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When you say senior's unit – do you mean over 55's over retirement unit/village? Also are you wanting to refinance both investments or one? Also what are the loan amounts and values for each IP?
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Hi Steven,
Stay away from serviced apartments. They have fantastic yields but that's about it. I had one case where an applicant was purchasing a serviced apartment. Luckily we did an upfront valuation before he purchased the property and they valuation came back $120k less due to a fire sale in the complex 2 months ago.
Is there a specific reason why you are looking at an apartment? If you are looking at an apartment go for at least a 2 bedder with minimal strata cost.
Regards
Shahin
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A lot investors have investments in Gold as it is going up (as they say) but the problem is that you lose a fair bit of money on the conversion and transfer to cash process. Contrary to his statement I remember Warren Buffet always saying that he would never invest in Gold. Is Switzerland an option?
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Hi Kara,
Deposit Power will be able to provide short term guarantees pending you meet certain criteria however you cannot pay the bond back after settlement, it needs to be on or before the date. The fee is 1.2% of the deposit amount so say the 10% deposit required is $40,000 then the fee is $480.
Your other option is to have a delayed settlement as well as negotiate a 5% deposit instead of the traditional 10% but that is assuming that you have the 5% after the cooling off period.
Have you signed a contract of sale yet? Do you have finance approval?
Regards
Shahin
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Situation deserves a longer answer but im going to paraphrase. You can borrow up to 95% with most lenders depending on a few things such as ANZ can only go up to 70% if you have 2 dwellings on one title or Westpac will lend to 95% but only for loan amount of up to $1mil. You will not be able to borrow funds for the subdivision as part of the construction loan at 95%. You will need to borrow this separately from against another property.
Its a bit of chicken and egg but you will need to get some estimates to get the ball rolling. Then I would consider unlinking the securities, doing upfront valuations if possible (depending on the lender) and then devising a plan of attack from there. E.g. what type of equity do I have and will this be enough to fund the construction and subdivision. The lender will also require a builder's tender as part of the application progress. Will the subdivision stage occur before construction or after construction?
Regards
Shahin
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Whats the strata on the place?
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Give Marilyn a call from Best Real Estate – she is the best. They are based in Wenty but should be able to service Northmead.
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Unless you are building a pair of 2 bedder single storey properties – the duplex will cost you much more than that. Also factor in site costs and the 7,000 other small costs like holding costs, demolition costs, etc.
Re the finance side of things – be careful of the lender you deal and the policy of that lender. Not all lenders will lend you the money you need based on the above scenario (I am assuming of course you are restricted by your deposit).
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Hi Maree,
Some lenders allow you to do an upfront valuations (most free and some a reduced fee). Depending on the situation – you may be able to request that a particular lender uses a specific valuer but it must be a valuer within their panel.
When the upfront valuation takes place – you will be able to get a full copy of the valuations. In some rare cases you may be able to successfully challenge a valuation. Also if you have done renovations to the property be sure to highlight these specifically together with the cost of the renovation.
Regards
Shahin
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Waterproofing is paramount – make sure whoever doing this is doing it properly and actual does it. Don't get one person to do everything. Get a tiler to the tiling, etc. Make sure you pay a little extra a get a good tiler even if its for an investment. Doing a bathroom the wrong way will cost you heavily. There are plenty of bargains out there re fixtures and products and they are good quality too.
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Hi Matthew,
It slightly depends on the areas you are looking and also the type of property you are looking to purchase (unit vs house). Think about your long term strategy, e.g. when do you want to purchase your 2nd IP and how will the first IP help? Will it help cashflow or capital growth?
With a $15k deposit – you will be looking at a purchase of around $180k (depending on which state you are in and whether or not you will be eligible for any grants).
What types of properties are you looking at? Unit or house? Also what areas have you been looking?
Regards
Shahin
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You can't pay off the PPOR loan by using the LOC or a loan against the IP and then claim the interest on that amount.
Set up the facilities separately/standalone and if you are going to use equity in the PPOR to fund the next IP – make sure that that too is a separate facility.
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Whats been the problem? You should easily find something about the Turramurra area.
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You have $50k in savings and this is linked as an offset to your PPOR. This is great and keep it there. It is 'bad debt' and you want to pay less interest on the PPOR than on the IP's. Re the equity – you have $152k in equity at an 80% lend. You have $186k in equity at a 90% lend (minus the LMI). The equity of say $152k can be used as a deposit for the purchase of subsequent IP's. Make sure that you keep the $152k separate to the PPOR loan as this portion is tax deductible and you do not want to contaminate the interest that has been charged.
Re location – why are you looking at regional at not western sydney say around the blacktown, penrith and Mount Druitt areas? The other thing with IP strategies is not just location but also what you are planning to do with the property. Some have the strategy of buying cheap fire damaged houses in the area and fixing it up and renting, some subdivide due to the relax council rules in the area and the larger blocks and some ascertain DA for multi dwelling development and sell it with the DA. It all depends on the strategy but make sure you have one before buying.
Regards
Shahin
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That is sqm size is bordering on ridiculous. I won't go anywhere near the property. What is the strata on the property?
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Hi Rob,
Thumbs up on the decision to purchase house rather than units particularly if your strategy revolves around Capital Growth. There are a few strategies you can implement, i.e. development, subdivision, GF's, and the good old renovation. Which areas have you been targeting?
Regards
Shahin
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Ok so what would be the rental on both houses? The numbers dont look too bad. It will really come down to building costs but a single 3-4 bedder dwelling should cost around $150k turnkey. Don't forget the depreciation benefits on the back property when crunching the numbers.
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Hi Louis,
Whats the resale value of both properties once the unit in the back goes up and the subdivision is complete?
Regards
Shahin
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You should never fix your loan on the basis on beating the bank. Fixing a rate is more of a risk management than anything else.
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Hi Mate,
Go to Liverpool auctions – they have solid timber front entry doors for $120. You just need to paint or stain them.
Regards
Shahin
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