Are we kidding ourselves?

Oh additionally… we are expecting a bonus through my husbands salary to be made available to us come 7 July, of approx $50k or a little more. So although we don’t have this money right now we are hoping the bank might acknowledge this (for example if we can present them with something in writing from his employer as proof of the agreed bonus payment due).

How can we make this ‘bonus’ start working for us now to help ensure we can buy IPs now rather than waiting until mid July to do anything?
Or do we just have to wait and be patient?

We are trying to look outside the box and tap into possibilities rather than sit back and wait and wish we had planned better.

Any advice/insight?

Thanks heaps!

Thanks Jamie.

So are you saying we should avoid pre-approval and just straight up submit a loan application for each property?

(Apologies for the lack of knowledge in this area… still learning)

I gather borrowing 95% is not looked upon in a positive light by banks… when asking to borrow so much (eg 95% for each of 3 IPs)?
(Even though on top of our combined income of $190k pa, able to save approx $2k + per wk, we will add potentially rental income of approx $1500 pw for 3 properties in total)

So even if the bank has said we have capacity to borrow up to $1.3M before they even considered any rental income from any properties… we are not necessarily in a good position to get approval?

Seems as though we have to consider putting in more than 5% for each property… no?

Thanks in advance for your replies.

Dragonflyz

Thanks Jamie.

I should have been clearer and offered a bit more background… when we met our broker for the first time )a Thursday evening) we were applying for pre-approval of $780k. Our broker said everything looked great, start looking for a property or 2 or 3 if you wish.

My husband and I got excited that night and that weekend and we found IP1 and didn’t want to lose it ( we had been researching and looking for several weeks but now felt we could choose). So on the Sunday we put in an initial offer expecting it to be knocked back but it was (listed as $285k ~ $309k) accepted at $297 straight up. Based on the fact that we told them we had spoken with our broker and we had been told ‘verbally’ that we had pre-approval, could settle in 30~45 days and not depending on another property to sell, to allow us to make this purchase (the vendor had another offer of $298k but that party was depending on another property selling to fund the purchase so they liked our offer better).

Before our broker had a chance to submit the ‘pre-approval paperwork’ … we asked husband’s brother if he wanted to get in to the market as well and join us on this one (just to give him a chance) but he couldn’t decide, probably a blessing in disguise (not getting family involved) cooling off period was ending, we had to get back to the broker and the REA, so we went back to the broker and she said … ok lets not go for the pre-approval right now lets just submit the application for IP1.

So in summary:
1. We have found IP1 and have conditional approval from the bank, waiting for the property to be assessed and approved by mortgage insurer (fingers crossed)
2. We have found IP2 and have placed a holding deposit, but think we need to wait for IP1 to be ‘a done deal’ before we submit application for IP2. This might be pushing it but we want to try…
3. We are thinking if IP1 and IP2 are accepted, we will look ASAP for IP3… but nothing as yet, just thinking…

Should we consider putting in more than 5% towards each IP?
But from what I have been reading, the less we can put in the better to help diversify our portfolio.

But Jamie, as you say it all comes down to what the mortgage insurer says… I really hate this waiting.
Maybe we are trying to do too much too fast…

Thoughts, ideas, suggestions anyone?

Thanks heaps.

Dragonflyz

Hi Jamie

When we started the process for IP1 we had $35k in the bank (2 weeks ago) we have since saved another $5k.
We have a savings history that proves we will continue to save at a rate of the same until settlement… to cover the $16k needed for deposit of 5% and more than enough to cover the stamp duty and all associated costs.

Our broker said, you can borrow this amount but you have to fins the funds to support the up front costs for each property… obviously.

In my second post (above), immediately after my initial post… I added the following comment… our broker was made aware of this at our initial meeting/discussion.

Oh additionally… we are expecting a bonus through my husbands salary to be made available to us come 7 July, of approx $50k or a little more. So although we don't have this money right now we are hoping the bank might acknowledge this (for example if we can present them with something in writing from his employer as proof of the agreed bonus payment due).

How can we make this 'bonus' start working for us now to help ensure we can buy IPs now rather than waiting until mid July to do anything?
Or do we just have to wait and be patient?

So after we pay the $16k deposit and associated costs (buidling & pest inspection and conveyancing = $1.5k) by 1 July, we will have saved more and be 1 week away from receiving my husbands $50k + bonus. The way I see it, we can cover at least 2 IPs with this money, as well as have the stamp duty for IP 1… BUT as you say, it is all a matter of what the bank/mortgage broker says. 

Thoughts… opinions?

Thanks again.  

Richard

Thanks for your input… but if you read the entire thread and what i have siad, I have already answered what you are asking.
There is no PPOR.
We are not putting the $50k (after tax) into 1 property.
We have a letter as proof from employer (employment retention benefit bonus) to say this is guaranteed.

Thanks for suggestion this course of action is ridiculous (even though not entirely an accurate observation of facts)… not so sure how this is at all constructive feedback!

Just looking for some hints and tips and insight from people in here that can shed some light on our first step in to setting up an IP portfolio… not necessarily tell me I am ridiculous.

Thanks.

Correction – my post @ 1.37 today.

Point 5 – We have paid a total of $1500 for building/pest and conveyancing (not $100… typo with the 5 missing) 

Thanks quickchick… we will certainly be discussing depreciation v captial gains with our accountant (have an appointment with him in a few weeks). Thanks for the tip.

Aso, I have seen 'The real Deal' mentioned in our research so I think I will definitely get a copy and read.

Thanks again.

Thanks Catalyst

From all the reading and researching and talking with people in the IP market with investments in the areas we are looking at, and with discussions with wealth advisers, and with discussions with buyers agents… we have a good understanding of the areas we venturing into. We are very aware of rentals and projected CG in the areas in and around our IP1. We are also aware of what buying off the plan can mean for our IP2, and yes we have researched similar properties in the same areas and what they are renting for and we have looked at projected rent yields and CG for the Gladstone/Boyne Island area.

As for us offering a price in the mid range for IP1, yes we realise what we were doing and we hoped this was the exact price the vendor was looking for, they wanted/needed a sale. There were other offers on the day. We were their best option even though we offered less than the other 2 offers (each were relying on the sale of other properties yet to be put on the market) so they accepted our offer, it was on the money, clean, easy and could be complete in their preferred timeframe. So no not a bargain but we believe a great property, and for us a good one to go to the bank with to get our portfolio started.

We had thought about injecting more than 5% BUT we read and are told so many times that the less of our own funds that we inject into an IP the better. So go figure!

Anyway, we just have to wait and see what comes back from the MI, hopefully tomorrow.

I have to say… I really wish the whole IP process was straight forward but when I read all the differing opinions in these forums, it is anything but… no wonder so many people don’t even bother!

Thanks again.