Increasing LVR

[rambada]

Anyone out there thinking of increasing their LVR? I have steadfastly kept mine at 80% but am investigating wavering this rule. Reason - if we accept that we are at the bottom or near bottom of the RE market then in the medium term we can expect a capital increase. There are a multitude of opportunities out there, property, funds, CPT's, etc. To jump on the tail and ride it would be extremely benificial. And ride it until the LVR decreases back to 80% but on a higher assett base. Any thoughts?

 

[dunnyboy]

i am cautiously increasing the LVR on my margin loan at the moment, and in the last few weeks i have been buying some CPTs as my exposure to property.

i just dont think that residential property in my market (sydney) will be showing signs of growth again for a while. im going to wait until they start printing stories in the paper about people "having to scrape together" rent on a week to week basis. thats usually a good indication that rents are on the rise and may spark some people to re examine property as an investment.

furthermore, the latest jobs figures released yesterday point to another rate hike sooner rather than later. this will also weigh on the property market in the short term.

 

[Rixter]

im going to wait until they start printing stories in the paper about people "having to scrape together" rent on a week to week basis. thats usually a good indication that rents are on the rise and may spark some people to re examine property as an investment.

I dont know about you but IMHO if you are waiting until then, you have missed the boat - the real equity has already been secured.

You want to be the one securing a ticket before the advertising creates a line for the best seats.

Some food for thought.

 

[DavidMc]

I was thinking of raising my LVR to say 90 or 95%, using some but leaving it as undrawn loans as a buffer. Like a cashflow insurance policy. LMI is generally expensive however I'm with NAB who are one of the cheaper ones (~1 to 1.5% for my loans).

 

[nomadic]

Anyone out there thinking of increasing their LVR? Any thoughts?

I'd love to for reasons you've mentioned but my DSR always kills it. I think this is probably more common with property investors, i.e. lots of equity but cannot extend borrowings as they're unable to make the extra repayments.

I think you're lucky rambada if you can increase your LVR AND also make the extra repayments... go for it, even if it's just a LOC sitting there waiting for a good opportunity.

 

[dunnyboy]

Rixter,

food for thought indeed, thanks for that.

 

[The Y-man]

I tend to look at the LVR across the entire portfolio - as we have loans across several asset classes (as well as some "undefined ones - eg unsecured loans).

I think the average for our property protfolio is about 85%.

Cheers,

The Y-man

 

[MikeC]

Investors who want to 'lock in' their equity via a LOC often are already at their DSR limit. How would they overcome that?

Mike

 

[redwing]

Investors who want to 'lock in' their equity via a LOC often are already at their DSR limit. How would they overcome that?

Mike

The Cashbond strategy that Rixter uses is one way, another may be LPT's or Managed Funds to increase income and so assist with serviceability?

There are also a range of Loan products that may still assist you in entering the market and a good broker may assist here?

Keep some of your LOC as a *safety buffer* as well

Just some thoughts above as I'm looking at doing the same.."Topping up and Locking in".

My LVR has been dropping and did get to around 60%..now I've established a LOC against several of the IP's.



Redwing

 

[D.T.]

im going to wait until they start printing stories in the paper about people "having to scrape together" rent on a week to week basis. thats usually a good indication that rents are on the rise and may spark some people to re examine property as an investment.

In this weekend's AFR, there is an article about how Perth rents have risen roughly 30% this year, and most other cities seeing about 10% or so. Is that your cue?

 

[DavidMc]

I think the average for our property protfolio is about 85%.

Wow, you make me feel conservative at 80%. What was the highest LVR you reached during your early aquisition phase?

 

[The Y-man]

Wow, you make me feel conservative at 80%. What was the highest LVR you reached during your early aquisition phase?

We generally aimed for 90% LVR where we could get it (i.e. not for our 1BR apartments). This became difficult after we hit the exposure limit with our primary lender and had to go with another mob at 80%.

We've maintained those LVR's through refinance and draw downs.

Cheers,

The Y-man

 

[saucy gibbon]

I'm looking at taking my total lvr from 77% to 86%. However this is not based upon where I think the market is currently, it has been based upon whether i think my DSR is acceptable. I hold the view that my LVR is only relevant to my DSR, ie if I can service the debt does it matter if my LVR is +80% though not above 100% ?