Forum Replies Created
Scremin,
I was going to explain it, but this is more complete.
http://www.somersoft.com/forums/showthread.php?t=8945&highlight=easement
James
The simple answer is..YES..But some things to take into account….
1. Choice of suburb – long term growth prospects?
2. Choice of apartments block ie how many units/apartments, how many 1, 2 or even 3 br apts
3. Current condition of the both apt and block
4. Size & floor plan design of apartment
5. Who runs body corporate and the balance of the sinking fund
6. Very preferable to be strata title (some are stratum and banks are more reluctant to lend you higher LVR’s)
7. Car space(s) on title?
8. Do the numbers stack up? Comparable prices of unrenovated and renovated apartments
9. Have you identified the team for reno’s
10. Structuring ie purchase in individual name, trust etc
11. Tax adviceGiven the state of the market, the ability to find a rough diamond and then be able to put back on the market after renovations might be limited. If you allowed yourself some more time before re-selling might allow you to get a better price.
James
Your financier will have a valuation taken on your property when you re-finance. This will dictate what LVR you are borrowing and therefore any LMI liability.
So yes, capital growth may have taken your property from a LVR which requires you to pay LMI (above 80%) to a LVR which does not.
James
As an investor, I think this is great news.
Reduced supply in the future of stock (whether house or apartment), a relatively stable economy and low interest rates with a positive outlook, all in the presence of continuing increased immigration.All underpinning IMO, very solid capital gains in the longer term.
James
Don’t forget that this comes off three years of negative job growth, so this is only the start of the climb back from a jobs perspective.
The LA Times article “Jobs Growth in 2004 Best Since 1999, 8/1/2005, also pinpoint limited or no wage pressures and a declining participation rate which tend to suggest there is still considerable under employment of resources in the US economy.
From those limited facts, I would see little to encourage our exporters of an increased demand for our products in North America. However, if the recent increase in the US dollar can be maintained (and conversely a reduction in the $A), this may give some needed respite to our export sector.
James
Abbee,
The management group will dictate the return once guarantee has expired. You need to satisfy yourself that they have the experience and credentials to deliver. Do they manage other similar investments? What is their performance on those? Who owns the Group. Due diligence required on the management company.
Banks will not lend you as much compared to a normal residential property.
From a tax perspective, if you intend using the property for any time of the year, you will need to apportion back your expenses to the time the property was available for letting.
If the complex is almost all holiday letting, then re selling, you are essentially limited to selling to other investors, not owner-occupiers. Limited market for your property.
You are also exposed to the strength of demand for tourism in the area and more broadly within Australia. Holidays tend to fall under discretionary spending, so any potentail downturn in the economy would impact on tourism in general moreso than residential property returns IMO.
James
Lumwood,
Not a broker etc, however, you can today get very good 3 and 5 year fixed rates for around 6.5%, I have seen advertised. To put that into perspective, I am currently paying 6.67% variable with a professional package.
You can mitigate the RBA risk through this approach.
As for interest rate rises, it seems likely for at least a 0.25% increase but when, I would be only guessing. However, if it is during the winter months (and the traditionally slower months for real estate), would be interesting to see what happens to market sentiment. Might make for some interesting opportunities.
James
I am sure the REIWA would be very interested to hear about that. http://www.reiwa.com.au.
(Of course, I am assuming the agent is a member, which would give the REIWA power to punish if they have done something wrong)
James
Prodontia,
Re contents insurance, when establishing what is the right amount to insure, assume, the worst case scenario where everything is destroyed in your apartment (yes, pretty far fetched I know, but that is the point of insurance). So you might need to replace not only the carpets, kitchen, bathroom etc, plus your own things (TV, furniture, fridge, microwave, clothes etc)
James
JackHu,
I think many people use this forum as a thought starter, utilising the knowledge of others, maybe ,like yourself.
Others may already have an idea and look for confirming or contrary advice to see whether they have not missed anything.
We all have to start somewhere.
CK,
Don’t think that your own home is not an investment either.You also make mention that you want to start earning an income off property before your husband retires. Generally, it takes time for any one property to start providing you with a sufficent enough cashflow for you to live off. Are you giving yourself enough time to be in the market?
