Forum Replies Created
Thanks Jamie. So in theory, if our contract states we are to borrow $600,000, and based on a bank valuation, the bank is only prepared to lend us $590,000, this would be an 'out', regardless of whether we can raise the additional $10,000 or not.
Thanks Jamie, excellent advice.
Cheers…Thanks Jamie, does that mean the vendors are likely to sit on the offers and then take the best they have, other than make an 'on-the-fly' decision on the offers as they come in?
Warren
Thanks Michael and Richard for the feedback and advice.
The end goal for us at this time is to put ourselves in a position where we are able to borrow to purchase a new home for ourselves to live in. We are thinking the purchase price would be capped at somewhere around 400k.
We want to keep our two existing properties somewhere in our portfolio, either in our own name, in the Company or in the SMSF, although it sounds like the SMSF is a no go!
As we currently have two mortgages, one for our own home and one for our investment property, my line of thinking was to pay them out using funds from the company and/or the super fund. That would leave us debt free and ready to borrow again.
Warren
Thanks 'No Mates', we'll see what Mr. Swan has for us tonight
Thanks for the reply Jamie. Our PPR loan is already 100% offset, so all good there. I'm no rocket scientist when it come to clever accounting and taxation, but I suspect our account is talking Interest Only as a means of gaining maximum tax advantages. I'm just trying to get a better understanding of how Interest Only works, and at what point is the principal paid off the investment loan, or isn't it?
Regards, Warren
Just for the records, Allianz won't insure in the town we have purchased in. Had to shop around. No problems with GIO.
Yes, advice from our legal people was: Building insurance should be in place from when the matter is unconditional
and your finance has been approved to protect you as Purchaser.Thank JacM, consider it done!!!
Hmmmm, so it can't hurt to have it. We're in Victoria and no-one seems to know for sure if we should or shouldn't. Maybe better to be safe than sorry.
Catalyst wrote:OK do tell. How did you overcome your fears? Did you use a buyers agent? I'd love to hear your processes that helped you decide this was the one.Before you said you'd bought I was going to say look at the numbers. That's what counts with IP's. Friends say "I wouldn't buy anything I wouldn't live in myself" which is why they own nothing.
We certainly don't consider ourselves to be rocket scientists, so there is an element of "wishful thinking" and "here's hoping" built into our purchase decision.We've read all the books and subscribed to all forums, and while the information in most part has been invaluable, a lot of the information, or maybe more so the format in which it was delivered, was a little overwhelming. We sensed it as case of some very important information, surrounded by a lot of less important information, and in most cases, especially with the books, 200 pages of what could have been said in 100 pages. I think at the end of the day, for us at least, we just wanted the facts. The 200 pages may have worked for others, but for us it was at times all too hard. We're not lazy, just not the smartest kids on the block, not in this industry at least.
Having said all that, I have no doubt that we did miss, overlook, or simply not understand a lot of the information that we needed to take it. Again, we are not rocket scientists, just a couple looking for invest in property and invest wisely. So, how did we arrive at our final decision to jump on the IP bandwagon?
What we did get from all our research were some common threads that seemed to sit well in the scheme of things. They keep appearing over and over, in one form or another. Keeping in mind it has always been our intention to purchase existing residential property, they were:
– Buy a property that won't stress our finances too harshly if things go wrong.
– Look at property with no, or very minimal, immediate and foreseeable maintenance requirements.– Look for a strong demand in the local rental market.– Look for properties that would deliver us an immediate, or sooner rather than laster, positive cash-flow.
– Ideally find somewhere already tenanted.
– Look for good depreciation returns.Initially, we had made the decision not to limit our searching to areas we knew, but as first-time investors, that scenario wasn't sitting well with us as we started to venture outside our comfort zone. In the end we did buy in an area we know, but who's to say that area isn't a prime location…it might just be the next boom town???The property we finally settled on only failed in one of criteria we set. It is currently owner-occupied, but we have no concerns about sourcing a good tenant for it, they will be the easy part.So, that's us done, or should that be just starting out. Our aim is to get this little number under our belt and use it as a spring board to future investments. We are very comfortable with the commitment we've taken on, and looking back to our early days of researching the investment property scene, one of the most overwhelming aspects of it all was the constant suggestion that you needed to own three dozen properties to be financially successful. There may be an element of truth in that, but the biggest truth is you still have to, at some point, buy your first property, and now we've done that. The rest may follow….and we hope it does.
Again, a big big thank you to everyone that has ever contributed to this forum, and in particular those that took the time to address our concerns directly. WOW!P.S. We did our own ground work. Decided against a Buyer's Service for this one……
Finally….today we took the plunge and signed up to our first investment property! Thanks to everyone for their feedback on this discussion and other discussions we've posted, and for the forum overall…..the advice has been invaluable just to get us this far…
Thanks for all the feedback so far, it's much appreciated. The unit we have in mind is one of 10 that are for sale. No pools, balconies etc, just 10 2 bedroom unit on the one block. They are all owned by the same person and being sold off individually. They are one and half years old and all currently tenanted. Any alarm bells here for anyone? WarrenThanks JacM……excellent advise that I'm sure will sit well with me for the years, and many investments, to come…. Cheers !
Thanks xdrew, understand that, but am I entitled to view the section 32 at any time,. providing one exists, or do I first need to enter into some type of agreement regarding my intention to purchase the property?
Thanks Amanda, certainly appreciate the feedback. The dinner party scenario is no issue for us. Our only goal is to secure our future, but to not make too many "big" mistakes along the way, so just looking to hear experiences from other first time investors. All our research tells us to go exactly the same way you have, and that is the direction we'll be going. I guess our main question at this point is whether to go it alone, or jump in with a Buyer service. Thanks again., WarrenWow, I might be starting to actually follow this. So, based on all that, if we were to draw $50,000 as a deposit on an investment property from the equity we have in our PPOR, and if the interest paid on the 50k is tax deductable, we would be better to re-draw the 50k, and then dump the 50k cash we are sitting on, back into the PPOR loan, so our overall mortgage balance on the PPOR is much the same, but we potentially have a tax deduction from the 50k component now, and we've scored ourselves a deposit in the process.
Thank you v8ghia, so it fair to assume that it's better to use our cashas a deposit, rather than our equity?
Thanks Thommo, really do appreciate the reply, but I'm thinking maybe it does show that this might all be a bit over my head, as that only confuses me twice as much and I have no idea what all the figures actually mean, or what figures to put where. My question probably wasn't structured quite right in the first place either, but thanks anyway, we'll soldier on with caution and see where we land.
