I am sure this question has been answered before. If anyone could point me in the right direction I would be most appreciative.
I am looking at buying an IP for $150,000 currently renting for $175 a week with tenants who have been in place for 18 months and as far as the property manager can tell do not wish to move any time soon. Obviously that can change at the drop of a hat. The IP will become our PPOR when we move closer to home after renovations have been completed in our current PPOR which will then become our IP. We have $35,000 in available equity in our PPOR but wish to use $20,000 on doing it up to be able to rent it out a little more easily. We hoping to be in the new house in about 6 months. Do banks look favourably on investments that are already tennanted? There is no way a bank would lend us the money otherwise even though we could pay both loans with no trouble. How have others gotten around this.You could rent to own the property of the owner for say 4-5 years.
Pay the landlord $220/week (and you have the right to sublet) and agree on option price of $180K. (more than it is worth now … but hey you have 5 years for the market to catch up)
Put up $5K for option fee…… Then you can apply for a low interest loan to do the repairs, keep current tennants in place and depending on the wroks to be done… perhaps offer a reduction while you are completing repairs for thier inconvenience.
This way:
1. You do not have to apply for a mortgage.
2. Your borrowing capacity does not change as you have not increased your debt levels.
3. you should be able to get the smaller loan on either low interest Ccards or short term loan or increase your current loan to complete renovations.The landlord wins in the following ways:
1. Increase return on current rent by 19%
2. house gets a major upgrade without any cost to him/her
3. gets a higher than market price if you excercise the optoin.
4. $5,000 cash to use TODAY!go for it!
Cheers
Kiwitgavin
There are currently lenders offering 100% loans on IP’s and it is always easy if you have an existing tenant in the property.
By taking a 100% loan you might incur such additional costs as LMI or an increased establishment fees but it saying that it maybe worth it to secure the deal.
You will however need to be able to access funds to cover your purchase costs such as stamp duty etc. Dependant on which State the property is in this may add up to a few thousand.
Richard Taylor
Residential & Commercial Finance Broker
Ph: 07 3720 1888
[email protected]Richard Taylor | Australia's leading private lender
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