Option one might be to purchase the property that you are considering, and seek to pay down the loan over time. Say after 1 to 2 years, you maybe able to utilise the equity to purchase an IP.
Option two might be to purchase an IP now and rent concurrently. This something that I do.
Lucifer_au had a good suggestion regarding trusts and marrying the above two options.You may also want to look at the discussions being made on Derivex (interest free loans) on this site. They have a web-site, http://www.derivex.com.au
James
Victorian PM charges $2+GST. Qld PM charges $6+GST.
From a principal viewpoint, I agree that their commission, should incorporate all their costs of doing business. However, put in perspective, these charges are not usurious and tend to agree with MortgageHunter, that personally while irksome, this is small potatoes.
Interesting to see whether they vary significantly by state.
James
Robert,
Personally re ‘how much I can borrow’ calc., the information I get back from them tend to differ to the amount that the lenders eventually say they will lend to me. (Yes, with the same information), so I tend to not use them anymore.
The other calculator that I would like to see is a LMI calculator. Therefore based on %LVR = % of loan = $. For me personally, as I tend to have higher LVR’s, I would like to know the sensitivity of % changes in LMI rate applied against loan amount as LVR increases.
James
Claire,
Can only concur and re-inforce Rob’s commentary on impartial final inspections.Recently, an acquaintenace who bought IP on Hope Island in Qld (new construction). It was due for settlement on 6/12 and all was completed. However, there was no final inspection done and when she flew up to view the property, there was still builders equipment inside the apartment, the kitchen unfinished and some hastily finished and poor quality work.
James
One more point that I forgot to make, earlier this year I purchased an IP at 90%LVR. At that point, there was no overdue account on my credit history.
Would this potentially go in my favour from a mortgage insurer’s perspective? ie already obtained finance. Although I guess they don’t see the LVR on the credit history, for all they know, it could be 50% LVR I guess. Of course, if it is the same MI, that might help….maybe?Have previously spoken to Westpac on the issue of further borrowing ability with minimal deposit and the amount they had indicated was approximately $300k(max) purchase price with a 95% P&I loan (IP)
Given the price is in the vicinity of $350k, this would make things impossible. Admittedly this is only Westpac, so I have not verified elsewhere. The rationale behind the personal loan, was that would allow me to place a deposit of a maginitude on the property to qualify for that finance.
Of course, I am not sure when banks do a credit check, look at the specifics of previous hits on your CRA, or whether they just look for defaults etc. So, in this case, they might see a hit for credit for ‘x’ amount (being the personal loan)and then ask questions accordingly(?) Of course, that is if I have not disclosed the personal loan in my statement of assets and liabilities.
James
Joe,
I bought 3 br townhouse in April this year in Upper Commera. I have just had it revlaued and in the process of getting a refund on LMI. Rent has gone up from $235 to $250pw in that time.
I was recently up there for work (Gold Coast), and am more convinced once the town centre & remaining infrastructure has been completed as booboo mentiones, this will certainly add value to the area (cyclical considerations aside).
James
I have just had the cost of $2700 for a Hybrid Discretionary Trust with corporate trustee by Gatherum-Goss (previously mentioned by GreatPig).
However, you could set up your own pty ltd company without accountants’ charge for minimal amounts, other then the statutory charges (www.incorporator.com.au)
James
I know of a few examples in the early 90’s on commercial properties. Haven’t heard that on residential.
James
Understand completely Kay.
Docklands was mentioned before. I know in looking there to rent at the start of the year, I thought that the facilities ie shopping, proximity to places going out other than Docklands, was a bit far. Anyhow, I don’t think people say in Melbourne yet, lets go out tonight and go to Dockland. When people come and visit there are limited places for people to park (without being charged). Weekends are a real issue.
The rents are still higher than Southbank (as you would expect, newer buildings, arguably better facilities etc). 1br start at around $300pw & 2br @ $380pw. I think the vision for the area
is spot on, I think it will take some time for it to become reality. Don’t forget, there is construction in the Docklands precinct (ie residential towers) for the next 6-7 years.Of course, if Collingwood played all its home games at Docklands Stadium, I might think differently[biggrin]
James
