-
Join the Ausbb - Australian BodyBuilding forum The Ausbb - Australian BodyBuilding forum is dedicated to no nonsense muscle and strength building. If you need advice that works, you have come to the right place. This forum focuses on building strength and muscle using the basics. You will also find that the Ausbb- Australian Bodybuilding Forum stresses encouragement and respect. Trolls and name calling are not allowed here. No matter what your personal goals are, you will be given effective advice that produces results.
If you have any problems with the registration process or your account login, please contact contact us.
Please consider registering. It takes 30 seconds, and will allow you to get the most out of the forum.
the property investment thread
- Thread starter TrentZor
- Start date
-
- Tags
- investment property thread
DKD
Private Dancer
Dicko, your mum is in a very solid position to be investing. She should educate herself about how to go about it before jumping into anything but I'll give you a possible scenario based on her situation.
Banks will lend up to 80% of the value of a property - can even be up to 90-95% if you're prepared to pay Lender's Mortgage Insurance (which is usually in the $10-$25K range)
So your mum could, subject to bank approval, get a loan for $480k on her $600k property.
Most people would be thinking 'ok what type of property/ies should I be getting with this $480k?' Most would use the $480k to get one, possibly 2 properties.
I would take a different approach and use the $480k as the pool from which you get your 20% deposit and purchase costs for each of your investment properties.
Example
Go to Bank A and get $480k Line of Credit (LOC) with her $600k PPOR as security. The LOC is like a credit-card limit, except that it's home loan sized rather than $5k or whatever, and there's not necessarily any card attached to it. She would have a limit of $480k to use as she wants...if she only used $10k, she'd have $470k sitting there when she wants it.
Investment Property (IP) 1
$400k, plus $20k purchase costs (stamp duty, solicitors fee etc) - total $420K
Draw down 20% of the $400k cost ($80k), plus the $20k purchase costs from the LOC. So LOC balance owing would be $100k - available funds $380k.
You still need to come up with the remaining 80% for IP1. Go to Bank B, as mentioned they lend up to 80% of the value of a property.
Imagine IP 2, 3 and 4 at the same cost prices...you repeat the process....use the LOC for 20% of each IP plus associated purchase costs. Get the remaining 80% of each from Banks C, D and E. Do each of these 80% loans as interest-only.
The LOC would at this stage have $400k utilised with $80k available...you need to leave several thousand available as a buffer for when tenants leave, hot water systems blow etc. When her PPOR or any of her IPs go up in value she can visit the bank to draw on her increased equity. For example, if in a few years her PPOR increases to $700k, then she increases her $480k LOC to $560k (80% of $700k).
If she wants to sell, say IP3 in the future, then she only needs repay Bank C the 80% she borrowed. Whatever profit she's made she can do with as she pleases. If she has all properties with one lender, they will dictate exactly what level you should bring your loan balance down to, according to the remaining properties they have as security. They'll say 'yes we'll release IP3 as security but we require $450k to be applied to the loan from your $480k sale proceeds'...that might not be what you want....that's what I meant in an earlier post about structuring your finances correctly.
The biggest hurdle to achieving this is the capacity to repay...interest-only loans will reduce the repayments but there does come a point where the banks will say there is insufficient income to meet payments. A good mortgage broker can still get you loans, and if you do your sums well you can still meet repayments. A good mortgage broker and good accountant are handy people to have in your corner.
Goddamm, long post, my fingers havent had such a workout since last time I posted in the Hot Babes thread.
DKD
Private Dancer
No problem champ. My first thought was just to respond 'go visit Somersoft forum' (which is still probably the best response), but thought what the hell I'll just spit out my thoughts.
I learned that finance structure from that forum anyway, there are a heap of things she can learn from there. It would probably help if she got a good book to give her better context when she visits the forum (though it's not essential). I found Jan Somers' books a very practical guide to property investment.
I learned that finance structure from that forum anyway, there are a heap of things she can learn from there. It would probably help if she got a good book to give her better context when she visits the forum (though it's not essential). I found Jan Somers' books a very practical guide to property investment.
TrentZor
Member
I went to a seminar hosted by steve mcknight. He mentioned that he bought a whole "town house complex" in the states for a measly $15k AUD (It was worth 600k US pre the US GFC.
The place was like those shady motels u see in the movies but these rented out for 300 bux a week and there were 10 of them. So he was pulling in $12000 a month $US.
Thing was there were all these land taxes and muncipal taxes (the US version) he had to pay along with it all. Plus he could not take the money out of the U.S account to australia for some particular reason.
Any of gents want to elaborate?
