ideas needed

Discussion in 'Property Investment - Other' started by LouiseMc, 14th Nov, 2007.

  1. LouiseMc

    LouiseMc Member

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    I posted this elsewhere in this forum, but have moved it to here as I REALLY need some advice...

    Hello all,
    i have been watching here for ages, soaking up so much great advice.
    Heres our situation:
    We began investing less than 6 months ago. I was paralized with fear, and spent months researching. We had a home valued at $550,000 with $89,000 owing on it. We borrowed against the equity to buy a property in South Hedland for $130,000 then won another at Ballot for $100,000
    A real estate agent has told me both are worth a bit more now, especially the ballot one. A search of Realestate.com has NO land for sale in Hedland.

    We had a lot of trouble finding a builder (although Kevin aka KPH from Karratha was a fantastic help) so we eventually decised to build a prefab home and ship it up from Perth. A really lovely 4x2 with quality fittings and clad in colorbond and texured render, 3 m veranders and decking around. The agents up there have been really helpful and are confident we could either rent for at least $1000.00 per week or sell for around $760,000 to $800,000 depending on gardens etc.

    We were going to do one first, learn from it, then the other. The first should be onsite around late feb. We COULD do both at once but the builder of the prefabs really wants to get into this market and wants to do one at a time to ensure it is done really well, and a great showpiece for him.

    One of the properties comes with a $7000 landscaping voucher.

    So heres the tricky bit....
    We put an offer in on an AMAZING property which was knocked back and after a couple of months the vendor has said he will accept our offer. The prop is right on the foreshore with 180 deg panoramic ocean views, opposite a launching ramp and park. The dunes have been cut to give unhindered access to the ramps and park, giving us great views. It is suitable for holiday rental at a prime rate (ish) due to its unique location. A PM is really keen to get this property happenning. She says it should be worth around $1000.00 per week. I am only countling on it being renting for one week per month .

    This property is going to cost us $650,000 BUT the vendor needs the money as he has bought another property himself. He wants settlement by beginning of March.

    IF we get all the engineering stuff back within a week,
    AND we got it to the Hedland builder for his quote to supervise the installation
    AND we get it to the council and it is passed under delegated authority ( should do, as it has been built before elsewhere and complies with guidelines etc, doesnt need planning approval)
    AND then get a loan to build (the properties themselves are debt free, we put the loans on our home) (build cost prob around $230,000 all up on the ground with landscaping)

    HOW are we going to be able to get the finance for THIS property? It will literally be worth millions in the future, aspecially when we can reno it. (We are in the building industry- hubby is an electrician)

    He (the vendor) wants us to go unconditional. However we have only been investing for a couple of months and have done very very well. I am not ready to go unconditional.
    Should we consider bridging finance?

    ANY SUGGESTIONS GRATEFULLY ACCEPTED

    Louise
     
  2. wylie

    wylie Member

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    I would be talking to one of the mortgage brokers on this forum to see what you can do.

    If it was me, I would be trying to get it, but not at the risk of losing sleep or risking assets already held.

    Wylie
     
  3. sailor

    sailor Member

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    I would not be going unconditional...the vendor has come back and offered you the land, so you have the upper hand on this one. Also agree with advice about getting a mortgage broker. Sounds like a dream opportunity.
     
  4. HandyAndy888

    HandyAndy888 Member

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    Definitely worthwhile pursuing a MB...if its a MUST have...and you can afford the repayments.
     
  5. LouiseMc

    LouiseMc Member

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    The repayments are no problem. When both properties in Hedland are tenanted, yhey will be bringing in at least $1000 each per week. We dont need to chip in to any morgage payments until interest rates top 11%

    The transportables take 6 weeks to manufacture so I am allowing that with a xmas shut down, and maybe any council delays, I expect to have at least one of them ready by early or mid feb.

    I dont think I can borrow against them until built though or even have any of the income taken into consideration.

    So I am wondering if I can even look at finance before they or at least one in situ.
     
  6. wylie

    wylie Member

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    This is why you need a broker. We bought our last place on an asset lend basis because we did not have the ability to service the loan. Two years on we are negatively geared, but are handling it well.

    However, if we had gone to a bank, I reckon they would have laughed at us. Our mortgage broker knows his stuff and got us a loan. He also knows us very well and knows our commitment to building wealth, so we were not strangers off the street who might not have had runs on the board.

    My parents have buckets of equity, but in their early 70s and obviously not employed, were knocked back by their bank on what they asked for. The bank offered a slightly less desirable outcome (which does the job, and which they have accepted because the bank has all their paperwork so it was easy to put in place quickly) but our broker said they could get exactly what they wanted if they change banks. You just have to work around the banks and the (sometimes) silly rules they insist on sticking to. Sometimes you have to fit a square peg into a round hole and belt it to make it fit, and that is what a broker can do for you.

    Make a broker your next call, I reckon, and get it from the horses mouth.

    Wylie
     
  7. LouiseMc

    LouiseMc Member

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    Thanks Wylie,
    I have spoken to two...
    One said I cant get the Beachside property until I build on the 2 properties in Hedland. That makes it very difficult.

    The other said I could leverage against the existing properties to get the beachside one, but then couldnt build....no point doing that either.

    I had hoped that once I have a buiild contract in place with a builder,that I could maybe lend against the end value (somewhat). Ever heard of this being done?

    Louise
     
  8. sailor

    sailor Member

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    I recollect reading somewhere about a construction loan. Sorry I don't know much more but I think you can borrow the money to build your houses.
     
  9. LouiseMc

    LouiseMc Member

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    Yes, I think I will have to use a construction loan .

    The problem is they want to take security over both Hedland properties to fund one being built then use the equity in the built home to borrow for the second. This means we cant build simultaneously the two. This would be cheaper and faster especially for the builder of the homes, as he can save on double ordering.

    Maybe it just isnt meant to happen!
     
  10. sailor

    sailor Member

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    Do you have a mortgage broker who can navigate a better deal for you?