After you get your first 3 properties it’s much easier to buy the next 5,10…etc because of your total equity worth which gives you a leverage in term of buying power. Just have to make sure the right structure is used and you keep on changing to adopt to your changing financial situations.

It also helps to have a team of professional who can synchronize to your needs and they understand each another’s need as well ie your Accountant must agree to the strategy employed by your Mortgage broker or Financial Planner.

Regards
Michael

Rhianna, most banks will be ok with Mat leave return. As long as you explain this to them- and provide proof ie past payslip + letter – you will not have a problem.

Regards
Michael

Yes it can. Both me and my brother started young with the help of partents for deposit and guarantor – and now we actively search for more IP….and just build build build! – allowing us to do what we enjoy- Property invesment/developments

End of the day-Money makes money.

Regards
Michael

Getting ready to start my property development project for a block of units in Glebe

Speaking to builders 3 hrs a day is sooo much fun…oh the joy ahahha

Regards
Michael

I suggest speak to a broker, rather then you going to different small banks your self
1. Save time
2. You dont want to many inquires on your CR ( will cause a massive problem)

Your another options is to build one first, then instead of selling it- get it RE-valued…and if the price is high you can use this as a 2nd security to build the next one- Yes you will be crossing your loans. but it’s one of your only options with your serviceability.

Regards
Michael

Emptyvessel -from a consumer’s point of view and someone who has NOT yet been bunrt by the bank i understand where your coming from. But it’s common for banks to:

1. Stop lending to you- once you reach a “certain” threshold, especially your income DOES NOT increase and your relying heavily on your rent and capital growth – they see this as a risk…if you lose your job they potential will lose a lot of money if they hold 5-6 properties under their belt…..they prefer to spread the risk at a certain point- depending on the client.

2. If the rate increased for that ONE lender- ie look at what CBA did !!! 0.45%…..all your properties will be hit- wouldn’t you want to spread the risk? …reason why people buy in different states and buy different types of shares..

3. If you wanted to buy a unique property- ie a studio accommodation or a commercial property, the bank your dealing with might not lend for that sort of property type- so you might be force to “untangle” your properties anyway in order to go to a different funder ( as terry mention, no banks is willing to be 2nd mortgage)

4. If your force to sell due to financial problems- see terry example above.

All good if you have NO problem…but when a problem arise- you better watch out. All about risk prevention. and asset protection.- if you can WHY NOT?

Regards
Michael

Welcome Bahar7-

I understand your frustration! you work hard, and when you go to the bank to borrow money they reject you! like your some sort of disease or criminal.

But if you look at it from the bank’s view- if you can’t mathematical “afford” the loan, then it would be bad practice for them to lend you this money, forcing you to work more just to make end meet.
To be honest there’s not much even us broker can do if you “lack ” the serviceability, no matter how creative we get if your serviceability is very low, there’s only so much one can twist….if you have more money going out then coming in; then it’s hard to convince a bank to give you extra funds.

The question is, How bad is your serviceability? are you off by $50,000? $100,000?

Regards
Michael

Emptyvessel- Best to uncross if you can especially if you plan to expand in the next 3-4 days.

I wont go into the math of the available equity, since Terry has covered that part already; But if your interested in HOW to use this available equity or the process, i will give you a very quick run down on a simple and common equity release- there are plenty of another creative ways ( IO, LOC, Portability loans…ect), depending on your situations.

1. Once you determine how much available equity you have- apply for either a top up or REFIN, and split the loan as 2 payment- which lender you choose will depend on your “purpose”.
2. Use the spare funds for another investment.-

Repeat for next place….but you must be able to service the loan

in regards to getting other valuation done in a short period of time, it’s fine as long as you have a good reason to- ie you have done some renovations- You be surprised i help a client reorder another valuation 4 month after settlement because he spent $10,000 on renovation ( well documented) – and this increase the property valuation by a whooping $170,000! allowing them to buy another property in a short period of time.

You never know if you never try- but of courses do it in a smart one…ie get a free/discounted valuation…and no CR checks..

If you order your own Valuation yes it’s tax deductible for IP’s, and no the bank will not use them, but you can use them to “dispute ” a bank’s valuation if there is a huge difference.

Regards
Michael

well if that $500 for a depreciation schedule -That’s fine.

Paying LMI should not be a taboo, for some property investors ( like my self) they will use LMI as part of their wealth creation strategy; as it has some tax advantages+ ability to invest into another project faster (better cash flow) .
Im going to make a huge assumption here- since you can afford a mortgage of >$600,000 in north shore property + another IP purchase- your combine house hold income is relatively high- Having this IP at a higher LVR say at 85-90% LVR with the LMI capped into the loan may be beneficial in term of the interest deduction ( tax deduction) – This will free up a lot of cash for you to purchase your next IP + cash for Holiday and spare cash.

The way i will structure this loan ( subject to serviceability) is what Jamie has mentioned; Refin your HSBC as a SPLIT loan ( this is a must) one split for the PPOR and another for IP-use this for the deposit/renovations/ Valuers cost – hence you are using your equity to finance the cost involved for the IP + the interest is tax deductible. Also loan will be done as a 100% offset for the PPOR part, with interest only for both splits.

Just one note on the trust, it will not give you any “personal ” tax advantage” – ie the lost or interest from the trust can not be claimed via your personal income.
The main benefit of a trust ( My assumption and answers are based on a discretionary trust) are;

1. Asset Protection
2. Ability to stream incomes
3. Taxation advantage
4.Limited liability

Potential disadvantages include:

1. Possible implications for capital gains tax
2. Distribution of tax losses
3. Establishment costs and administration costs

Regards
Michael

Mookii- Your not going to get any reply unless you give us a bit more details….

It’s like typing, i have $300,000- what can i buy???

Tell us a bit more about the deal/reason/ financials etc….
I have private short/long term lenders that range from 3% – 27%

Regards
Michael