High demand = location.

You could buy a unit in a rural area and still not find any tenant for a good month.

Generally speaking as you know, unit = better rental yield, while house = capital growth..so it depends which strategy your after.
Lastly Demographic of the area makes a big difference! does the location have a demand for unit or houses?
Example: Parramatta NSW.

Typical demo – Students, single and young family with max 1-2 kids ( as per ABS) + close to public transport only 40% has a car.

So buying a 3 bedroom house may not make sense as investing in a 3 bedroom unit; given the return for Parramatta. On the another hand the suburb next door (1.1km) Granville is still not developed and investing in a land makes more sense in term of land value growth .

Summary- work with the location.

Regards
Michael

In NSW for a $240,000 property it be $6,900 for the stamp duty + ~$600 for Solicitor fee + $2,000 for another switch cost – Title transfer, GST, transfer cost, Registered valuation, title search.

You will find you will need to hire a registered and approved ( SRO) valuer to determine the market value of the property so they can work out the stamp duty and CGT ( if applicable) ; since it’s a one arm length transaction.

Good luck with it, and good work on paying down the debt to 1k….it be a great “b day”pressie for your dad

Regards
Michael

A few issues that needs to be addressed.

1. If you do the transfer – stamp duty is payabe ( they take it as a “sale” still …even if it’s a free transfer )
2. Do you still have a mortgage on the place? if so your dad need to take out a loan…and with no income – it won’t be easy….EVEN if his getting rent of say $400 p/w this won’t be enough for living expense + mortgage

Lastly Why do you want to transfer it into his name?? if it’s to show a sign of gratitude and appreciation and sign of good gesture ?

Regards
Michael

To be honest i tell all my client who are new to property investing NOT to go to seminars; as they will get suck in and their mind set would be different …i say speak to family and friends, do your own research in areas you know ( NOTHING beats local knowledge) ; only you would know which streets are bad, where the local attractions out are and what sort of changes are happening on a macro and micro level….

For your first one; try not to buy interstate + buy within your reach and region. Be more hands on…go for a drive! talk to the locals at the coffee shop and the agents.

Regards
Michael

It’s cheaper and easier to convert the Double Garage into a Granny….i dont know the technical terms but here’s how my parents did it.

1. Roof needs to be re-lined with plaster board + electrical work/lights- used down lights due to height.
2. New walls and plaster boards for Toliet/bathroom and Bedroom and power points
3.Water proof the Bathroom
4. Titled the floor
5. New kitchen
6. Added windows + Knock out door and replaced with Double glaze sliding doors ( Blur) + Small Balcony./

The ceiling wasn’t high especially after one extra layer of plaster board and titles; but council didn’t ask anything about that….maybe it was high enough? not sure…was around 2.4m?

As i said the biggest issue we had was getting approval for the kitchen and the design of it…council rejected the first application because of fire safety issues.

We used a local builder to do most of the work for us + sub contract some smaller job ( plumbing , electrical, Paving ) , total cost for the cheaper granny was $32,000 ( 1 bedroom, full brick granny)

Properties are located in Beverly hill NSW ( Hurstville Council) and also in Liverpool NSW ( Liverpool council )

Regards
Michael

umm with a low borrowing capacity, i would personally wait till you can borrow a bit more, no point rushing; there are “cheap ” properties out there but it doesn’t mean it’s worth it…

Regards
Michael

My parents did the same conversion on two of their IP, and yes approval is required; especially for the kitchen where they would need some sort of fire safety clearance certificate to make sure it’s safe etc..and this was all under the SEPP rule…and when they say 10 days, they mean it takes up to 10 days for them to decide 0.o so it probably take you 2-3+ weeks to get all the paper work together + certificate + plans.

Regards
Michael

You haven;’t missed the point- but it’s not the way the bank looks at it …the bank look at this as a 30 years loan…your calculations are based on TODAYS market.

What happens if the rate goes up to 10%? or even 18% ( the good old Paul Keating days…dw im to young to know how a 18% interest rate is really like anyway ….) then your $39+ per week becomes negative VERY VERY quickly…

So what does the bank do? they have certain guild-lines which mange these possible changes:
** Note: this is the reason for the Massive change in borrowing capacity as well***

1. Most bank will only accept 70-80% of the rental income ( 2 lenders that i have dealt with will accept the rental income at 100%! if LVR is under 80%)

2. The servicing ratio ( the interest rate that the bank looks at, to work out if you can afford the loan or not) is based on the standard SVR + 1.2-2% ( so ranging from 8.7-9.9%) The lower the servicing ratio the better your serviceability of course + if your happy to take on a fix rate of 3-5 years the bank would consider using the fix rate + 1% as your servicing ratio ( ~7.6%?)

So a loan of 280,000 on 8.7% = $468 p/w (I/O)
Rental of $400 p/w x 70% = $280 pw

You can work out the rest

Yes it may look “bad”, but sometimes it’s a matter of finding the right lender and product type that SUITS your situation- like a jigsaw puzzle

Regards
Michael

Home run!
ABL see no point in doing the valuation, it won’t change the LMI in fact even if the LVR did drop you will NOT get any refund on the LMI. Also even if they allowed a valuation they will keep it and give you the “value” only and then charge you $280 for it

Also one possibly reason why ABL will not allow you to do the valuation is because 2 of their product is based on LVR, the lower the LVR the lower the rate on a sliding scale….so if your LVR did drop you could potential refinance BACK to them at a lower rate.

But i have to say a few lenders allow valuation for free ( ANZ allow up to 3 free valuation per year for all their break free customers, regardless of what they do with it) some would be happy to do the valuation if you ask as you can’t use this valuation with any another bank anyway.

Three possible solution:
1. Swap to different lender – but get an Upfront valuation done first ( some bank do not charge for valuation, most do)
2. Ask a broker to do it for you; and pay the $280 ABL valuation fee. – Us brokers have the ability to do upfront valuation if requested.
3. if you want the valuation for personal reasons, then get your own ordered ( the bank will not accept it though) – either a free desktop one or a full valuation $200-250.

Regards
Michael

Min amount for offset? doesn’t sound like u got an offset account…more like a “redraw”???

Regards
Michael