Hi all,
Im looking at possibly purchasing 2 properties from the same vendor, both listed around the 180k mark (both have been reduced roughly 10% for a quick sale so may be able to squeeze a bit more) They are both a bit older and could do with a splash of paint and carpet etc. Im approved up to 300k from CBA which obviously isnt enough to pick up the two. Ive come up with two options –
1. Put an offer on one, try and get early access to get carpet, paint, yard tidy up done (place is currently leased, is this going to be hard to work around? what, if any, concessions is the tennant entitled to?) Get a revalue done that will give me enough equity to boost borrowing capacity + provide deposit on property #2. From there go ahead with the purchase of property #2.
I think this option is very dependent on the results of the first purchase and the vendor may not want to wait that long for the sale of #2 to go through.2. Put offers on both properties with a delayed settlement on #2, say 30 days? Basically do the same as option one, general tidy up to build some more equity. Not sure if this will work though, is it wise to put offers on both properties like ive proposed without having the approval to borrow the full amount of for both properties?
Any thoughts/advice/tips/things you can see that i cant???
Thanks
btw, have about $25k in savings and save around $3500pm so borrowing capacity may increase slightly over the next month or two
Go for delayed settlement on one property.
Get immediate access to both properties to allow you to complete the renos ASAP.
The tenant woul dbe entitled to FREE rent (cheap at 1/2 the price as you will add $1,000s to your valuations.
Have the valuations completed WITH the renos taken into account; you will need 3 quotes for each item (painting, carpets etc) so as to allow the banks valuer to increase the valuations. Remember, 'some' renos ill not add $1 for $1 but just a % of the money you spend.
What is the selling motivation of the seller? Does he need cash NOW/YESTERDAY to complete another purchase or to remove his mortgage? If its to remove all or a % of a mortgage, offer to use a 'Rent to Buy option' where you pay his entire mortgage for him….this allows you to hold onto your deposit (for now) while paying is mortgage for him while you complete the work and at least delays the cost of stamp duty.grantos_champos wrote:Hi all,Im looking at possibly purchasing 2 properties from the same vendor, both listed around the 180k mark (both have been reduced roughly 10% for a quick sale so may be able to squeeze a bit more) They are both a bit older and could do with a splash of paint and carpet etc. Im approved up to 300k from CBA which obviously isnt enough to pick up the two. Ive come up with two options –
1. Put an offer on one, try and get early access to get carpet, paint, yard tidy up done (place is currently leased, is this going to be hard to work around? what, if any, concessions is the tennant entitled to?) Get a revalue done that will give me enough equity to boost borrowing capacity + provide deposit on property #2. From there go ahead with the purchase of property #2.
I think this option is very dependent on the results of the first purchase and the vendor may not want to wait that long for the sale of #2 to go through.2. Put offers on both properties with a delayed settlement on #2, say 30 days? Basically do the same as option one, general tidy up to build some more equity. Not sure if this will work though, is it wise to put offers on both properties like ive proposed without having the approval to borrow the full amount of for both properties?
Any thoughts/advice/tips/things you can see that i cant???
Thanks
Hi Grantos
You could always look at other lenders with better servicing calculators – that may allow you to purchase both at once (assuming you can afford to do so).
It can be hard to get a tenant out when there's a lease in place. You may have to wait a while (depending on the current lease agreement) before you can start those renos.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks for the comments. I may have written this post in a bit of haste. Spoke to my broker regarding finance and he has informed me that the pre approval was 300k due to the deposit we had saved up (which was nearly 2 months ago) we have a bit more saved now and he thinks it should be fine to get us over the line to purchase both properties!
I find it interested you commented “delayed settlement” of 30 days. I would say 30 days would be a standard settlement time, but delayed could be 3-4 months. If you put offer on both, you can settle one in 30 days and the other in four months, gives you time to seek additional funding… is the second property leased? could it be easier dealing with the vacant one first and renovating that and getting a revalue done?
i believe banks also vary with how soon they will allow a revaluation done on a property, particularly if it is only minor cosmetic renos. So ask when speaking to your broker or direct to the bank what their policy is on second valuations done after renos. you don’t want to get stuck and find they will refuse a revaluation until 6 months has passed.
Good to hear you have been re-evaluated to buy both properties.
Personally, I would not have gone for the option of putting a contract on both properties without finance approval. If you had done that and then renovated both properties (and then finance fell through) you would be deeply out of pocket and the owner would keep all your nice renovations. That would be a disaster!
Good luck with it.
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