Hi All,
I am a new migrate but unemployed currently
I have a plan to buy a property, would someone give me advice please. Many Thanks
Situation:
Cash: 150k
Unemployed
Single
Target Property:
Studio Apt (Area: 21m2 to 30m2)
Assume Market Value: 130-150k
Selling price: 150-170k
It is obviously that there is no capital growth for the apartment but I guess the rental return would be fine)
I have read Steve’s first book which stated that we could buy property in company Trust structure (sole director) rather than buy it on own name. It is because our borrowing capacity wouldn’t pass the limit and can borrow the money over and over again from bank with diff trust structure. (Is that right?)
Scenario and Question:
1) If I buy the Studio Apt (full paid) in own name, and then could I mortgage it with bank by home loan equity to fund up some money to investment another property?
Step: Own Property ->buy IP
2) If I buy the Studio Apt (full paid) in company with Trust Structure, and then could I mortgage it with bank by home loan equity to fund up some money to investment another property too?
Step: Property own by Company Trust -> buy IP
Thanks all if you could give me some advice.
Hi Gold
First welcome to both the forum and Oz and i hope you enjoy your time with us.
Let me first clarify one of you questions and that is:
1) No buying in Trust or a Company structure will not ease the issues with finance as you as a Director of the Company will be a Guarantor and will need to disclose this Guarantee in future applications.
If we wind the clock back 6 years or so then certain lenders did not ask the question so many borrowers did not disclose it however such a liability would need to be disclosed these days.
In regards to your choice of investment i would probably think again as at that size very unlikely to get form of financing irrespective of you income as the security would not be acceptable to the majority of main stream lenders.
Once you had purchased the property for cash you would find you were unable to access any equity in the property for future investment.
In my opinion you would better off buying something that can be mortgaged and even if you are unemployed we can include the unemployment benefit as income and also the potential rent.
On the downside you would have some form of accomadation payment i.e rent / board or similar and also a living expense which lenders will take as a liability.
The amount you can borrow would be limited however there are many properties i come across where the rental income is covering the loan interest and therefore the outlay is minimal and this will aid your borrowing capacity going forward.
Without full information it is difficult to comment further however with cash savings behind you there are always options.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
I wouldn't buy a studio regardless of the cashflow as the CG is statistically poor. What's the point of purchasing an IP that will not return you the CG?
That aside – there are LVR restrictions with that sized studio so there is a certain amount that lenders will go (depending on the lender).
Also re your employment – is this something that is going to change or is the plan to stay unemployed?
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Thanks so much for your opinion that broaden my view on real estate.
it seems like that my plan has low possibility to do so.
I have searched on internet for some real estate, but the price of property looks pretty high for me.
This is why I am looking for studio Apt which I can affordable.
Paid in full amount of the Studio Apt that allow me not to worry paying the rent as my current state is unemployed and it make me feel a little more secured
In regard to unemployed benefit, what exactly is ? is it a benefit from government?
By the way, Oz is wonderful place to live, people are nice all around, feel great to to be one of here
Hi Shahin, nice to meet you!
Yes, I understand it, no CG don't look be good to invest in as IP. My thought is starting in small and getting big in future.
However, what if it generate a great CF to you. That why I don't understand why there are so many Studio Apt are built and on the market all around in AU such as in Melbourne.
Back to Studio Apt, does you mean there is still possible to refinance the full paid studio Apt ( assumed I had it ) to get some cash and to do some investment when I really need it? Do you know how the % of LVR in the case.
Regarding to my employment situation, currently it seems that unemployment rate stay at the medium level. As I am just migrated and I would like to look for the right position to myself in steady way.
Many Thanks for your concern!
Ok lets firstly start with the studio – have you calculated the net profit or loss? If so how have you calculated this? Studios are usually in high strata complexes so they usually kill the gross income.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Lets read back into your leading statement, and then put that out as the wrong criteria.
in fact .. its so important i'm going to quote it word for word.
It is obviously that there is no capital growth for the apartment but I guess the rental return would be fine
So .. on a realistic basis that you've worked for the money (or parents chucked you something as a goodwill gift) you are prepared to say that the value of the money in asset holdings can dissipate or deterioirate on the possibility of making a minor return?
The money .. that you worked long hours for .. slaved in a hot kitchen for, waited on tables for .. or dealt with crazy bosses for .. is not worth retaining or increasing its value?
Even in todays market with little to purchase for 150k there are significantly better options than a studio apartment. If you feel that your lending criteria will restrict you with banks for the initial purchase .. you might want to consider a vendor terms property in the shorter term. You might be able to negotiate better terms or leverage dealing direct with an owner.
Also, once you have some sort of job .. you will find your lending ability (and therefore purchasing power) will increase dramatically. A 150k initial amount allows you a deposit of 20% plus stamp duty on anything up to 600k using leverage. Now isnt that a more attractive portfolio goal?
Never restrict your investing by purchasing poor property based on price or circumstance limitations. Always purchase on the basis of ongoing potential, possibility of improved capital appreciation (or valuation), or ongoing demand.
For your own benefit and for the sake of not repeating myself .. search for studio apartments within the site. Its been a much talked about topic, and you can make better judgements based on what you will learn.
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