G,day everybody…hope your well.
Some advice please if possible. I have cash of approx $40k but no equity in any property.I am trying to start this mission and want to do it right.If I am looking at buying properties around the $90k mark how do I start correctly? The bank will want ,depending on location,around 20%. Then comes costs.
Basically what I am asking is, how do I make the most of the cash I have to buy more than one or two properties(and continue forward)without tying my $40k up into only a couple of properties?
Helpful advice would be much appreciated…..fafsky[
][]Hi fafsky
good luck with your endevours, i started in 1997 with only 25k and bought 10 in the first year,admittedly the most expensive was only $33,500. So i hope i can help.
it is difficult because the market isn’t moving up anymore (well not when i left Oz in Dec), but it wasn’t moving up much at all in 1997 either.
here are some tips
1. buy properties that are under market value (so you need to know the market very well). so you buy a property for 70k but you knowit isworth 85k you get the property revalued and draw out the extra equity. So you put 14k into the 70k house loan 56k, revalue it at 85k you get 68K 80% better if more). with that 68k you pay off the loan of 56k and you have 13k extra towards another deposit. You do this as often as you can. But if you stuff up once yourare stuck.
2. buy places that can be improved cheaply ie mow lawns paint outside etc. sometime a coat of paint inside and out can add 10k+ to a property, then you revalue and use this as equity.
3. only buy cash positive or else you end up wreaking your loan service ability with the banks.
4. buy areas that will appreciate in value then youdo the revalue thing.
5. borrow money from mum or dad, i did this then paid them back after i revalued the places. i still aske to borrow cash short term up until recently(always paid interest and paid them back as soon as i could).
6. be creative with finance, find partners (a bit risky actually) never done this myself.
6. you need to become totally obsessed with the property market, read everything you vcan,spend wekend working on houses or looking for proerties, holidays are spent looking for houses (as well as holidaying) but hey if it goes to [plan, soon everyday can be a holiday. (thats what i thought anyway, isn’t quite working out that way at the moment, but i’m having fun).
There were times when i got stuck and i couldn’t borrow anymore, luckily i found new banks that could help me with finance, remember that in a market going backward it is harder toexpand, but if you buy below value or improve properties you will have a good buffer against a negative market.
finding cheap rising market is a huge help get on a plane and come over to NZ and see what you can find i find 10%+ properties everyday i look.
Gee i hope that make sense its 12.15 in NZ and my spelling is bad anyway.
regards westanI find +ve cashflow deals in New Zealand which I sell to other investors. To be on my database send an e-mail to [email protected]
G’Day Fafsky
To maximise your $40k you need to know what banks will lend on certain post codes. I have clients who purchased in North Queensland with a 10% Deposit and some banks will do 95% lends with capitalization of Mortgage Insurance, in country areas depending on the post code. As a rule of thumb cost will be 5% of purchase price. If you were to purchase at a 10% deposit on 90K cost would be approx $4600 + $9000 deposit, 20% deposit on 90K $3469 + 18K deposit. Find a good mortgage Broker who can access 15-17 banks so that they can find the maximum Loan to Value Ratio on your post codes and have access to a bank that will do a 5% deposit with your mortgage insurance capitalized to the loan. This will keep cost way down. If you were able to get a 5% deposit loan and capitalization, with deposit of $4500 and costs of approx $4000 you would be able to more that two properties on your 40k.
However there are other factors such as post codes, your wage and number of lenders who do a 95% lend as you dont want to put all your properties with the one bank. To many eggs in one basket.
It can be done.
Feel free to contact me anytime if you want any more help. It can be done, keep educating yourself. Education is power.
Warren Pickles
Finance specialist
Australian capital Securities
0408 811 660
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