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Stuart Wemyss
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July 8, 2003 - 8:33 am
Policy cover varies greatly amongst insures and therefore it is not always meaningful to compare premiums. In addition, some insurers have higher claim approval stats than others (no use having insurance if they don’t pay when you put in a claim).
Perhaps consider using a licensed insurance broker. As Del alluded too – there is a number on our website to ring and discuss insurances.
Cheers
Stu
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at http://www.prosolution.com.au
Stuart Wemyss
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July 8, 2003 - 2:23 am
Yes there are a few lenders that will do a 90% lend with no genuine savings. BankWest & IMB are a couple off the top of my head.
A lender will want to make sure that you have sufficient funds before they give you unconditional approval.
Re: short fall. How about personal loan (but must be able to service), Sell assets, borrow from family, investment partner, etc. This is probably something I would have addressed before signing for the property.
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Stu
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Stuart Wemyss
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July 6, 2003 - 8:18 am
You don’t have to refinance to another lender. You can stay with the same lender and just renegotiate or vary the mortgage based on a new valuation. You need this valuation to increase by approximately 40% to ensure you are able to pull out the full deposit (assuming a 70% LVR).
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Stu
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Stuart Wemyss
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July 5, 2003 - 11:44 am
The ENJOLady
It might do. If she borrows more money then her payments will change. The lender need to complete a new assessment to ensure she is able to repay the loan (i.e. they will look at P&I repayments not IO). Secondly the lender will probably want to see another income source so the borrower is not over reliant on rental income. Things you need to be aware of before you alter a mortgage.
Cheers
Stu
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Stuart Wemyss
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July 5, 2003 - 6:11 am
Hi Wte48b
Re: valuation. If you feel that the value is not adequate then ask the broker to negotiate with the lender or perhaps consider another lender. For example, perhaps you should have been there when the valuation was done to ensure the valuer is aware of all the market evidence in the area. How about asking if the lender will accept a valuation you commission (to be used by the lender for mortgage purposes). Then you have control of the valuation process.
Getting access to equity is vital. Don’t settle for an undervaluation.
BUT be informed. Be sure that your estimate of value is realistic. You must be able to point to specific evidence.
Re: how to use equity – pay out your personal loan first. This is non-deductible debt (or bad debt as some would say). Get rid of all bad debts first… then invest. That’s my advice.
Cheers
Stu
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Stuart Wemyss
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July 5, 2003 - 3:09 am
Linda3
This not an easy one to answer. Some lenders will consider lending 95% but it really depends on the borrowers situation. If the lender is taking a higher risk on the security (i.e. by lending 95%) side of things then they will want to mitigate that risk on the serviceability side of things (i.e. you need to be able to easily be able to afford the loan). Perhaps the lender may also consider an accelerated repayment arrangement (where you reduce the LVR to 90% over 3 year). The lender will also consider your current loan. If you are ahead in your existing loan repayments then that a good sign.
Difficult to answer yes or no.
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Stu
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Stuart Wemyss
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July 5, 2003 - 3:02 am
Hi Caz
Try and hang onto it (only if you are reasonably sure that there will be some capital growth in the short-term). However, if you are unsure about capital growth then I would sell.
$4,000 is not that much in the scheme of things. Maybe do some home based work. Get your de facto to assist the trades people in return for a lower cost of labour. There are ways of getting the repairs done.
By the way, you can’t refinance if you are unemployed. You (and the lender) must ensure you are able to comfortably afford the debt. Don’t put yourself in a situation where you will be forced to sell the property.
Best of luck.
Cheers
Stu
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Stuart Wemyss
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July 5, 2003 - 2:51 am
I have got a client that owns 19 properties and her average yield is 11%. []
I would like to have her portfolio. []
I just takes a lot of pounding the pavement (for which I have little time at the moment []).
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Stu
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Stuart Wemyss
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July 4, 2003 - 9:00 am
Hi Tas
Any profits retained in a trust (i.e. not distributed) are taxed at the highest margin rate (i.e. 48.5%) as far as I’m aware.
