Greets All,
I’m new to the property investment game, and I have read both of Steve’s books as well as attended the October 04 Masterclass in Sydney. Money well spent, and a great learning experience it was too.
As Steve recommended at the end of the event, it’s important that I get out there and take action. Now more than ever, I feel the need to do something to shape my future and control my finances.
Procrastination, fear (of failure), and mindset have been holding me back the past few years, but the recent realisation that I don’t want to be working 9-5 to get by for the next 50 years of my life is the why for me wanting to invest.
Having the why, I now need the how, so I would appreciate any assistance with the following questions:
1. I want to start out small, one property at a time, and as such I’m looking at investing in QLD (I live in NSW).
– Where can I obtain information about specific suburbs to target and how much historical data is relevant (eg. 6-18 months or more?).
– Are reports such as residex beneficial, and worth purchasing, for analysis?2. I have limited savings (approx. 10-15K), work full-time (30K gross salary) and no assets against my name to borrow against. What are my lending options?
3. I am considering borrowing against the equity in my parents’ home.
– Is that a wise move?
– How do I do it? and
– What suggestions do you have for getting the house valued?I have read in these forums and elsewhere that it’s best to get a valuer that is on the panel for the financial institution that you are intending to borrow from, however I am unsure where to begin in that regard (nor do I know who I want to borrow from at this point).
4. I know building a team of experts (with their own successes in the property investment arena) is key to building a successful investment portfolio.
– How do I find such accountants, solicitors and whoever else I may need (that won’t send me broke in the process)?
…
I think that’s enough questions for now. Once I have an idea on where to go with these things then I’m sure further questions will follow.
TIA.
I will address the finance questions…
Your lending options are difficult to determine without you first providing an indication of how much you want to spend on an investment property and also an indication of your other expenses. You will be restricted by your ability to service the debt but you can use rental income from any investment properties you intend buying to assist here.
I don’t thing that you should be the one considering borrowing against your parents home. It is a decision for them as they will lose their home if you do not pay the loan and they cannot pay it. However, if they agree, there are a few options available here. The easiest is for them to borrow and then you use the funds.
Regarding whether it is wise or not, it is on your part. On their part, it is a risk of loss as described above. I would strongly recommend that you do not cross-collateralise (linke together under one loan packaged) your parents home and the property you want to purchase.
To do it, I suggest you and your parents speak with a mortgage broker and they can take you through it. It is not overly difficult if everyone is willing.
Regarding getting a valuation, don’t worry about it. Save your money. The lender will do this when you select one. You can get a fair indication of the property value by looking at recent sales of similar properties in the immediate area.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdYour lending options are difficult to determine without you first providing an indication of how much you want to spend on an investment property and also an indication of your other expenses.How much I am wanting to spend is limited by my borrowing capacity, which is why I’m considering involving my parents.
Of course I would prefer not to have to put up their house as collateral, but with my limited savings I do not see any other option.
I suppose my target purchase at this point is a maximum $250K.
With regards to expenditure, I don’t have any outstanding loans. I would have approx 1.2K per month savings left after living expenses.
I don’t thing that you should be the one considering borrowing against your parents home. It is a decision for them as they will lose their home if you do not pay the loan and they cannot pay it.Certainly, when it comes to borrowing against their home they’d be involved
However, if they agree, there are a few options available here. The easiest is for them to borrow and then you use the funds.If they are the ones borrowing, how do I build up my own lending history?
I would strongly recommend that you do not cross-collateralise (linke together under one loan packaged) your parents home and the property you want to purchase.To do it, I suggest you and your parents speak with a mortgage broker and they can take you through it. It is not overly difficult if everyone is willing.
Regarding getting a valuation, don’t worry about it. Save your money. The lender will do this when you select one. You can get a fair indication of the property value by looking at recent sales of similar properties in the immediate area.
Some very useful info here that I will look further into.
Thanks for your help.
eRR,
They borrow 20% deposit plus fees. This should be a maximum of 25% of the purchase price.
You mentioned up to 250k purchase so they would borrow $62,500 and give it to you as a ‘gift’ and you borrow the other 80% (ie: $200,000) to complete the purchase if your servicing allows this. If not, your parents would need to borrow more and you borrow less. The portion you borrow in your name is where you will get a repayment history.
I am happy to discuss this on the phone if you like or make an appointment with a mortgage broker who knows their stuff and they will talk you through it. It should become very clear how to structure the loans properly.
Robert Bou-Hamdan
Mortgage Adviser
http://www.mortgagepackaging.com.auFREE Finance-Related Newsletter – Click Here
Comments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty LtdYour parents could borrow money secured against their own property and lend you the money. make sure you have legal loan agreements, so they will be able to claim the interest (actually passing it onto you). If they gift it to your they won’t.
They lend you the money and you borrow the rest. After the property grows in value, you can then increase your loan and payout your loan to them. This increase will then be claimable – the interest portion, i mean.
This way keeps everything separate, so if you go under, they do not lose their house.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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