Hey all,
Approx 1.5yrs ago i purchased a property Brisbane. The property was purchased at a very good price of $90 000. Since then the market has taken off and I have had estimates that my house and property is now worth $180 000. All surrounding houses in the area of similar specifications and condition are asking around this price.
I am now looking for another property to purchase as an investment. I conservatively estimate that i have at least $50 000 equity in my property. Will i need to have a deposit to borrow against the equity in this property???
I am also scouring the country for the next best place to purchase. Either Brisbane again as i beleive that the value of the market there will over the next 5-10 yrs continue to rise. ALternatively as my employment will be taking me to Sydney am i better of investing in a property there. Property values substantially higher in Sydney etc hence more outlay. However my concern lays in the fact that Sydney is not in a boom as much as Brisbane hence the overall value within 10 yrs time will not increase comparitavely much as will Brisbane.
Any ideas or advice.
ThanksG’day…
You would know the Brisbane Mkt better than me.
I think it’s important to buy what you already know rather than have to rely on researching an area such as Sydney that is new to you.You say you bought 18 months ago at $90k and now worth $180k. Unless you have already borrowed/ refinanced, surely your equity is much greater than $50,000 ??? More like $100,000. If it’s worth $180,000..then your equity is $180,000 less what you currently owe on your Mortgage. Your question “Do I need a deposit to borrow the equity in your existing house” of course not.
You will require say 20% of the purchase price of your next investment Plus closing costs. That will determine what Price Range you are buying into. Example …Buy at $175,000…requires a deposit of $35,000 plus allow $10,000+ for closing costs…Total $45-$50,000.
Looking at the sums above..it would automatically exclude Sydney…How about if you get back to me
and clarify your equity in your current home before I can help any further.Cheers
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]Thanks Bill for your advice so far. I have borrowed against my home again since my initial purchase. I now owe $99000 on the mortgage. I was conservatively estimating that i would have at least $50 000 equity, however in reality the figure is a lot closer to the $80 000 mark.
I have been nutting over things for the last 12 hrs and have decided that maybe i would be better off to purchase 2 property’s around the $120k mark and rent each one out. Hence the properties are more likely to be positively geared and the value of the property has a greate chance of movement. Any advice would be greatly appreciated.
Thanks.G’day Mr Charchie…
Very formal like having to callyou Mr.
Okay,lets say the Lender values it at $180,000 and you have a mortgage of $100,000,round figures.
To avoid Mortgage Ins. only refinance to $140,000
which gives you $40,000 for Investment. On an IP at $120,000, any more than one will be too much.
Deposit $25,000 plus settlement costs $10,000 will cover it…Total app $35,000. Then a $5,000 to $10,000 cushion for emergency etc.Please consider doing your sums on 8% to cover yourself if/when rates rise. The average interest rate over past 30 years is in excess of 10%.
You might also like to give some thought to the fact that “this R/E cycle is already 6 years old”
Why not contact one of the Brokers on this Forum and get your loan(Line of Credit) in place before you go shopping.
Cheers
Bill O’Mara
Real Estate,Mortgages,Share Market Strategies.
[email protected]HI Bill, thanks for your advice. Greatly appreciated. However one thing that i am not sure about is what u mean by “the R/E cycle is almost six years old”. I am relatively new to this game, although i have been watching the market for some time. I am gathering that u mean that the current boom within in the real estate industry has been going for the last 6yrs. However if you could provide some clarification on that, it would be greatly appreciated.
Over the weekend i have been considering my options and have decided, as you have mentioned, that i would be better off going for one IP, and sitting on it for another quarter to half yr just to see what happens. After this time i will then consider purchasing another property.
However, in the mean time, my job will be taking me to Sydney and the idea of paying rent to someone else, doesnt excite me. What i am planning to do is to hire/purchase an apartment, hence any output that i make can be retrieved either by the ownership of the apartment or by the sale of the contract at an early stage. I wont have to have any deposit or equity up front which will be an added bonus and i also have the oppurtunity to get into the sydney market for such a property.
Can u please advise me on this idea!Thanks again for your help.
P.s. u can call me Greg (or MR Greg if u like).
Hi Greg,
Is that Charchie as in teen swoon idol from Happy Days?? [
] Whatever happened to him anyway.I think Bill’s on the money regarding limiting yourself to one more IP at around $120K if you wish to stay within your equity limit and not pay LMI. There are plenty of other options too regarding loan set up which as a brisbanite I’d be happy to review with you.
[
]
Mel
[email protected]Greg
In regards to a Sydney property, I think that you’ll find that you can rent a much much better place for heaps less than the mortgage payments. Even for a rent to own, lease/option deal etc. if it were me, I’d be trying to recoup at least my costs for offering that sort of deal. Do your sums, but you might be better off renting, and using any extra money you would have been paying to pay off other loans, or put towards your next deposit.
My two cents.
Cheers
Mel
] Whatever happened to him anyway.
]
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