The place was like those shady motels u see in the movies but these rented out for 300 bux a week and there were 10 of them. So he was pulling in $12000 a month $US.
Thing was there were all these land taxes and muncipal taxes (the US version) he had to pay along with it all. Plus he could not take the money out of the U.S account to australia for some particular reason.
Any of gents want to elaborate?
gareer
New member
Isn't it obvious? His account was on transfer cooldown for irl trading.
DKD
Private Dancer
Wish I did, but no. I've seen them from time to time when looking at a property on the web, but that's only by chance. To be able to specifically look for only mortgagee sales on the web would be great, but then obviously everyone would jump in.
Probably best to align yourself with a few r.e. agents around the traps, talk to them, show them you're investor savvy, and then they'll contact you when a bargain comes on the market, and not waste your time with other stuff.
Beware.
Some of these can be rented to students only.
Also check strata fees and other management fees, a big proportion of your 200/week rent can be eaten up here.
The big problem is finance, most banks won't lend for these, or lend very little.
Capital growth can be low and if you need to sell, comparitive sales will be used, and may not be good.
Last edited:
Ben
Member
GST is involved in residential property as well if developing for the purpose of producing a profit. Don't get me started on the damn GST
Someone asked earlier about investing in commercial property, why not just invest in a listed/unlisted commercial property trust? Buy shares in Westfield, which is run by Frank Lowy. No tenant hassles, no vacancy hassles, and if you think you can invest better than the wealthiest man in the country, good luck...
CaT_SPeW
extra crispy
ive been looking at the jan somers books to buy, which one would you suggest i start with?
thanks for starting this thread ceffo, i always though property investment was out of my reach with my first home purchased 12 months ago all i could see was a big fat mortgage i thought i would have to pay off before i could do anything else but i can see that is not the case anymore. funny how its taken a bodybuilding forum to spark an interest in property
thanks for starting this thread ceffo, i always though property investment was out of my reach with my first home purchased 12 months ago all i could see was a big fat mortgage i thought i would have to pay off before i could do anything else but i can see that is not the case anymore. funny how its taken a bodybuilding forum to spark an interest in property
Ben
Member
If it's all you can afford Dave, better than nothing, but I would look to maximise the land component.
CaT_SPeW
extra crispy
im not really sure what i can afford right now the studio apartments just sorta caught my eye when i was browsing realestate.com.au
anyway i might as well post up my situation and see what you guys think:
12 months ago my partner and i bought our first house for 488,000. we owe 357,000 on the mortgage and have a combined income of around 120,000 per annum, we have no debts although we are about to pay off a wedding next march which we should break even on and i would like to invest around 20-30K next year on tools and equipment for my job which will allow me to increase my income possibly even starting my own business, the money for these tools can be borrowed interest free from our parents as they have already offered. is property investment a good option for us in the future?
anyway i might as well post up my situation and see what you guys think:
12 months ago my partner and i bought our first house for 488,000. we owe 357,000 on the mortgage and have a combined income of around 120,000 per annum, we have no debts although we are about to pay off a wedding next march which we should break even on and i would like to invest around 20-30K next year on tools and equipment for my job which will allow me to increase my income possibly even starting my own business, the money for these tools can be borrowed interest free from our parents as they have already offered. is property investment a good option for us in the future?
DKD
Private Dancer
Dave, visit loan calculator websites, check borrowing power calculation. You'll see that on $120k you will be able to borrow a fair bit more than $357k.
Your limiting factor will be equity. It's possible that your property may be worth $500k now. You may consider taking out LMI and borrowing $475k Take away $357k PPOR loan and approx $25k LMI you'll have around $95k for deposit and purchase costs for a property around $250-$300k mark.
Don't go into blindly mate and get all excited with stuff on this thread. Property values can decrease for a period of time so there are risks. Knowledge is power.
Your limiting factor will be equity. It's possible that your property may be worth $500k now. You may consider taking out LMI and borrowing $475k Take away $357k PPOR loan and approx $25k LMI you'll have around $95k for deposit and purchase costs for a property around $250-$300k mark.
Don't go into blindly mate and get all excited with stuff on this thread. Property values can decrease for a period of time so there are risks. Knowledge is power.
In all honesty, you are the only one who can truly answer that question.
And you can find the answer after doing more research and projections while considering the future risk vs reward, how long it will take, what sacrifices you are willing to make, and whether it will suit your personalities and lifestyles.
To be good and sucessful at something, it helps to have a passion for it.
You can become passionate about new things and experiences.
Or you may try new things and realise you don't really like what you're doing and want to get out.
Last edited: