Duplicating properties through capital growth

Maybe I am a bit naive – being new to this investing gig. I have found that networking and thus relationships with bankers, accountants, RE agents (and not forgetting tennants!!) are all a matter of personality and viewpoints. This is a fact of life no matter where you go.[]

If someone does not share your vision – find someone who does! Much more satisfaction and greater achievments are possible this way.[8D]

Words From the Wizzzard[8D][8D][8D]

C2, if the valuation comes in at less than the one that’s there already – which has happened, I have to leave it as is. My banker did not say – hey, you better pay us some money to top it up – thankfully.

Costs of refinancing can vary. If you are staying with the same lender and aren’t changing a fixed rate loan, it can range from $0 to $600ish (brokers would be able to answer better than me on this exact point). It’s up to you if you want to pay this out of your pocket, but it’s always been deducted out of my loan at settlement. It just means you have that much less cash in hand i suppose.

If you do have a fixed rate, like I did in my example where one loan was $143.1K, and i got an extra $32K. Same bank, same terms, just a ‘2nd’ mortgage against that same property. So ‘new’ loan fees rather than refinance (plus MORE paperwork which i’m beginning to hate).

My bank manager of 5 years took off to the gold coast this year which was a bugger, but also good in a way that now I don’t feel bad if I go to a broker, who can offer me a better range of deals than just the one bank. If you’re having trouble with continuity of people, and differing opinions, I would find a broker you trust and use them for everything.

Josh

If I just spent the money rather than investing it I would be negatively geared. Rents certainly haven’t risen to keep up with values.

So if I’m buying another property, I calculate my return based on borrowing the entire purchase price, and so rent has to beat those costs for me to proceed. As Bill said, I’ll have it in a Line Of Credit, and so if I haven’t found anything to buy, it will be there and available, but won’t be costing me any interest.

I hope I’ve answered everybody’s questions.

Cheers
Mel

Hi Mel, I’ve recently been in contact with someone and are heading towards using a broker on my next deals.

C2
“Is it true the more you owe the more you grow until the bank steps in?”

Hi F&B I think the difference between using the equtiy and getting LOC is that the LOC can be used without tying up the property as security. When using the equity you run the risk of cross-collaterlisation a mistake I’ve made in the past. I’m sure others can explain it a little better.

C2
“Is it true the more you owe the more you grow until the bank steps in?”

Basically it’s when the lender ties up the properties together as security for each other. Example your PPOR has equity but is used as security for your IP’s. The banks love doing this.

C2
“Is it true the more you owe the more you grow until the bank steps in?”

Yes.

C2
“Is it true the more you owe the more you grow until the bank steps in?”

Yes, the same property can be used as security for different loans and properties. Most of the lenders have different criteria on how many times you can use the same property and it can also depend on how much equity the property has. My understanding of this is limited and maybe one of the brokers on this forum can explain it better for you.

C2
“Is it true the more you owe the more you grow until the bank steps in?”

Hi All
In relation to loan costs i.e. establisment fees. I have a setup with the NAB in rural NSW, I pay then $350.00 per year this includes all ongoing charges i.e. check fees, establishment fees, 2 cards and a hole lot more. this is paid once a year and I can apply for as many loans I wish and there is no more cost. This only applies if you have more than $150k tied up with them. This may seem to some as alot of money to pay. But if you sit down & add up what you pay the bank every year it works out better value. ( well it do’s in my case.)

Cheers
Craigc

Hi F&B, CraigC, Most banks have a similar product and it has various names such as wealth package(which bank). I think the initial amount to be owed is 250K and can go as low as 150K, before the package cancels out. What happens after that I don’t know? Maybe one of the brokers here can shed some light?

C2
“Is it true the more you owe the more you grow until the bank steps in?”