I have 2 IPs. Am considering a 1980s double storey house which is split into a 4 bed 2 bath house upstairs and a 3 bed flat downstairs total rent per week $600. Price of house $365k. This amount of rent would more than cover the loan plus pay some of the first 2 loans instead of me paying from my own pocket. So it sounds pretty good. The seller owns a number of IPs and is selling because he wants to free up some cash to do some subdivisions. What else do I need to consider? What is the LVR level beyond which banks won't lend? I'm not sure exactly how to calculate this but I think if I could purchase this property my LVR would be in the 70-80% range (I think again,not sure exactly).
Thanks for any infoWendy the amount a lender will advance will be dependant on your own personal situation and they will weight up your current income, expenditure etc.
In saying this if you are referring to the particular property then many lenders do not like multiple living arrangements like this and therefore you may well find there are some lvr restrictions.
Of course without any property details it is difficult to provide you with any real structured answer.
On the surface and assuming the second dwelling downstairs is Council approved the numbers stack up reasonably well.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
My first question is? Is it legal. ie the splitting of the house. If not then you could be told at anytime to rip out the kitchen etc and stop renting one level. There needs to be fire walls (floor/ceiling) etc to be legal.
So before going any further I'd want to see the paperwork. If everything is legal then on the surface (without knowing the value, rental demand etc) it looks good.
Thanks, have thought to check out whether it is all council approved. What is the best way to go about finding out its value and rental demand? Would be hard to value a 7 bed house as not much around of that size? I havent yet seen inside it apart from a few website photos which indicate it is in decent but original condition.
For normal suburbia, prices go up about $40-$50k per bedroom. So if you know what a 4bedder in the area costs you can work from there. That said, there are very few buyers needing a 7bedder so you can knock the price down due to lack of demand.
If the two dwellings are separately metered for water, gas, and electricity it is a fair bet it is all council approved. I learned a neat little trick recently.. a council I deal with a lot pretty much said if they have already issued two sets of bins then they are happy for the two dwellings to be separately occupied. But do call them and have the conversation.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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