Best Finance Strategy Buy Reno and Refinance

[coastal]

My Strategy is to buy run down props reno and refinance in regional areas. Population minimum is 10000 people in the area and the property must be cash flow positive. I am manufacturing equity. I am not currently relying on Capital Growth. I am trying to quickly build up a solid base

I am doing 80% loans and have just used the big 4 and Suncorp.

Are 80% lends the best way of doing this when purchasing the property. Would this be the best way to for buying reno and flipping a property?

I am wanting to take it up to the next level and go hard for the next 24 months...renovating a mother load of properties

 

[Terry_w]

Yes because if you are selling then you may not want to pay lmi

 

[Jamie M]

Hi OP

Are you buying and holding or buying and selling?

Cheers

Jamie

 

[Jess Peletier]

If you want to sell quickly, using 80% means you're not wasting LMI so it makes sense to me, assuming you have enough cash/other equity available to fund the reno.

If you want to hold, using around 88%ish with a lender who is good with cash out is also a good way to leverage early if you want to go hard over the next year or so.

Choosing lenders with DUA will also be important if going over 80%, as multiple hits to your file (from the lender AND the insurer) can put a spanner in the works when you're buying lots of props in a short space of time, although there are lenders you can use that won't credit score.

Going regional can also cause problems with certain lenders, so you want to be sure they like the area too.

Which lenders you use will depend a lot on your borrowing capacity with the lenders you've currently got, where the properties are located, as well as your personal income situation.

Good luck - sounds like some pretty exciting plans!

 

[bonanzawealth]

Choosing lenders with DUA will also be important if going over 80%, as multiple hits to your file (from the lender AND the insurer) can put a spanner in the works when you're buying lots of props in a short space of time, although there are lenders you can use that won't credit score.

Jess, I don't get that part. What is DUA? I hear this a lot of times in this forum. And could you please elaborate the long term effect? Which lender has DUA and which one doesn't have? Thanks

 

[Redom]

Jess, I don't get that part. What is DUA? I hear this a lot of times in this forum. And could you please elaborate the long term effect? Which lender has DUA and which one doesn't have? Thanks

Its lenders that can 'approve' the loan without going to the mortgage insurer.

Regarding multiple applications in a short space of time, you need a lender without credit scoring after a while. Once you have 5-6+ applications in a short few months, some of the Big4 scoring systems start penalising your file and you may end up with an 'automatic decline' for finance, even though your application may otherwise be fine.

Going to lenders that simply ask for explanations, instead of computer generated scoring results as a first cull, would get around this.

Cheers,
Redom

 

[Jess Peletier]

DUA is basically in house mortgage insurance. If your lvr is over 80% using dua lenders just simplifies things as the deal only needs to be approved by the lender, rather than the lender AND the insurer.

DUA lenders include the big 4, suncorp, St George, AMP, Macq, ME, Bankwest. Important to note they have restrictions on it though for eg AMP only has it up to $850k etc.

 

[bonanzawealth]

Thanks Jess & Redom.