You wont get any sort of finance secured by this. You may be able to borrow against your other properties but this project will not stand alone.
Treat it like a business and buy it if the numbers stack up. But don't expect that the resource boom will continue forever and if this business relies upon it then I suggest the whole deal has a fairly significant weakness in it,
Ask yourself why the cashed up miners aren't owning these themselves? They are investing in Perth!
AJMJ wrote:Thank you for that.I know what you mean, i have tried to read between the lines. I am just sick of not being able to trust people and what they say.
Any more advice or stories would be really appreciated.Simon – are there any websites open to people like me who have no passwords or anything to find all these detais out on my own?
Thanks again.
Try this.
Get to know your local area very very well. Search the real estate websites and visit properties each weekend. Try to see about 20-50. The more the better.
Pretty soon you will be able to pick what offers you the most potential at the best price.
Make offers. No vendor expects to be paid his full asking price.
There is no secret place in another state where all the deals are gold. Why buy something unseen that the local investors aren't buying??
There is no easy ticket either – you need to put the time in.
All the best mate
You can buy one of my properties. I will cobble up some newspaper clippings and a sales pitch to prove how good the area is and even extrapolate how continued 20% growth (which we can show has happened in the last few years) will make you a millionnaire soon.
The prices will be non negotiable because they are already too cheap as a special deal to you.
I will even line up a tame, valuer, lender and solicitor for you to use so you don't get independent advice and I get a kickback from them. I can even fly you up and refund the $49 ticket after you buy!
All this work we do for you will save you a few weekends work and only costs you $10K too much now and poor capital growth into the future as I flog stock that locals wont touch because they know the freeway will be going in past the back fence later on.
Sounds good?
Seriously – you will do better on your own and you may even enjoy the learning process. I have heard so many horror stories from people buying through these groups – groups which exist solely to make the directors money.
If you want to ask questions then do it here, plenty of enthusiats willing to share their knowledge.
Good luck mate
kenzel wrote:Tatts – Yes I do intend to get the FHOG which I believe is $7000 at the present time and I'm sure I won't rent it out until I've lived in it for 1 year
Requirement is that you live there for 6 months, starting within the first 12 months.
simple wrote:I overheard that in order to manage RealEstate government considering to make IP less attractive as investment by removing tax benefits (loss wright off) from IP property's.Who did you overhear?
Do you believe it likely? I sure don't. Not that it would worry me too much either way.
Don't waste energy worrying what might happen – either invest or get out of the way
I would be speaking to the agents principal about his integrity.
You also need to accept some responsibility. You might have insisted the agent return with the key.
You should have known better than to take a REA at his word – especially close to settlement (his payday).
sunsetred wrote:Hi Simon,
It was the Manager that said No, first he said he would see what he could do then he rang back the next day and said that "they would not be willing to lower the rate".
Then he said he would have one of the girls send out the paperwork.
May I ask how you went about obtaining your lower rate?, and how much they came down for you? (if that's not too personal).
Regards SunnyI have a pro package on about 7.26% with 100% offset and no fees. I got it because I asked for it via a contact in the bank. I have done it for other's too so it should be possible for anyone. It is a major big 4 lender.
Cheers,
Some banks are very competive and others are not. Nothing to do with size either.
A lot also depends on who you are speaking to. Perhaps the person you dealt with had no ability to consider your request and just sent you the paperwork. This may not be a specific policy.
I asked for a discounted rate and got it on my own loan.
Yep – I am with Terry.
you need to live there for 6 months starting within the first year.
If you use an offset account then the answer is yet. The money never enters or exits the loan and thus the loan remains uncontaminated.
Do not do this with a redraw facility. I have met brokers and lenders who will tell you that redraw is just like offset – Don't let these clowns near your finance!
bevans000 wrote:My question is: Should we keep the 1st house, put on the rental market and re-finance this (maximize tax benefits)-BS-
Hope you weren't given this advice by a professional. As pointed out, the ATO looks at what the funds were used for to determine deductibility. In your case, if you use the refinance to pay down your new home then that has no taxation benefits.
You can use this loan to fund another investment or two but it cannot help you reduce personal (inc home) debt AND be deductible.
It is added to your taxation assessment and your tax return includes a cheque.
If you know the amount you can ask for the tax taken from your pay each fortnight to be reduced accordingly.
Cheers,
v8ghia wrote:Interesting sentiments here. I have often been interested in the way some refer to 'securitised lenders' as if they are only for people that can't get bank loans from the big four banks. While it is indeed true, that some lenders, and indeed the lender in question will suffer some surprise reductions in their profitability for the year, the insinuation that a 'securitsed lender' (in this case Rams) is a 'quick lets panic risk' is very misleading. It appears that the banks today (among others) are tripping over each other to provide funds to Rams and other 'securitised lenders'. Why.? Thats right, because they ARE securitised – and thus mortgage insured – making the investment so appealing.And this reliance on everything being mortgage insured is why investors should think twice before going to securitised lenders until they have to.
The Contrarian wrote:Whatever you do DON'T sign with RAMS….
They listed @ $2.50 on the share market a couple of weeks ago…
their share price has dropped to 60 cents… in less than two weeks…They will need to assess their position and try to find some cash from somewhere…. ie. by increasing their fees…
Much better options out there..
Why does the share price mean they need to find money? If shareholders shares are worth less how does that affect RAMS? Interested in your reasoning mate!
CEO of CBA was warning that securirised lenders funds are getting more expensive and rates may rise.
I reckon I would personally be heading for one of the big four myself.
