Hi everyone!!
I have been following for a while and found lots of great info available and people who know what they are talking about.
My problem is I have been researching and ready to get serious about investing/developing but how to get the next one!
Currently have one property in western sydney LVR about 75% now and negativly geared by about $80/wk
I am keen to buy another but unsure how I will go considering my current situation.
My wife and I are currently travelling around oz working (central qld now), wife is now the main income earner and my income has dropped dramatically. Overall, we arent to much worse off than if we were settled due to her employer providing accomm.
1. Will I have troubles refinancing and getting hold of the equity availble (approx 80k) due to my income dropping and becoming irregular? provinding pay slips etc
2. Can I use my property as security for a purchase if we buy in her name? if I cant access equity
3. Should I look at setting up a trust to gain access to equity?
4. what are the interest rate differences and pros/cons with a commercial loan – trust setup (security, tax benifits)
5. If we buy and I work on the property to renovate (increase capital) while she works full time, do lenders take into consideration potential growth and future rental income as its an investment? or do they purely base it on purchase price? and what you do is your business??Thanks for reading
A property in Western Sydney negatively geared to about $80/week and at 75% LVR doesn't sound like you are getting as much from the property as you could. Of course I do not know where it is, or what kind of property it is.
You should consider adding value in order to increase the rent, such as doing a cosmetic reno, doing a more serious reno (new kitchen/bathroom etc), subdiving and building a second house, adding a secondary dwelling to the rear of the property etc. Western Sydney is a good spot to add value and generate nuetral/positively geared properties.
Cheers,
LukeIts a basic 3 bed. ~800m2, cant subdivide. and probably not enough room for rear access to a secondary dwelling. I have recently heard about these making good returns, are people in the area keen to rent out a self contained single bed hut?? living in someones backyard doesnt appeal to me. and wouldnt it turn away potential tenants for the main residence??
It does have potential for a reno – extra living area or main bed with ensuite plus study. but not being there makes it difficult, i would like to do it myself. then look at selling. capital growth has been poor over the last 5 yrs.
I can't give you advice on using a trust, but I think I have heard that you cannot tax deduct your losses against your main income if the trust owns the property (somebody correct me if I'm wrong).
As for accessing the equity in your existing IP, you should be able to get at least 5% (taking the LVR back to 80%) and therefore not have to pay lenders mortgage insurance. You may even be able to take it back to 90% LVR giving you 15% to invest, but I think LMI will be due then.
So if your property is worth around $400,000, then 5% = $20,000 and 15% = $60,000.
Before you go any further, I think you should clarify with your existing lender how much equity you can access and then get pre-approval through a mortgage broker about how much money you can borrow for another IP. It's difficult for us to speculate your lending position.
If you are also concerned about how you will buy an IP whilst living in central QLD, maybe check out using a buyers agent assuming you want to buy elsewhere in Australia. I've never used one, but I would consider it if they can provide good value (such as negotiating a below market value).
Darren.
Hi Bob
Most of your questions boil down to your borrowing capacity, employment history and the value of your current property. If your combined borrowing capacity can service the debt, your employment histories are sound (same job for 12 months or same industry for greater than 2 years) then tapping into equity and purchasing another property is achievable (it also depends on what you're property is currently worth).
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]
HI Bob,
1. Are you contracting? part time? ie what is wrong with your salary….just beawre even though some bank may think your salary is weird and not “normal” when you approach another banks they may be more then happy to accept it! don;t take a NO from 1-2 bank as the answer.
I seen bank’s accept a self employed with 1 day ABN!! that’s right 1 day…
2. Yes you can….but the only way to go about this is either via as a guarantor loan OR as a 2nd applicant (easiest way)
3. Setting up the trust won’t allow you to gain equity, don’t JUST set up a trust because you can…understand how it works first
4. Dont go commercial if you don’t have to… going commercial is a lot easier sometimes becasue they are willing to bend a lot of rules..but the rate will be at least 1.5-2 % more MIN…. + def more set up cost.
5. No lender’s will not consider the potential increase until it happens …HOWEVER if it’s a business then commercial lender will consider.
Regards
MichaelBob shovel wrote:Hi everyone!!I have been following for a while and found lots of great info available and people who know what they are talking about.
My problem is I have been researching and ready to get serious about investing/developing but how to get the next one!
Currently have one property in western sydney LVR about 75% now and negativly geared by about $80/wk
I am keen to buy another but unsure how I will go considering my current situation.
My wife and I are currently travelling around oz working (central qld now), wife is now the main income earner and my income has dropped dramatically. Overall, we arent to much worse off than if we were settled due to her employer providing accomm.
1. Will I have troubles refinancing and getting hold of the equity availble (approx 80k) due to my income dropping and becoming irregular? provinding pay slips etc
2. Can I use my property as security for a purchase if we buy in her name? if I cant access equity
3. Should I look at setting up a trust to gain access to equity?
4. what are the interest rate differences and pros/cons with a commercial loan – trust setup (security, tax benifits)
5. If we buy and I work on the property to renovate (increase capital) while she works full time, do lenders take into consideration potential growth and future rental income as its an investment? or do they purely base it on purchase price? and what you do is your business??Thanks for reading
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
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