In response to the original post ‘where to buy in Gladstone” I would suggest buying anywhere around Kin Kora, Kalleentha, Emmerdale, New Auckland, Kirkwood.. these areas are more up market. The coastal suburbs are badly affected by coal dust and alot of the houses full of asbestos. 90% of the investors I have dealt with buying in Gladstone have bought in these areas. Calliope is an excellent spot, 20 minutes or so from Gladstone and very popular with good rent returns. Hope this helps.

Re mining towns, yes you can ride on the back of fast growth there depending on the town and mine location but you really need to know what you are doing and research the fundamentals pretty well. (naturally). Take Pine Creek NT for example 4 years ago you could buy a house for $25,000 and within 2 years they were selling at around $150k – $200k with th eGold Mine and Iron Ore mine going off. Then the Gold Mine suddenly closed shop and pulled out as the economy shifted and values suddenly plummeted… scary.

Regarding positive geared properties, traditionally pos geared were in low growth areas and neg gearing in strong growth areas, of course high rental return in a high growth area would be ideal.. unheard of in the past but they are actually out there at the moment, I’m buying one right now in Caboolture. A good investment with high rent return, high growth predicted due to solid fundamentals… They are out there.

Regards
Tony Born
Senior Mortgage Consultant
Member: FBAA, PIPA
Mb: 0407 617 141
Email: [email protected]
Ask me about a free Property Investor Toolbox

Hi Raslaffin if you sell what are you hoping to gain? It’s cash from the equity right? Then your up for all the costs associated with selling so you loose a whole chunk of money in the process, real estate agent fees, if an investment property then capital gains tax etc etc. Not only is it costly to sell you LOOSE THE GOOSE THATS LAYING YOUR GOLDEN EGGS!! You loose a valuable asset that will most likely return you on average anywhere from 7 to 12% if history repeats itself.

If you access the cash out through well structured finance (and I need to make that clear WELL STRUCTURED FINANCE) you can pull out the required equity and have it sitting in a bank account interest free and tax free.. until you draw it down. Then you pay interest only on the amount you draw down. This money is cheaper than selling and as I said theres no tax involved as its a debt in essence.

Use this as a deposit and costs for your next purchase and increase the size of your asset… then you are setting yourself up for creating for yourself significant wealth with property (I had to throw that in) due to the size of your asset generating capital growth.

Check out one of the other forums regarding multi property structuring as well.

Regards
Tony Born
Senior Mortgage Consultant
[email protected]
0407 617 141
Ask me about a free property Investor Toolkit

Hi Mike, good topic and one that will affect anyone building a portfolio. Basically what has happened in your case is the bank has cross secured or cross collateralised (same thing) your loans in order to give the lender more security and control over your properties. Worst case if you default on one of your loans they can sell out from under you and of course it has stifled the growth of your portfolio.

Sad thing is I see many brokers .. even brokers who have been in the game for years structuring like this for investment properties, and even including a PPOR into the equation risking everything. It limits your potential to grow and is very costly to re-structure as you need to pull properties away from the structure and refinance as stand alone. Then of course there are potential exit fees and partial release issues and costs involved if you want to move forward.

There are a few factors that limit your borrowing in a case like this. 1: Overall maximum LVR is lowered, 2: The assessment rate to which they calculate borrowing capacity is now spread over the entire portfolio. If it were a stand alone security the assessment rate is applied to the loans directly related to the top-up and purchase. Thats another thing, if it were set up as stand alone a refi and associated costs may not be necessary as you could top-up an existing loan facility for cash out to cover costs related to the next purchase. 3: The lender also has a max debt level (ceiling) and once you reach that debt limit with them thats the end of the road.

You would need to have your situation properly analysed, but providing you service and you have enough equity, my suggestion is to refinance one of the properties as stand alone security with another lender, do 2 splits in the loan for the refi, one to payout existing mortgage owed and a 2nd split for the cash out component to cover deposit and costs in purchase of your next investment property. You wont need any fancy bells and whistles like LOC or Offset accounts in my opinion, they cost and a cheaper option would be a basic variable loan with redraw facility, that will do the job with internet banking access and all.

Then for the purchase, again stand alone security, and basic variable loan.. do them both with the same new lender perhaps.. but dont be afraid to diversify lenders..

Theres alot of issues to consider when financing a portfolio and especially if you are planning to keep growing i.e… how you structure loans with a lender/lenders, what type of lenders you place loans with , are they deposit book lenders or securitised, do they have in house LMI (mortgage insurance) or is LMI outsourced and you need to keep tabs on your debt with mortgage insurers as well.. once your portfolio gets to a considerable size all this will be an issue. Keep a spreadsheet with all these details.

Anyway I could go on forever, later on down the track you would tackle the other cross secured properties and slowly pull them way and restructure.

I hope this helps. Good luck with it all.

Regards
Tony Born
Ph: 0407 617 141
Email: [email protected]
Ask me about a free Property Investor Toolkit.

Just be aware with NRAS that mortgage insurers will not go near it so you are limited to which lenders will fund. As far as I know max LVR is around 80%. This may not be attractive to investors later down the track if you ever want to sell.
Best Regards
Tony Born
Senior Mortgage Consultant
[email protected]
0407 617 141