Is this do-able?

[Nikki84]

Hi Everyone,

I have been reading this forum for years but have only joined today and this is my first post.
I am currently a Uni student with 2.5 years left to go. I own a flat in Melbourne (Prahran) that I bought before going to Uni when I was on a full time wage.

I have a close family member that is building townhouses and they have offered me the current house that is on their land for free. This house has recently been refurbished and is very rentable. It would cost well over $140,000 if I were to build it from scratch.

I have targeted a beach town in Victoria called Venus Bay as an area that currently has cheap land but has potential long term growth. - 2 hours from Melb, amazing beaches.

I earn $15,000 in a casual (but very reliable) job and receive $5,000 as youth allowance = $20,000 altogether. My loan repayments on the flat are $1,300pm and I receive $1,300pm rent for it. I live at home with my parents.
I have a $2,000 credit card limit and no other debt. I am able to obtain an $10,000 personal loan through Vic Teach with deferred payments until I start work as a teacher.
Would anyone give me a loan to:

Buy land in Venus Bay at around $60,000
Move house onto new land approx. $20,000 - I have a large family that will help me repair the house and get it rentable, so I have not allowed any funds for this.

Expected rent would be around $80-$100pw, but I would be able to make the repayments even if it was vacant.
I do not want to touch or change anything on my current loan for the flat.

Total $80,000 (hopefully). If I access the VicTeach personal loan to use as a 10% deposit and to pay for all fees, would anyone lend me 90% for this venture? Maybe Lo/No Doc?
Does the fact that I will be initially buying a vacant block alter this? Or that part of the funds will be used to move a home onto the land?
If possible, what kind of interest rate would I be looking at?

I know that its a stretch but I would hate to let such a good opportunity pass me by.

Cheers
Nikki

 

[tubs]

Nikki

It sounds like a bargain, since your house would be worth around $180k when you've done it all. The whole issue of relocating a house to the property might be too much bother for many banks to want to bother with for only an $80k loan, but maybe you could get a lo-doc or no-doc loan for the land, and then you'd have to get another $30k -$40k or so to handle the relocation and deposit for the land. You might be able to borrow against your flat for this, again using a lo-doc or no-doc loan.

I'd talk to a mortgage broker about the best way to handle this. Be careful about borrowing the whole amount against your flat, as this will stop you using this equity for something else later.

But also make sure you talk to your accountant to make sure that you set up the loans correctly to ensure the interest and costs are tax deductable.

 

[Qlds007]

If you have an ABN number for 1 day then you may qualify for a Nodoc loan with no documented evidence of income required.

Tubs is correct you may subject to the satisfactory post code be able to obtain a loan to buy the land and then once the house has been moved increase the loan based on the end value of the property,

Only problem i can see is the LVR. There are a couple of private lenders that offer upto 85% Nodoc loans but the interest rates are higher. I guess if it is short period of time then interest rate is not that much of a concern.

All boils down to the equity you have in your current property.

 

[tobe]

Without touching your existing equity? No. You can probably get a loan for 80% of the land value securitised on the land, but you will need to find the moving cost and reno money somewhere else (like your flat).
Once you have the house moved, and the tenants in, you can refi the loan securitised by the land to 95% of the value of the house and land.
My limited understanding of moving houses is its quite expensive, thats why there are loads of free houses for removal in the paper each week.

 

[tobe]

Another afterthought, most low doc loans need you to have an ABN registered for 2 years. No doc loans only require an ABN registered one day, however most have restrictions on postcodes. Although they may lend for a vacant block in a regional or capital city, I dont like your chances for vacant land in venus bay.
Its annoying, these postcode restrictions are one reason these sort of areas are cheap. they restrict the amount/type of people who borrow, and therefore the price.

 

[Rolf Latham]

removal home over 80 % LVR

Ick...................dont think anyone will wear that even on a full doc basis ?

ta
rolf

 

[Qlds007]

Hi Rolf

Yes Breeze Finance will.

 

[Nikki84]

Thanks everyone for your replies,

Tubs, I know it does seem like a bargain I suppose that’s why I’m prepared to go a bit outside the square.
Thanks for the info Tobe, I do agree I need to do more in depth research into how much the move would really cost – however I don’t have a hope in getting all that money upfront, even if it is to refinance ASAP.

Qld2007 – I could manage the 20% deposit, would I need an ABN for the Breeze Finance product? And would their rates be a lot higher?
Also, if the idea was to refinance as soon as the property was intact and rented, would I be up for massive costs for paying out the first loan so quickly?

I will do some research on obtaining an ABN, but would it mean that I would have to pay GST on investment earnings? Are there any negatives with having one if it basically sits inactive?

Cheers
Nikki