Hi Everyone,
My husband and i have no experience in buying ip's but we are trying to do all the necessary research.
Many people that i have spoken with who own a few ip's have told me that they did not ever have a deposit for any of them but instead borrowed 100% with an interest only loan and used the equity they had in their own home, is this how most people get started?
My other 2 question's are where do you go to research areas besides the realestate websites and is it really not such a good idea to purchase a flat due to the fact that there is no land value? Surely they increase in price over time don't they?
Sorry if these questions sound ridiculous.Andrea
Hi Andrea
Yes it is normal practise to borrow 100% of the purchase price plus sufficient to cover the acquisition costs of the property.
Most people merely throw in the security of their own home and their Bank cross collateralises the 2 securities.
This is where they go wrong and is not until the 2nd 3rd or 4th property realise they have structured the loan incorrectly and it ends up costing them potentially 000's in costs to untie the properties.
Make sure your Mortgage Broker is experienced is investment structures as most wouldn't a clue.
Remember done properly you will still borrow 100% + but have the freedom that each property has its own stand alone loan and no 1 property is supporting the other.
Richard Taylor | Australia's leading private lender
Research material comes from such sources as RP Data and the like ie recent sales information (you will have to pay for it though) or you can keep a log of newspapers reporting the sales in an area eg local paper, smh or the age.
There is fundamentally nothing wrong with purchasing units – people have to live somewhere, they will increase relative to the market that they are located. Just buy in a good area where demand will remain strong, there is a shortage of available land for development, well located (shops/schools/transport etc). Smaller lowrise blocks have a greater land value component than a unit in a large multi-storey complex.
Thanks guys,
Scott do you know if the paid info about areas is worth spending the money on? Is it any more useful than info you can find yourself?
Andrea
Hi Andrea,
You can buy paid reports from the Domain.com.au website. I have used them in the past and have found them quite usefull. They give you a birds eve view along with detailed info and often you come across trends that you would have never thought of.
You should top up this info with ur own research then.Hope this helps!
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