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From: Alex Ermo


Dear Forum

I’ve been reading the invaluable info on the forum for the last 2 weeks due to a friend’s Introduction.

Being a beginner investor I would appreciate the forum’s opinion.

My position is as follows.

We’ve got a property valued at 220k we owe 35k.

We have just put a 5% deposit on a long-term settlement (due to be ready in December) on a new I.P. unit, which will cost us 125k, they currently selling at 130k (5k Capital Gain already).

Also we have an overseas property, paid off and rented. The Bank here can give us a loan up to 150k, which is 80% of its value.

What would be the best way utilizing the equity we’ve got?

Thanks in advance for your help.

Alex
 
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Reply: 1
From: Rolf Latham


Hi There

I think the boys and girls will need a bit more info about you - theres 1000 + ways to make good use of that equity - dont squander it !

Great that your local bank will give you money on an os security, I have yet to find one.

Ta


Rolf
 
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Reply: 1.1
From: Alex Ermo


I'am open to any good suggestions, Rolf.

Yes, I know of two Banks (Depends where the property is) that will lend you money on a os property.

Alex
 
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Reply: 1.1.1
From: Rolf Latham


Hiya again

gets a bit personal Im afraid :eek:)

What sort of borrow capacity do you have ?

What do you want your IPs to do for you - as Covey says - begin with the end in mind.

Without knowing any of the real details,
my primary suggestion to all is that equity/cash is king.

Protect your equity by getting the highest % loan you can get and can afford.

You can always get out of trouble if you have ready cash or equivalent equity.

ta

Rolf
 
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Reply: 1.1.1.1
From: Paul Zagoridis


Congratulations Alex on finding a financier willing to lend AUD on o/s property. Let us know if you can which bank and which country.

The more information that Rolf mentions is things like borrowing capacity and preferences for types of investments. Do you want yield or growth? Or both? How do you feel about interstate or country property? Commercial, industrial, residential, rural?

None of the following is advice, merely my hunches on what I might do in similar circumstances.

Firstly how conservative are you? this relates to LVR (DSR impacts this as well but lets ignore it for now). If you are conservative lets assume 80% LVRs if you want more risk you can go up to 95%-97% LVR on your Australian holdings.

So let's adopt a conservative funding model for now. At 80% LVR you have $291K in equity less 19K to settle the IP at 80% (ignoring costs).

Call it $270K. So at 80% LVR's you should be good to $1Million AUD assuming you can service it. I would still get the loans approved higher but keep enough in the LOC to cover any problems. Bankers like that.

I've found it easier to get 10 $100K loans than a single $1M loan (your mileage may vary).

Do you like the idea of buying a small block of flats and tying everything up there? Or do you prefer to buy multiple property in growing, inner-city areas. Or how about buying in an area that yields 12%-16% no growth and let them pay it off?

Tell us what you like and we'll come back will suggestions.

Paul Zagoridis
Dreamspinner
Oz Film Biz is at
http://www.healey.com.au/~paulz
 
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Reply: 1.1.1.1.1
From: Michael G


Banks will for o/s property, but only if they have 100% collateral here to secure against back home :)

Michael
 
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Reply: 2
From: Alan Meagher


Hi Alex,
Did you use a deposit bond or hard earned cash to secure your property? There is no need to use much of your own cash. You are in a vulnerable position, without knowledge. I commend your inquiry, you only need education, you have the right psychology. When you find someone with exceptional results listen, learn and apply to the extent you need. Good luck.
Enjoy Life
Alan
 
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