Forum Replies Created
Hi Jamie,
If I were in Canberra, I'd be coming to see you (or are we able to do all this via email???) – I think the mortgage broker who I got my first loan through has now gone on to do something else, and I haven't had a good experience with the few others in my area… So in the meantime I'm going to have to do a bit of leg-work – hence trying to arm myself with all this info so as not to be signed up to a structure that might cause me headaches in future.
"Know the answer before you ask the question" as the old adage goes.
Just to clarify, you guys would recommend taking out a LOC against my first IP, drawing out the money to pay for the deposit, stamp duty and any minor cosmetic changes on 2nd IP, with a new separate loan to finance the rest of the 2nd IP?
As this is all deductible debt, is it worth putting my "rainy day" cash into an offset account?
Many thanks again – finding this forum to be a very big pool of very valuable knowledge!
Bear in mind that Radiata Pine is quite soft – easy to get scratches and depressions in the surface that will stand out like crazy if it has a dark stain over it. Dark stain to increase the perceived value? Most likely, yes. Practical long-term? Not really.
Freehold means you own the building and the business, leasehold means you lease the building from the owner but own/operate the business (accommodation/restaurant/bars/pokies etc.)
Thanks Jamie – I'll suss them out… My previous experience has been pretty good, but if they tell me it can't be done or seem confused I will look elsewhere.
One more question…
Online Stamp Duty calculator is telling me I'll be up for about $8000 – is this correct?
Thanks guys, much appreciated!!!
I will go and see the bank this week to see what they think…
I've got a property (2BR unit) that was entirely exposed brick inside – putting Gyprock up was a relatively inexpensive exercise – as catalyst said, Gyprock is pretty cheap and to fix a sheet in place is much less labour-intensive than rendering a similar sized area. You could probably do the sheeting yourself if you're confident enough or can get a few hints from someone, but I'd leave the cornicing and finishing to a pro.
I can't remember what the exact breakdown in cost was for the Gyprock, but the total reno cost me a little over $12k (including carpet, tiles, paint and some downlights – I've got a very good mate who's a builder which certainly helped) and the valuation after it was completed was about $80k higher than the one done 2 years prior. I was also lucky in that the walls didn't need battens over them before applying the plasterboard.
In the right property, it can certainly elevate a tenants view of the place – giving you the ability to aim for a higher rental return or appeal to a better tenant.
Hope this helps, and all the best with it!
IDV8, you're on a much better train of thought now! Zimby has hit the nail on the head – don't over extend yourself. If you qualify for a $600k loan, you don't necessarily have to take it, and don't let the banks talk you into it. Of course they want you paying interest on $600k, but if you find the right property at $300 or $400k that just needs a few cosmetic repairs and a quality tenant, you stand to learn just as much first time around with a lower risk profile.
A couple of the other people responding on this thread have touched on it already, but my first concern reading your post was your desire for your first purchase to be your dream home…
If you can honestly picture yourself living in this "dream home" until you retire, then go for it – I sincerely wish you all the best. On the other hand, if you can't see yourself living there for 30 years or so and would like to generate wealth, then cast that dream to the back of your mind for a while and focus on buying IP's with ZERO emotional attachment for a few years. Becoming financially free (i.e. waking up one day and being able to afford to quit your 9-5 job if you'd like to) requires delayed gratification.
Stay patient – Rome wasn't built in a day.
Hi John,
It's not property specific, but George S. Clason's "The Richest Man In Babylon" is a must-read for anyone interested in creating personal wealth – it covers the basic principles in plain and simple terms – basic principles that most people don't even think about. Your teachers comment reminded me of the lesson in the book where a man gets burnt financially while seeking the advice of a bricklayer about precious stones… Read it and it'll make more sense.
Peter Spann is another Aussie with a couple of good books on the market – further to Catalyst's post, he pushes the idea of networking with like-minded people.
From personal experience, I'd also suggest sticking to your local market initially as you're much more likely to find success in an area you know more intimately.
All the best!
Haymes paints are fantastic – I haven't done any renovation work recently, so I'm not sure where they fall with regard to price, but definitely worth checking out.
I agree with Kailyn. If you're new to it all, it'll be a much less stressful venture if you start with something that only involves cosmetic changes – especially if you intend to do some of the work yourself to cut your costs. You'll learn a heck of a lot that will put you in good stead for when you do get hold of something that needs structural work.
Another way to increase the yield once you've made the changes you want to make: Furnish the place.
I did this with an older 2BR unit I own in a large regional city. It's close to the centre of town, but the block was prone to attracting the odd undesirable tenant from time-to-time. The extra $80 a week I got for it as a furnished unit not only paid for the relatively cheap furniture package within the first 6 or 8 months, it also put the price out of reach of "those" tenants.
Thanks Richard.
Much appreciated.
After a little more research, can I assume that I might be able to refinance my current IP, up to 80% of it's value, taking $80k ($100k equity) and borrow about another $250k?
Ah, yes. Thanks Jamie.
Back to the topic… Can anybody advise what my maximum borrowing capacity would be if I eliminated that CC debt, saved a $15k deposit, earning $45k p.a. with around $100k equity in another IP, no dependants, no other debts with the loan to buy a property making between $300 and $350 p.w. in rent. Existing IP making $290 p.w. with repayments of $780/month?
Many thanks in advance.
Sorry Michael – I may not have explained myself well enough (bad habit of mine sometimes) – my credit limit is about $22,000, but I currently owe just under $7,000 and most of this has just been transferred to a new card on which I'm only paying 0.99% interest for 9 months.
So… Assuming I can pay this off and save $15,000 as a deposit in the next 12 months, what do you think my maximum borrowing power might be?
Thanks again to both of you for your input on this – it's greatly appreciated – I'm just trying to set challenging, but also realistic targets for myself to work towards.
Thanks again Michael,
Am I correct in assuming that a line of credit, much like a credit card, will reduce the amount of money I can borrow on the loan? If I've got no credit card and no line of credit, wouldn't I be able to borrow more than if I had a line of credit? I'm essentially trying to maximise the amount I can borrow to purchase another investment property.
I'm in no hurry to move on anything just yet, as my local area (much like the rest of the world) is currently a buyers market and I don't see it changing significantly in the next 12 months or so… I'm happy to pay down my credit card, then save a deposit, so that my only debt is my original mortgage on a property that's cashflow +ive.
Would this maximise my borrowing power, based on my current income?
Thanks Michael,
No dependants, no other debts at all, might be able to get a stat dec for my living arrangements, but let's assume my circumstances change (or those I'm living with) and that I have to find a place to rent. I could, in the current market, find a room to rent for $150/week in my area – certainly much less than $290.
My current total credit limit is $22,500 – old card, and the new one to which I have transferred the bulk of my debt to. I will be requesting to have this at about $2000, as I won't really need it once it's paid off. I just wanted to make the most of every opportunity I had while travelling. I know the banks don't really consider it, but I'm very, very good at living within my means.
With my current savings, there's no reason why I couldn't have a $20,000 deposit 12 months from now if I reduce the credit card debt (and limits) and continue to save what I'm currently paying off those cards once the debt is eliminated.
Thanks again in advance for your help.
