My wife and I recently upgraded our own home. We own a home in Woy Woy on the NSW Central Coast. It cost us $460K and we currently owe 403K on the morgage for that home.
We have been talking recently about the option of purchasing an investment property. The problem is that we do not have alot of equity in the family home and have no savings. My income has increase by a bit in the last few months and I now earn $95,000 a year plus bonus which is usually around $5-$10K paid annually.
Is it too soon to get involved in property investment. I can afford to make the repayments on a new loan but the lack of equity in the family home may make it impossible to borrow the required funds as we would need to borrow the whole purchase price plus stamp duty etc.
We don't care where the property is located just want decent returns. We plan to keep the IP for around 10 years. We would then use the profit to help pay off the morgage on the family home.
Please point in the right direction and offer any advice possible
We are new to it too, not sure how you will go about equity but have a look at the NRAS scheme, it is for 10 years and is a cashflow investment which may help you get your 100% loan. There are a few problems with the tax offset as to who gets it but it is being sorted out between the government and the ATO so shouldn't be an issue. Have a look at it and see what you think yourself.
Hate to say purchasing a NRAS property or anything positvely geared will not help you get a 100% loan or anywhere near it unless you have other property security / equity or cash deposit.
Realistically unless you have a very good credit score you wont get more than 90% lvr so would need to access some equity in your existing property or look at some vendor / private financing. (albeit at a higher rate of interest).
Richard Taylor | Australia's leading private lender
Yes I agree with you Richard but there will be a lot of these properties being built over the next few years so no harm in doing your homework on them now and then putting as much as possible into savings or mortgage to gain the equity needed in the near future. Some sites to look at are:-
http://www.nrasscheme.com.au/?gclid=CLTDtNjv2J8CFUwwpAodlVuBGA
http://www.housing.nsw.gov.au/Centre+For+Affordable+Housing/NRAS/
http://www.chfa.com.au/NRAS/
http://www.qahc.asn.au/modules/tinyd0/index.php?id=34Try this one on for size newbieinvest,
Do you have much sitting there in your super fund? It's actually possible to get yourself an investment property using your super fund. There are a few things to consider first though.
1, banks will only lend 70 percent of the loan against a super fund, and they don't want to play unless you can find a cashflow positive investment. (Or pretty close to it.) This is because when you buy investment property through your fund, and the investment goes belly up, the banks can't come after you for the debt, they can only come after the superfund itself. So they want to make sure that you have a winner before they give you the money for it. So, if you wanted to consider buying property through your super, you'd need to have about 100k sitting there ready to play with as a deposit. If you don't have that much, but collectively between yourself and your partner you DO, then that is good enough also. up to 4 people can pool their supers together and buy an investment property.
Now, you can buy almost any property that you decide upon, so long as the banks believe it is a healthy investment. But if you're having a hard time, just think, two words, dual occupancy. Build a dual occ home so you get double the rent. With a significant 100k dropped down as a deposit, the banks will give the nod, and you've got yourself a cashflow positive investment using money you didn't even know you had. High fives all round! Not to mention, you don't have to pay capital gains tax or contributions tax if you sell it after you hit your pension phase, and if you do it before, it's only 10 percent capital gains tax. So it's actually a lot easier to make a profit when using your super fund than if you tied up your regular cash.
So, if you're worried that you may not be able to get a loan with your current income, maybe take a look at your and your partners super. You might have a winner after all.
How do I know this? It's what I do for a living. I work for a self managed super company.
Email me if you want to know more. [email protected]
Oh, I also forgot to mention, if you're looking for a cashflow positive dual occupancy home, I can tell you where to get one. I'm currently in the process of doing a deal with a developer/builder to get in before he even puts his stock on the market.
With all the different schemes etc out there, is there a company that can assist in helping you invest in property that works for you, not themselves. EG trying to sell property they have an interest in etc.
Would like some assistance but don't want to get ripped off
Newbie, I couldn't agree with you more. Before I had bought my first property, I came very close to getting snaked. It was a horrible feeling.
I went to one of those free seminars that advertised about learning how to create wealth. I was keen as to get started, so I went along.
