Do you have a structured approach to finance and sales process for your IP

[RIC84]

So I have three properties(one Owner Occupied and two IP) and looking at my LVR and thinking each time I get hit with LMI it makes it that little bit harder to keep the ball rolling and made me wonder if anyone could describe the best practice when approaching the banks initially and through the sales process to get a optimal outcome.

How do people approach

if you are able to lend again -
1) best way to work out what the value is to the bank of your property portfolio
2) how to best approach question 1 to get the best value, especially for the IP you intend to buy and preferably before you make a offer so you know your optimal price bracket/s.
3) How can you best negotiate terms with a bank / how much bend will banks give and what sort of debt do you need to bring before they will be influenced

Serviceability
4) how does the bank view your rental income for other properties and is there much of a difference to how they treat this when compared to your Employment income.


Sales process -
5) order the steps you should be taking through the sales process to save time and money - (over my last few purchases I found that there was a couple of times that I thought if my bank rejected the property I intended to purchase based on the value, I would still be out of pocket building and pest inspection cost for no real reason- or is this just me thinking this way) And is their anything you can do through this to get better results from your lender in terms of terms

 

[Aaron_C]

The problem you have is you have one-bank-itis....you need to diversify your lending across different banks to maximise your borrowing power, lower your LMI costs (since you are probably cross collateralised and increasing the LMI cost) and move forward.

 

[Colin Rice]

Dont deal directly with a bank as they will do what is best for them, not you, in the vast majority of cases. Find the right broker who understands how to structure your debt to your maximum advantage taking into account your present and future goals. The right broker will be able to answer all your questions outlined above and also the best process in approaching the bank on your behalf.

 

[Rolf Latham]

A bit of a tangent but, "Best Practice" Structured lending will allow a portfolio of 1.8 to 2.5 larger than a poorly structured one.

Poorly structured means a finance structure that has been built without regard to the commonly available laws of lending applying across "all" lenders, and overlaying those laws to the long term goals, risk profile and resources of the borrower.

By definition, most DIY structured finance and all bank provided specific structuring usually falls into the "not knowing what you dont know category", unless there has been some good fortune involved, or a borrower has gone to the trouble of finding out what they should be doing when, how, with what lender and why.

Unfortunately, more than 9 out of 10 brokers fall into the same category, to a large extent because broker education has been largely bank based, and most brokers like bankers, make their recommendations based on the "current transaction" without sufficient client care and investigation into the future goals.

I know there will be howls of protest from some DYI and certainly from bank staff, and brokers........ how can this be.

"Ya canna defeat the laws of physics" applies equally to the laws of lending.

ta
rolf

 

[Terry_w]

How do people approach

if you are able to lend again -
1) best way to work out what the value is to the bank of your property portfolio
2) how to best approach question 1 to get the best value, especially for the IP you intend to buy and preferably before you make a offer so you know your optimal price bracket/s.
3) How can you best negotiate terms with a bank / how much bend will banks give and what sort of debt do you need to bring before they will be influenced

Serviceability
4) how does the bank view your rental income for other properties and is there much of a difference to how they treat this when compared to your Employment income.


Sales process -
5) order the steps you should be taking through the sales process to save time and money - (over my last few purchases I found that there was a couple of times that I thought if my bank rejected the property I intended to purchase based on the value, I would still be out of pocket building and pest inspection cost for no real reason- or is this just me thinking this way) And is their anything you can do through this to get better results from your lender in terms of terms

1. I think you mean Borrow rather than lend?
Get your broker to do a desktop valuation report on every proeprty you are thinking about. Then a formal upfront valuation report.
Also some banks will not need a valuation if buying under certain conditions.

2. Val report can help here

3. You generally cannot negotiate terms other than interest rate discounts. The bigger your loan the more leverage. At least $250k before you bother to ask.

4. Complex. Roughly 80% of rent it taken into account and 30% of wage. But each bank has a complex serviceability calculator to work things out.

5. Do you mean purchasing process instead of selling? I assume you are buying a property. You should get a pre-approval up from and then try to go for the full approval asap. Valuation should help you know the rough value so if you have this upfront should be fairly confident of getting an approval if you have a pre-approval subject to only a valuation.