Forum Replies Created
- How do keep borrowing for further investing when the only income received is from property investing?
With extreme difficulty. Even if you had a fully paid off property worth $500k, at a 4% net return, this would still only equate to $20k income. Rent reliance may then become an issue.
And whilst you might use this to invest in shares and achieve say 10%, this is still only $50k.Serviceability models tend to take approx 30% of PAYG income, 75-80% of rental income and approx 50-60% of dividend income (or so I have heard) At least initially in your investing career, PAYG income is significantly greater relative to rental income.
Don’t give up your day job – yet, at least..
Terry,
What would change (if anything) in this scenario, if there were two people applying? One overseas like Leigh and another in Australia.
If borrowing 80% or less (in joint application), would this pass lenders & MI criteria?
Noticed the anti-Melbourne 2030 proponents are starting to make some noise through Bob Birrell. (Remember him from uni as author of studies outlining the negative effects of immigration)
Does anyone think they will have some traction with the government and potentially persuade them to change the broad direction of M2030?
I had my phone number unlisted 6 months ago, yet alas, I still get these phone calls, more often than ever.
If you find a solution, post it here…..Good luck
The Trustee won’t accept any offers prior to auction (I have been told this by the agent …. should I go direct and speak to the trustee about this?)It is my experience that all trustee sales go to auction. This is not unusual.
Have you or your solicitor veiwed the vendor’s statement?
What are comparable properties being sold for?Question re hybrid trust. If you set up a hybrid trust and buy units – aren’t the units then an asset of yours and open for attack from bankruptcy, litigation etc Where does this leave your asset protection?Don’t forget under a HDT, the discretionary nature of the trust allows any proceeds of any sale or income to be assigned as the trustee chooses. He/she may elect to not allocate funds to the new owners of these units.
I have read elsewhere that proposed changes in the Bankruptcy Act may change the above though.
We have just purchased a property in south frankston and sold it within a week for a good net,You sold it within a week? Is that a typo?
Collingwood
Thanks for your responses – will let you know of my experience and efforts to woo them into the valuation that I want.
C@34,
Intellectually, just can’t see how a software system could help you achieve more from a valuation viewpoint than what the market actually says it is worth ie comparavle sales. Maybe my mind isn’t open to accept this new paradigm!
I guess there is a money back guarantee which might be useful for those who are tempted but unsure. In my case, this is the first valuation on this property, so in some respects I can’t see this as being as relevant, given the comments, that they guramtee a $10k increase in your valuation over the last one.
If I apply this to one of my other IP’s, which is valued at original purchase price ($235k)and based on comps, today is about $265k. Of course if I used this tool, then the claim would be technically correct, however, it is not the tool that has generated this increase.
Maximus,
I think they might be referring to low-doc loans, which require an ABN
https://www.propertyinvesting.com/forum/topic/6467.html?SearchTerms=low-doc,and,ABN
Buy or rent?
Richmond, Sth Yarra, Sth Melbourne or even Docklands. There are many different (older to newer premises in these areas which will suit different budgets). All close to transport & good areas for going out….
I personally live in Sth Melb and walk to work (in Southbank).
Ask your wizard consultant if the loans are fully securitised – I believe they are.This increases your exposure to the Mortgage Insurers even if the loan is under 80% and you don’t pay an LMI premium. At some point this may affect your lending ability.
Could you please explain the above. Aren’t most mortgages securitised anyway? Thanks.
This is a link with regards to property taxation in Greece.
Jacqui,
I think you are referring to what the NSW government introduced from July 1, 2004, also known as the Vendor or property exit tax.
Yes it is different from stamp duty (applied on a purchase), it is applied against the purchase price of the IP when it is sold and is payable by the seller.
http://www.osr.nsw.gov.au/portal/page?_pageid=33,193927&_dad=portal&_schema=OSRPTLT
but you must admit in your scenario it is timing the that works in Delta’s favour, must you not? In your example she has bought at each trough – how do the numbers stack up if she buys as prices cross their long term trend? What if she buys above that trend?I didn’t start with the premise to favour Delta. Just simply to illustrate the point, that all factors being equal, cashing out at the height of the market even in anticipation of a down turn, is not necessarily the intuitive or best path to take long term.
A simple example like this was not meant to illustrate and factor in all the variables. How do you model or factor the skill/knowledge of the purchaser who may have purchased as well as Delta.
You make a valid point if she purchases at the height of the market or overbids when she purchases to the extent of 20% as the example outlined, it is the eigth year before Delta’s purchase price is surpassed by its market value.
And of course, they both could leverage into the market with multiple properties over a period of time based on their equity, which depending on what they and how well they purchase respectively, would change the future scenario.
devilcv8,
The 12 months that Terry is referring would be bank policy on the specific loan.
I am going though the process with finance on a contract for property, which was signed in Dec 2003. From my research only Bankwest, Macquarie & Adelaide Bank would lend on valuation up to 90%, as long as it was at least 12 months from contract date. Westpac do, but only to 80%, but to a maximum of contract price.
Andreaw,
UI Value $264,000
$200,000 – $539,999: $200 plus 0.2 cents for every $1 of the value that exceeds $200,000Therefore (64,000*0.002)+200 = 328
I think you calculated based on 20 cents or 0.2. Because it was nominated in dollars, 0.2 cents is actually 0.002 dollars
If LT was $13,000 for your example, there would be mutiny in the streets!!
If somebody, somewhere can time the market well, buying low and selling high, they will absolutely outperform a buy and hold investor.Have done a scenario based on what you have outlined and unfortunately we cannot upload files here.
Two people purchase IP for $200k with 20% deposit as the property boom picked up momentum. Interest rates I have assumed at 7.07% and it is a P&I loan.
Robert decides to sell and achieves $350k price after costs & CGT (assuming top tax rate) you clear $141,187.
Delta decides to keep but revlaues (to $350k) at the same time as Robert. She has a redraw facility which allows her to borrow up to 80% of 350k, being $280k.
Over the next two years, Robert decides to place his money in a ING type account and earns 5.25% interest and after tax,this is $148,696.
Delta continues to pay her loan down, $6400 over the next two years (so says Excel anyway). This leaves her with a loan of $147,199 outstanding.
But the market has dropped significantly, and
now her property falls by 20% and is now a realistic $280k. I assume that because she is an excellent customer the bank does not call in her loan nor cancels her redraw facility.For the next 6 years, I assume all property values increase by 2% pa. Where did I get this? It is a conservative number for such a prolonged period of time.
At the end of the 2nd year after Robert sold his property, he decides to buy another property. Coincidentally so does Delta! As prices have come back significantly since the property boom, prices are much more realistic.
Based on the initial 20% drop in the Delta’s property and ensuing 2% pa growth over the next 2 years a $291,312 is a realistic valuation for her property. Both D & R purchase identical properties next to where Delta currently resides, for that amount.
Delta uses her redraw facility which allows her to put a deposit of $132,801 against her $291,312 property. Robert uses his $148,696 and does the same thing.
As indicated above, property grows for the next 4 years (6 years in total) at 2%, then for 3 years at 10%. Of course Delta has two properties who get the benefit of this growth whilst Robert just one.
Their second loans are interest only (only because it is sunny outside and I want to go to the beach & would take too long to work out P&I).
Net result after 9 years from initial sale of Roberts & Delta’s re-valuation.
Delta’s net assets: $582,388
Robert’s net assets: $293,785Of course, it would be interesting to see the analysis (assuming serviceability is no issue) on 20% deposits for future multiple property purchases as opposed to just one.
Going swimming now.[thumbsupanim]
