There are pros and cons associated with NRAS. Some of the pros include long term tenancies and high rental yields. My personal view is that the cons generally outweigh the pros. Some of the cons include resale being more complicated, generally overpriced and capital growth isn’t fantastic.

I wish on so many occasions it would be different but the bank (the valuer actually) will go by the purchase price. Even if you think you have purchased it for a bargain the valuer will not share the same thoughts.

Re your second question the valuer will value the property as per the end construction price. Most often the valuer will add the land value plus the construction price. Make sure that the builder is a licensed builder due to lender requirements.

There are pros and cons for each option. Units are cheaper and thus have an easier entry point for investors. They generally have higher rental yields than houses.

Depending on the area my personal preference is the house for exactly the land. You have more opportunity to get Capital Growth with a house than a unit. Why? You can renovate it more extensively, you can extend up, down, sideways and you can develop (or at least get DA on it).

Make sure you do plenty of research on the property either house or unit before you make a decision. We run property reports on specific properties which shows recent sales, on the market properties, etc. Email me the property address and I will send you the reports.

IO is the better option if you are not going to be tempted to touch the funds sitting in offset account. Paying IO will also help you pay down your personal loan quicker since you are being charged a higher interest.

Re CBA – they are not the cheapest but they have been quite competitive over the past 12 months. Generally speaking I would stick with CBA but go onto an IO loan.

Hi Jenny111,

A portion of the strata paid by you is allocated to the sinking fund. The committee can agree on what amount should be in the sinking fund. The committee may vote that more is required in the sinking fund and therefore this would have an impact on the strata. It is important to see how much money is in the sinking fund. If it is too little then that is worrying. Why? if something happens where the funds are needed then the committee would need to draw on those funds. If there isn’t much there then this impacts the strata (it goes up). If there are adequate funds in the sinking fund then this is a good thing. Hope that explanation made sense!

Hi Adam,

$80-$85k is the average. Like all dwellings it also comes down to the finishes. If you are seeking finance for this project make sure that the builder licensed!

Yes. You should also review the body corporate financial statements which include the balance sheet, income and expenditure statements for the administration fund and the income and expenditure statements for the sinking fund.

Hi Jenny,

The other thing you need to look out for is strata. Some studios have very high strata costs.

Hi Mark,

It depends on how much your LVR will be at the end of the day. When it comes to Variable Rates ME Bank is definitely cheaper than ANZ but then there are about 3 lenders cheaper than ME Bank. The problem with variables rates is that the lender who is cheaper today may not be the cheapest next month. Fixed rates is a different story. Also in your case you need to consider LMI and the premium you will be paying as each lender is different.

Also re how much you can borrow – again different lenders will lend different amounts.

Is your total deposit $15k and the property purchase amount $350,000? If so then you will be short of a deposit amount particularly since you are not a first home buyer.

Shahin Afarin – Property Finance Consultant
http://elitepropertyfinance.wordpress.com/

Hi Bjsaust,

SMSF loans are priced higher than traditional loans. Generally speaking I would stay stick with St George as their SMSF loans are very competitive. Liberty Finance is particularly good if you are setting up a brand new loan.

Shahin Afarin – Property Finance Consultant
http://elitepropertyfinance.wordpress.com/