so, i bought a unit in MT DRUITT ..

[moses]

I purchased a unit there about 6 months ago, in hythe street..

so far, its been great living there despite the negative reputation it has. The conveniance of living so close to the westfields/ coles/ cinemas is really handy, and most people living in the same units are owners also, so the place is generally quite peaceful

I just want some advice. I want upgrade as my wife and i are expecting are 2nd child in jan 2011, and would like something a little nicer now.

I dont know if it would be worth trying to sell it? or look to get another loan? were only on one income now so that may be impossible?

anyone got any advice on the best option to upgrade?

any advice on mount druitt and possible increases/ decreases in value?

im extremely new to how it works, and would love some input on when its a good time to sell? or just hold onto it?

thanks everybody!

 

[moses]

i bought my unit for 210K - anyone know if that price was decent?


maybe i should consider buying another unit there? anyone know if the bank would lend me more money considering im only making 50K a year and already owe 180k?

 

[Propertunity]

any advice on mount druitt and possible increases/ decreases in value?

Some years will decrease a bit, some years will increase a bit, other years will go up a lot. Over the space of 10-12 years it should be worth more than 2x what you paid for it initially.

im extremely new to how it works, and would love some input on when its a good time to sell? or just hold onto it?

Generally speaking, you don't get wealthy out of selling real estate but you can become wealthy by holding onto as much of it as you can.

You need to speak to a mortgage broker about what your options are moving forward.

 

[moses]

Thanks for ur advice

can you clarify how units can double in price?

ATM the building isn't extremely appealing .. Would these external cosmetics first need to be rectified or does it work on an 'as is' basis majority of the time?

 

[DEC]

i bought my unit for 210K - anyone know if that price was decent?

What did your investigations before purchase (Due Diligence) tell you?

http://www.suburbview.com/view/NSW/Mount+Druitt/2770

maybe i should consider buying another unit there? anyone know if the bank would lend me more money considering im only making 50K a year and already owe 180k?

I'm sure the bank or a mortgage broker can tell you and I'm sure you will have an idea yourself.
Do you have enough money left over at the end of the week after paying bills, repayments etc to afford another $210k loan?
Sure it'll be rented mostly offsetting costs but then again you need to be able to stay afloat for several months as well if it is not or you lose your job.

 

[Propertunity]

can you clarify how units can double in price?

I refer you to the CG chart for Mt Druitt units attached. Not much growth since the last boom in 2004. Units were only $100K in 1999 and now you bought one for double that 10 years later.

ATM the building isn't extremely appealing .. Would these external cosmetics first need to be rectified or does it work on an 'as is' basis majority of the time?

There are 2 ways to get CG - manufactured (which is tarting up the cosmetics and doing a reno for example) and organic (just waiting for the market to lift and carry you along).

 

[Ed Barton]

i bought my unit for 210K - anyone know if that price was decent?


maybe i should consider buying another unit there? anyone know if the bank would lend me more money considering im only making 50K a year and already owe 180k?

i'm confused are you looking for a IP or do you want something larger so you each kid can have their own bedroom? or both.?

presuming you want to rent out your current place and buy something with another room - do some back of the envelope calcs to begin with. my 2 min search of rea.com tells me that unless your current place is below median rent, and you have expensive body corp, the rent should almost cover your expenses on the current place if you were to rent it out.

buying a three bed unit seems doable for not much more than you paid for the 2 bed. if you're frugal then i think you can possibly do it, but cutting close. what if you can't rent the ip for a few weeks?

unless you have a deposit i think parting the red sea will be easier than getting a bank loan.

 

[moses]

i was thinking something, not necessarily larger, but maybe nicer?

although now im considering another investment property.. because we are happy living in the unit we have now so upgrading isnt a need- rather a want..

 

[skater]

OK, why not look for a home that you would like to move into, but rather than immediately move into it, put tenants in. You should receive a decent rental yeild for the home. In the mean time, switch your current loan to IO and make sure you have an offset account. Pay additional funds into the offset account.

When you want to move to the bigger, nicer premises, move the funds from the offset on the unit to the offset on the home. By doing this, you get to maximise the amount of tax-deductable debt.

If you are happy in Mt Druitt, the surrounding ex-housing commission suburbs have 3 bed homes that you can pick up for under $250k. You should be able to easily get a tenant paying $280pw.

 

[mary&mat]

Is your wife still working at the moment....could you apply for a loan while you still have her income to declare? I was pregnant with last loan application, but as bank didn't ask how much longer I'd be working, we didn't tell But we knew we could make it work, we didn't just do it willy nilly!

