I have applied the 1% rule to hundreds of seemingly well priced bargains , units, houses, commercials, in my homecity of Brisbane, outer Brisbane, and almost all over Australia and cannot seem to find ONE positively geared property!!
For the love of God can somebody please point me in the right direction… I notice that some people find several in their searches like dimes in dozens however my search has taken the better part of many weeks and I just cant find one. My criteria is quite specific, I really need to spend under 200K. Further to this, I dont have any deposit other than equity in my home (current value approx 250K, equity = approx 50K) I know that using equity is contrary to advice given in the book, but it really is my only choice given that I work in a minimum wage job and a sole provider for my child I would love to be able to get ahead by any means …
ANY help would be highly appreciatedCheers
KatHi Kat
Must admit i havent read Steve's lates book but i can see why he would say that equity is not the way to go as a deposit for the first IP. Personally i would never recommend to a client that you use Cash especially where you have a non deductible home loan debt.
In and around Brisbane you are very unlikely to find anything that is cash flow positive but depends where you are wanting to look.
Financed a deal in Moranbah for a client this week which was $460k and rented at $920 / week for the next 2 years.
In saying this of course with $50K equity (and i wonder if you mean $50K equity or $50K useable equity as there is a big difference) you will need most of that to get put down a deposit cover your acqusition costs and LMI.
If you cant find something in Brisbane have a look further a field as there are many gems to be had.
Richard Taylor | Australia's leading private lender
Are you sure you are eligible for a larger loan?
Full time minimum wage equates to around $30k per annum and you already have $200k of debt, which would put you at the extreme limits of borrowing capacity already.
Hmm well no my income is not quite so dismal, I probably earn around 45K from my job, my property, while geared negatively at the moment, provides extra income to help service the existing loan.
Can you please explain the difference between usable equity and equity? I base my figures on what my bank evaluation has come back at and figure that the difference is "usable" however am a novice and not completely sure about really anything.
Thanks for the responses
Kat
Kat
If the difference between the Bank valuation and your loan amount is $50K then unfortunately this is not useable equity as in most cases you would only be able to borrow upto 90% of the current valuation meaning you would have less available for a deposit.
Richard Taylor | Australia's leading private lender
Richard again has nailed it as most valuers are coming in light on vals, im pretty sure you would get a rude no thanks from your bank.
I had a deal recently where you could buy a 2 bed unit for $140k with a $200/wk rent return. Not as Amazing as Richards client but available last week. Block of 10 reasonable holding costs.
They are out there. You just need to get the earlybird phonecalls from agents that like you give occasionally. Talk to agents, not just look at the web. Make an impression by chatting to them. Its amazing what listening to people can sometimes achieve.
Happy Hunting
DD
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