Obtaining Instant Equity

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From: Ian Redman


Hi All,

My fiance and I have just bought our first IP in St Kilda at what we believe to be at a discount price. The owner was asking $169k for a 1 bedroom top floor unit with security, off street parking etc. We purchased it for $158k!! and we are wondering how we can obtain instant equity on the property upon settlement in Jan '02 as the mortgage lenders valuation of the house came in at what we paid for it. It is tenanted and we do not plan to do anything to the IP at this stage.

Cheers

Ian Redman
 
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Reply: 1
From: Nigel W


Well done on negotiating! in the present market you probably did well to get any reduction but I make the observation (and its not a criticism) that you didn't get much of a discount. (but hey, better in your pocket than theirs)

Now to get that money into yours you can refinance or just wait for a few months and have it revalued by the valuer on your current bank's panel. Also, when you talk to the valuer you should try to convince them why its worth 185K rather than 169K, that way when the valuer is ultra conservative (ie thinking of her professional indemnity insurance premium) you'll get a valuation of what you want!

One way to make this work out is to pick a loan value that you want to refinance it for that is exactly 80% or 90% of what you want to value to come out as.

by way of example if you bought for 80K with a loan of 64K and you want it valued up to 100K then you need to ask for a loan of say 80K and tell the valuer its worth 110K. He'll then say its worth 100K (provided of course there's some comparative sales data that might support this and you've put a good case forward) and you've really bought the property for just the purchase costs!

Cheers
N.
 
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Reply: 1.1
From: The Wife


Nigel,

That was just a brilliant reply!!!

may i suggest to those who are new to the whole " market values scenario", read it slowly and carefully, a few times over, it really is a gem of a reply.

TW
~Life is a daring adventure, or nothing at all~
 
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Reply: 1.1.1
From: Ian Redman


Nigel,

Thanks for you very helpful response. I think I understand what you are trying to say. I guess I will read it a few more times before I fully get my head around it.

Cheers

Ian Redman
 
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Reply: 1.1.1.1
From: J Parker


Ian, some tips that I have heard on my travels about valuers:

* Make an appointment time to walk them through the place when they are valuing. Talk up all the good features (if any unique all the better) and give them an indication of the price you want it valued at.

* do your own homework and have recent sales info (auction results in papers, advertised properties with clear prices etc) with you to validate your opinion.

* Get them to tell you a figure face to face so that you can argue your case there and then. If they won't do it right there, arrange for them to ring you directly so that you can argue over the phone!

Good luck! Cheers, Jacque :)

PS: 18 shopping days til Christmas :0
 
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Reply: 1.1.1.1.1
From: Ian Redman


Thanks for the info Jackie.

Regards

Ian Redman
 
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