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The zoning allows it to have 6 units, but the demographic contains a lot of seniors and baby boomers (Lakes Entrance, VIC) so I’m set on doing single storey units, which would be too small if I did 6.
I definitely note your advice, but I’m still happy to do 3-4, especially given my target market. I’ve done (conservative) calcs and it works out well. I wouldn’t say I’m risk averse, especially if you ask my wife!
Ok I see, so you only get access to the OTP deposit (& remainder of purchase price) once it’s built. Handy to know. Just means you can’t use those extra funds to reduce the interest payments during construction if I understand correctly.
and yeh that’s true re: the commercial loan, I’ll look into that.
Thanks for the input
Probably a few factors for keeping it to 4 max.
For one, it’s my first development so I don’t want to go too hard too early. I see 6 as being more risky at this stage.Secondly, the deposit would probably be out of reach for me, especially since commercial loans require a greater % deposit.
Thirdly, and I may be wrong here, but when I first started researching development finance, I got the impression that commercial loans were more expensive and since then have just had it in my head that residential is better.
My exit strategy is to sell the properties, so not sure if that makes commercial more viable?
Would selling off the plan pay for the deposit (or majority of)?Good point re: getting the designer to spec the job rather than the builder. Makes sense
Gonna have to bite my tongue here, don't know about your relationship with your parents but mine definitely wouldn't screw me over. The properties have been performing well over the 10 years they've had them, we have discussed these things obviously.
Appreciate that you're giving advice though, just maybe learn a bit of tact
ah ok, 8.5% / 5%plus costs could help me get a couple of them.
The valuation on my house will be critical, the initial loan was 95% LVR, I wonder if that makes it easier to take it back to that ratio….
Thanks for raising the wrap option Paul, I still haven't fully got my head around it though. I'll sound like an idiot but I tried comparing the example (in your link) to my parent's situation and can't see how it would help them pay off their loan on that IP straight away.
Let's say I had enough deposit/equity for 2 of the properties, how would it work if I wanted to buy any of the other properties thru a wrap, in a way that gets the bank off their back quickly?
My girlfriend is in a position to buy but is not 100% convinced about the price being below market value.
Excuse my lack of knowledge here but what would be the best way to get an official (as opposed to speculative) valuation on the properties to eliminate any doubts?
Also, if anyone could provide input to my earlier questions:
– What seems to be the bank's minimum deposit atm?
– What is the absolute max LVR that banks allow you to draw equity to?
Thanks in advance,
Chris
yeh nah it's actually my dad, the bank hasn't communicated a selling price but they'll sell them for peanuts if they have to.
Not 100% clear on Vendor Financing, my understanding is they don't get the funds from the sale until I've gradually accrued a 10% deposit with them which would then allow me to take out a 90% loan? (which would actually work as I'd accrue that pretty quickly)
The bad debt was just a personal loan I took out, always payed on time though.
Thanks guys,
Shahin, that $16k deposit I'm guessing is 5% plus Stamp Duty (or LMI)? What seems to be the bank's minimum deposit atm?
Jamie, that's one thing I was unsure of. I thought you could only take it to 80%LVR (was hoping for 90% tho).
I dare say 95% is not allowed?
Servicing is no issue, they're close to (or are) neutrally geared which makes it even easier. As I mentioned, I'm putting 4K away every month and have no personal debt.
What if I set the LOC up while I still have an income, have the interest capitalised, and then retire?
Would the bank or the ATO find out somehow? and would they castrate me for doing it?btw thanks for all the suggestions, it makes me learn new concepts and ideas
Thanks Terry, I’ve heard cc is a bad idea so I didn’t want to accidentally do it without knowing what I was doing.
On another note, I have a question regarding retirement strategy. Seeing as though it’s kind’ve off topic, I’ll start a new thread:
https://www.propertyinvesting.com/forums/property-investing/help-needed/4332743
Thanks Richard, your answer leads me to another question regarding cross-collateralisation.
From what I gather from your reply, if you get a second IP financed thru the same lender, the loan just gets bigger rather than having 2 seperate loans. Is cross-collateralisation when you access equity from that loan for a 3rd IP, regardless of who the 3rd loan lender is. (hope that made sense)
For some reason I thought cross-collateralisation was when you use equity from 2 seperate loans (they could be with 2 seperate lenders) to finance a 3rd, is that incorrect?
too easy, might go do some shopping.
Thanks
yep good idea Terry, I’ve just found out there’s no stamp duty in WA for FHB up to $500K so I think I’ll be doing that.
Sorry to get off topic, I’ve got a few questions but I’ll open a new thread. Here’s the link…..https://www.propertyinvesting.com/forums/property-investing/help-needed/4328898
I’m pretty much in the same boat Emma, except no PPOR due to being in my 1st year out of uni. I’m saving 4K p/m so like yourself I’m looking to buy as many IPs as I can.
After reading some Kiyosaki books I’ve been trying to get info on starting a corporation so that the +ve cashflow can be used to buy more IPs with pre-tax dollars. Judging by the responses here is that not possible/not as beneficial in Australia?
Asset protection aside, what would be the best structure tax-wise for someone on a high income? And sorry for being a noob but what are the benefits of a trust?
Richard could I grab a copy of Trust Magic off you? My email is [email protected] if that’s alright. Cheers mate.
Chris
