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[blackenator]

Hi Everyone ,
I am currently in the process of purchasing my first investment property. I decided to build in the south western Sydney and put a down payment on a block of land in September last year. I have been lucky enough to see quite a bit of growth since September and my block of land has increased by about 45k.

I was wondering if a prediction of some sort of could be made about my future borrowing power next year. Since I am building and its a brand new house I need to live in the property for 6 months and rent it out after. My loan amount will be about 440k and the valuation of property hasn't been done yet but similar house and land packages are going for over 550k. I am hoping when my valuation comes back it will be around 510 to 515k.

I am wanting to put a deposit on another development it will only costs me 1000$. I am hoping to purchase a unit for 450k the completion date is the middle of next year. Will I be able to fund the purchase middle of next year? My first property will rent for minimum $500 a week and my income is 80k a year and only debt is hecs with no other expenses as I am living at home. My goal is try to accumulate property at a fast rate as I have other commitments like a ppor or family at the moment. I would like to retire by 45 to 50 years old. From my calculation both these property should be neutral cash flow maybe even positive after tax benefits

Also would it be feasible to withdraw the equity to fund the new purchase and pay lmi on both properties again? Or would I be better of buying something a bit cheaper. Lastly during the period of when I am living in the property for 6 months will I be able to purchase another property of about 200k I was hoping in investing or will I have to wait until I start renting out my property to be able to fund additional purchase?

Thanks in advance.

 

[Rolf Latham]

Too little data to be able to help really

Suggest you have a chat with banker broker to see what options u have

Ta

Rolf

 

[blackenator]

Too little data to be able to help really

Suggest you have a chat with banker broker to see what options u have

Ta

Rolf

thanks for your response . What other information would be needed?

 

[Rolf Latham]

Lots

Income outgoings dependants risk profile future goals now and say 10 years time both financial and life goals

Ta

Rolf

 

[blackenator]

Lots

Income outgoings dependants risk profile future goals now and say 10 years time both financial and life goals

Ta

Rolf

Thanks I will add these to the original post.

 

[tobe]

Id suggest getting the building contract and formal finance approved on the first purchase before leaving anymore deposits.

when thats done, if you wanted to go ahead with another purchase, do the house and land together rather than as a sepereate transactions.

Theoretically you can afford the second purchase, but in practice you need to manage your risks better IMO.

What if between now and settlement your fianncial details change? the lending environment changes? the valuation changes? How are you planning to manage these and other risks?

 

[blackenator]

Id suggest getting the building contract and formal finance approved on the first purchase before leaving anymore deposits.

when thats done, if you wanted to go ahead with another purchase, do the house and land together rather than as a sepereate transactions.

Theoretically you can afford the second purchase, but in practice you need to manage your risks better IMO.

What if between now and settlement your fianncial details change? the lending environment changes? the valuation changes? How are you planning to manage these and other risks?

I just got formal aproval last week for both the land and construction. I havent really thought to much about the lending environment changing. My job and finances are secure been at the same job for 3 years now and from my knowledge quite secure. I dont have any server financial predicaments coming up. I guess I really want to purchase my 2nd property while waiting for the 6 months to pass to get my fhog or put a down payment towards a otp property.

 

[tobe]

I just got formal aproval last week for both the land and construction. I havent really thought to much about the lending environment changing. My job and finances are secure been at the same job for 3 years now and from my knowledge quite secure. I dont have any server financial predicaments coming up. I guess I really want to purchase my 2nd property while waiting for the 6 months to pass to get my fhog or put a down payment towards a otp property.

You should do what makes you happy.

If you posted on here to get some thoughts though....

perhaps you should consider diversifying your portfolio rather than doubling up on the same type of investment?

 

[blackenator]

You should do what makes you happy.

If you posted on here to get some thoughts though....

perhaps you should consider diversifying your portfolio rather than doubling up on the same type of investment?

Thats a good idea it was something I was lenaing towards. In your opinion based on my earning and borrowings do you think I would be able to service another property?

 

[tobe]

certainly. Why dont you get whoever did your formal approval to confirm? they already have all of your current financial documents.