Cheers
Stu
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P.S. But there could be a different rule that I’m not aware of. Tax & Trusts is always changing and can be complex.
Stuart Wemyss
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July 4, 2003 - 5:09 am
Wow Terry – I was one second late! []
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Stu
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Stuart Wemyss
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July 4, 2003 - 5:08 am
Hi Amni23
The bank will consider your net income (i.e. gross income less expenses) as this is the amount of money you’ll have free to be able to repay the debt. The bank may make adjustments for some items (depreciation, excessive superannuation contributions, abnormal items, etc.).
It sounds like the bank will use $8,000.
Cheers
Stu
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Stuart Wemyss
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July 4, 2003 - 3:38 am
Hi Drewboy
I’ll have a crack (in the absence of anyone else).
1. 25% deposit for commercial – do you have this? If not then can use equity in your property @ 6%. Therefore net cash flow is $12,282 – $4,500 = $7,782. Commercials ok but you could probably get a residential at 10% yield. The good thing is the cost of debt for res. is much cheaper than commercial.
2. Ok – not bad but it’s a bit of a “slow” strategy.
3. No idea on this one (no experience or knowledge).
What about looking for a high yield property that is undervalued. That way you should get some good capital growth in first year (or so) and still have a good yield. You can then use the equity in that property to purchase your next one.
Cheers
Stu
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Stuart Wemyss
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July 4, 2003 - 3:25 am
Thanks Scott.
Just to clarify… when Scott says “bends over backwards” [] he means this metaphorically not physically! [] Sorry, Firday afternoon, long week… time for some humor.
Cheers
Stu
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Stuart Wemyss
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July 4, 2003 - 3:07 am
Terry – sub-sec 2 says if you use “part” of the dewelling for assessable income purposes… I checked my answer with the Master Tax Guide (but it has been known to be wrong before).
I’m email one of my tax nerd mates from KPMG and let you know.
Cheers
Stu
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Stuart Wemyss
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July 4, 2003 - 12:05 am
Actually you only get a partial CGT exemption. You have to pay CGT on the time this property was rented out (sec 118-145). Here’s an example:
quote:
You Acquire a property on 8/4/1992 and use it as your main residence until 17/8/1994. On 18/8/1994 you start renting the property out. On 29/11/2001 you sell the property. The partial exemption is as follows:
days in period 8/1/1992 to 17/8/1994 / days dwelling owned * capital gain
Very hard to own an asset – earn taxable income from it – and not have to pay CGT.
Cheers
Stu
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Stuart Wemyss
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July 3, 2003 - 11:48 pm
Don’t mix business with pleasure.
If you have purchased this for investment purposes then all you really have to worry about (with in reason) is the numbers. Is sound like you really like the area (which is great) but don’t let your emotions affect your investment decisions.
If the capital growth is good or if the rental yield is high then it makes sense.
Good luck with your investing.
Cheers
Stu
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Stuart Wemyss
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July 3, 2003 - 11:36 pm
Caeryla
I would also check out:
– Streets Ahead by Monique & Richard Wakelin
– Real Estate Riches by Dr Dolf De Roos
Cheers
Stu
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Stuart Wemyss
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July 2, 2003 - 11:21 pm
It’s all about rental yeild. If you buy a higher yield property your capacity will increase.
This will be addressed in my “unlimited finance” article – which I’m about half way through.
Cheers
Stu
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Stuart Wemyss
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July 2, 2003 - 10:30 pm
Just on the covering your risks thing… each syndicate member could counter indemnify the other members for their share of the debt. This would give you legal recourse should one member not meet their obligations. You could put restrictive clauses in the syndicate agreement that perhaps states members lose their share of ownership if they default on payments, etc.
There are ways of dealing with these issues. It serious – see a commercial and sensible lawyer.
Cheers
Stu
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Stuart Wemyss
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July 2, 2003 - 10:24 pm
Return to your investment objectives and time horizon when you purchased. Did you buy for the long term? If so, ignore the short term volatility. As a long term investment I think Southbank is good.
However, if you purchased for a quick capital gain… it’s not going to happen. Cut your losses.
Cheers
Stu
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