When I got there I was surrounded by a crowd of about 30 people, and was given a highly polished pitch on a projector screen that told me all about how the average land price in brisbane was about to become $1.2m. They gave tid bits of good information, and then at the end, a large group of 'helpers' mingled with the crowd and took down names and numbers. I ended up with a lady who booked an appointment to come to my house to see me and my wife to talk about what we wanted to do. It was all free of charge. She was incredibly helpful, but I just couldn't shake the itch that was getting under my collar.
"Why is this woman being so helpful?"
See, I've been in the sales game for some time now. I used to be one of those morons that would call you up and try and sell you a gym membership. I was exceptionally good at it, but I HATED it. I always said that I would hate to be on the other side of the table while coming against me as a salesman, because I was so convincing that people just had no hope of escape. I was so 'well trained' in overcoming any objection, that it was near impossible for people to walk out the door without signing up. It just makes me cringe now. Why? Because I signed up to a gym down the road a few years later, and got to experience what it was like at the other end of the table. I heard every technique get repeated to me over and over again, and I could name every sentence that was used on me. "Tie down." "Objection handle." "Acknowledge, Empathise, Isolate, Overcome, Close." I wanted to strangle the salesperson. Not because of them, but because I could see myself in them after my sales training, and I hated it.
The same thing happened to me with this lady. I could hear her sales techniques coming through like clockwork.
So, perhaps having been in sales, it amplified my lack of trust for salespeople. She might have genuinely wanted to help me, but I just didn't trust her because it was all free of charge. She had an agenda. Her job was to make me feel comfortable, happy, trusting, and then when I was all nimble, pliable, and like putty in her paws, then she could pounce and sell me a property. She was a real estate agent disguised as a 'happy helper.' It instantly wrote off my ability to swallow her advice because I couldn't tell if it was her own advice, or if she was just pushing an agenda.
The clincher was when I told her what I was looking for, a dual occupancy home, and she came back and gave me only one option to look at… it was nothing like the idea I had in my head, and it wasn't even dual occupancy! She then spent half an hour trying to convince me why I should buy THIS property, and forget about my dual occupancy idea because that was 'too hard and bad for this and this and this reason.' The truth was, she didn't HAVE what I wanted, so she tried to sell me some other crap so she could get a commission for it. When she left, I took the cowards way out and told her over email that I was no longer interested in further discussions. I also never went to another wealth creation seminar again. In the meantime, I ended up going to friends that I trust that are builders, designed a dual occupancy home myself, and I'm moving in in two weeks with tenants paying off half my mortgage for me. So there, fat hag sales lady.
The point I'd like to make is this. There is no substitute for your own education. If you want to get involved in property, and get some good, unbiassed advice, buy books and read like mad! It's also good to pick the brains of people that you trust, that don't get a commission for their advice.
After reading Steves book, I got really excited about buying property, and in order to solve the problem of getting some good advice, I decided to join the other team. I paid a grand to take a real estate course to become a real estate agent. I then put my hand up and took some interviews at real estate places to get a job. I finally landed one at coldwell banker specialising in investment properties. The whole reason I did it is not because I want to sell property, but because I want to BUY it, and I figured that If I wanted to follow Steves model and buy cashflow positive properties from day one, I wasn't going to find any without having my finger firmly on the pulse. So here I am. One of those dodgy, commissioned-up, agenda pushing advice givers. My advice is, don't listen to my advice at all. I have a real estate license.
"The majority of Real Estate brokers don't invest in Real Estate. That's why they're called brokers, cuz they're broker than you are." Robert Kiyosaki.
So newbie, if you're looking for some assistance in getting an investment property, I can definitely help you. (Especially if you want dual-occupancy cashflow positive stuff, cuz that's what I love.) but, I'm biassed, I have an agenda, and I get paid if you buy something that I find for you. Sucks, huh?
Ben.
Hi there,
How long has it been since you has your house revalued? If I understand your post have you just "upgraded" as in renovated your house? There might be a way pull more money out of your house that way?
Let me know if there is anything I can do to help..
Wishing you the best future in your property investing journey!…
Jodie
Property Coach and Finance Specialisthttp://www.multiplepropertyservices.com.au.
I help people realise their lifestyle goals using property as the vehicle.. As me how today – no cost and obligation free!Newbie
An alternative would be to start off with a wrap or two to accelerate your cash flow and use this to pay down your non deductible debt. You could then look at a good capital growth property with maybe lesser yield and balance your porfolio that way.
Richard Taylor | Australia's leading private lender
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