 

[blackenator]

certainly. Why dont you get whoever did your formal approval to confirm? they already have all of your current financial documents.

I have asked the broker but they said they I would need to rent out that property first before I will be able borrow for my next purchase

 

[tobe]

they should be able to assume you are living in the first property and renting out the second. They will use the likely rental from the second from the valuation.

That gives you total capacity of approximately $870, minus $440 for the first one, leaving $430 for the second.

After you have spent 6 months in the first one, your capacity increases when you can use the rental from both properties, although you also need to allow for a rent/board amount for living at home.

 

[blackenator]

they should be able to assume you are living in the first property and renting out the second. They will use the likely rental from the second from the valuation.

That gives you total capacity of approximately $870, minus $440 for the first one, leaving $430 for the second.

After you have spent 6 months in the first one, your capacity increases when you can use the rental from both properties, although you also need to allow for a rent/board amount for living at home.

I am lucky enough not to be paying rent/board at home so that shouldnt be a issue. I will hassle my broker again and see what he saids

 

[tobe]

yes, but the lender will account for nominal rental/board.

 

[Brady]

yes, but the lender will account for nominal rental/board.

Not all lenders have to account for nominal rental/board. If he isn't paying anything at home CBA will accept a letter from parents confirming that applicant resides in their property and does not pay any rent or board.​

 

[Rolf Latham]

Not all lenders have to account for nominal rental/board. If he isn't paying anything at home CBA will accept a letter from parents confirming that applicant resides in their property and does not pay any rent or board.​

we wont and will add in contingency for movingout with a bunkie

Its cultural call too of course, with diff folks staying at home much longer even with extended families etc

in general Id say its unrealistic to be able to take a 30 year loan on the stay at home basis.

Obviously if an18 yr old tradie on small initial income goes with this strategy its more sustainable than a professional in their30s living with mum and dad........

ta
rolf

 

[blackenator]

Not all lenders have to account for nominal rental/board. If he isn't paying anything at home CBA will accept a letter from parents confirming that applicant resides in their property and does not pay any rent or board.​

we wont and will add in contingency for movingout with a bunkie

Its cultural call too of course, with diff folks staying at home much longer even with extended families etc

in general Id say its unrealistic to be able to take a 30 year loan on the stay at home basis.

Obviously if an18 yr old tradie on small initial income goes with this strategy its more sustainable than a professional in their30s living with mum and dad........

ta
rolf

I had to supply a letter to CBA signed by my mum advising that I do not pay rent and my broker is pretty adament that I wouldnt be able borrow any more until that property is rented out.

 

[Brady]

I had to supply a letter to CBA signed by my mum advising that I do not pay rent and my broker is pretty adament that I wouldnt be able borrow any more until that property is rented out.

Letter would be fine, confirms that you don't have rental/board expense.

Could use rental apprasial from REA or rental amount on valuation.

Don't have to wait until you have a rental statement or lease agreement.

 

[Brady]

we wont and will add in contingency for movingout with a bunkie

Its cultural call too of course, with diff folks staying at home much longer even with extended families etc

in general Id say its unrealistic to be able to take a 30 year loan on the stay at home basis.

Obviously if an18 yr old tradie on small initial income goes with this strategy its more sustainable than a professional in their30s living with mum and dad........

ta
rolf

It's case by base and not really your decision to make. Some people live that way, only have roommates. Some people stay at home for a long time.

I have client who in the process of setting up equity for his 4th property purchase he's nearly 50 lives with his sister and there family. Sister doesn't seem to mind. Cheap board for him... and he keeps on investing in property.

Just because you wouldn't do it doesn't mean it's not right for someone else.

 

[tobe]

I had to supply a letter to CBA signed by my mum advising that I do not pay rent and my broker is pretty adament that I wouldnt be able borrow any more until that property is rented out.

odd, so you had to supply a letter because the property you were purchasing is a rental? Yet you are planning on getting the grant and living in it for 6 months?
To my mind it would be either one or the other. the bank certainly wont process the FHOG or stamp duty concession if the loan was approved on the basis of a loikely rental income.....