Could you attach a LOC to the new loan & use that to pay for any shortfall in repayments until she's working again? (bit of a risky strategy, but you can get ahead faster if you're up for it)?

Agree with Skater, could you purchase new property now & put tenants in with a view to moving there yourselves in the next year or two? Great offset & IO tips too!

Being able to delay wanting a nicer place now could really see you in a far better financial position later on Best of luck!

 

[moses]

thanks skater and mary, good advice

when you say look for a home we'd like to move into, do you mean AFTER selling my units now.. or do you mean, purchasing a 2nd property?

I would like to purchase a 2nd home but im not sure if the bank would loan me more money.

My wife isnt working at the moment, and probally wont be for another 2/3 years due to a baby now, and another coming

i know theres a way of making the most of our money, i just wanna make sure i take the best option

and i do rent out my unit, id still need to live somewhere so id probally be paying more rent then my current repayments if we do that?

or is there a loophole? lol

THANKS.

 

[Bargain Hunter]

Hi Moses,

I think people are suggesting you buy a second property as an IP but which you would like to live in later.

The simplest method is to buy allow sometime for the property value to increase and draw down equity as a deposit on the next property. As you have only purchased in the last 6 months there is little opportunity for the property to have gained value so in essence you would need to have access to a deposit or have a highly geared loan.

I'm not sure of your personal circumstances, so can't say whether this would be a possibility given you are on a signle income with a recent loan however rental income as considered as part of serviceability for the loan.

If you do want to pursue you would need to speak with a lender or mortgage broker.

Regards

Andrew

 

[moses]

makes sense andrew.. thanks mate

so 6months isnt enough time generally to rely on equity? what is a realistic time in which a unit can increase in value?

i will book an appointment with the banker today and see what she would suggest

 

[mary&mat]

I think that by selling before you buy again, you're foregoing all the capital gains that you could make by holding your current property. If at all possible, I'd try & hold onto this 1st property...but I favour a buy & hold strategy, you may have a different strategy in mind?

It sounds as though you'd just be in a bigger place with possibly a bigger debt if you sell & buy somewhere else...so not really better off financially. I think it'd be a shame if you had to let go of this foothold you have into the property market. There must be some way of holding it & purchasing another (even if you stick tenants in the new one), & starting to build a property portfolio for your family's future?

Not sure if/how much rental income the banks will consider as actual income to service your loans? This could be a way of 'jacking up' your income to meet the banks' servicability criteria. There are some posts on here about using cashbonds to supplement peoples' incomes...not sure how the banks view these at present.

I'm sure if there's a 'loophole' some smart financial person on here will be able to help you with it!

 

[skater]

so 6months isnt enough time generally to rely on equity? what is a realistic time in which a unit can increase in value?

In a rising market, yes, 6 months is plenty of time. Just not sure that you have gained any equity though. How much is your property worth?

BTW, Bargain Hunter was on the money.

 

[skater]

OK, I just did a search of what is available for purchase. Is yours a 2 bed or a 2 bed with study? This is what I have found in your block that is for sale at the moment.


http://www.realestate.com.au/property-unit-nsw-mount+druitt-106534400?activeSort=price-asc

http://www.realestate.com.au/property-unit-nsw-mount+druitt-106686098?activeSort=price-asc

Unfortunately list price is often not sell price.

I'd suggest hanging onto this property, but change your loan from a P & I (presuming that's what it is) to IO with an offset. Pay as much as possible into the offset. This will preserve the loan amount in case you want to use this property as an investment in the future. You can then use the funds in the offset as a deposit on the next purchase and the total owing on the current units will then be tax-deductable.

 

[moses]

before i go to the bank, is it necessary i get it valued first?

im going to see if theres a possibility i can get a loan

 

[mary&mat]

Don't know how much credence the banks will give to your valuation; they'll do their own. May be based on comparable sales in the area & not an actual inspection of your property though!

Great to hear you're exploring the possibility!

 

[travelbug]

I really can't see you getting another loan. You already have over 80% LVR.

Why do you want to move? You say you don't need a bigger place (just a nicer one)? Why did you buy here?

Going by what you have said I'd just stay for a while and (as others have said) change to IO and pile as much as you can into an offset account. It may be a few years before you can save enough to go again. Then you can buy a bigger place and rent the current unit out.

 

[skater]

As Travelbug said, unlikely to get another loan at this stage. Just keep plugging away and before you know it you'll be onto your second property.

Keep hanging around here and you will learn heaps. There is an investors social gathering on Thursday 22nd at St Mary's Leagues (Bambusa Restaurant) Why not come along and meet some of the locals. We don't bite.