What % will make you buy and how long would you lock for

[devo76]

I am watching and waiting at the moment apart from a few low ball offers i will be throwing around next week. One property i have my eye on will be neutrally geared at 6 % not including the 45 PW rent increase it is easily capable of. This has me thinking would locking in at or below 6 % for 5 to 10 years be a good move. The property has lots of add value and subdivision potential. Just needs paint and stuff. I believe it is below value so if prices slump more it shouldnt matter especially if its neutral to positively geared.

Back to the question. What % are you waiting for and how long would you fix the rate for.

 

[letiha]

I'm not waiting for any further drop, just trying to find the right place at the moment. Oh and of course for the right price.

 

[Saint]

I am watching and waiting at the moment apart from a few low ball offers i will be throwing around next week. One property i have my eye on will be neutrally geared at 6 % not including the 45 PW rent increase it is easily capable of. This has me thinking would locking in at or below 6 % for 5 to 10 years be a good move. The property has lots of add value and subdivision potential. Just needs paint and stuff. I believe it is below value so if prices slump more it shouldnt matter especially if its neutral to positively geared.

Back to the question. What % are you waiting for and how long would you fix the rate for.

mate a bit more info would be good - you can keep the whiz bang place to yourself

what is the place worth - 200, 300k? I met a guy who owed 200k and the rent doesnt cover it.

So you expect to get the tenant to pay for all expenses and debts without you kicking in anything or much?

Hope you see where I am heading. Is it your first one?

 

[Bon]

If your gross yield is 6% and interest rates are 6%, I'd say it's still going to be slightly negatively geared once you take out all the costs associated with holding the property.... your net yield might come out closer to 4.8%, which being conservative would probably be a better figure to work with anyway.

 

[james_w]

I am watching and waiting at the moment apart from a few low ball offers i will be throwing around next week. One property i have my eye on will be neutrally geared at 6 % not including the 45 PW rent increase it is easily capable of. This has me thinking would locking in at or below 6 % for 5 to 10 years be a good move. The property has lots of add value and subdivision potential. Just needs paint and stuff. I believe it is below value so if prices slump more it shouldnt matter especially if its neutral to positively geared.

Back to the question. What % are you waiting for and how long would you fix the rate for.

waiting for the next drop then going shopping fixing for 5 yrs at 5% fingers crossed

 

[BV]

Back to the question. What % are you waiting for and how long would you fix the rate for.

Devo

6% is a good yield in my books and with the potential to increase rent if I could find a 10 year fixed loan @ 6% I'd take it.

I am actually going to lock half of my loans as soon as I can find such a rate.

cheers

 

[Jamie_D]

When it comes to servicing the banks will calculate 75-80% of rent as net rental fugure/income.

I would advise calculate your budget based on the above prior to fixing.

If you get $250 pw then $187.50 would be a good yard stick

Hope this helps.....Also, wait for RBA's decision next week...could be further good news re IR's

 

[want2bewealthy]

Im putting in an offer today and see no need to wait until rates drop, it's common knowledge theyre on the move, everybody knows that and just go variable until you think it's bottom then lock it in, who knows , when rates do hit bottom the market may have moved upward some because of the affordability factor, you can never tell but then you wouldve missed a good deal and some welcomed capital growth, what if the market goes unexpectadly crazy? it's one of the best times to buy in history for any investor who knows what they're doing.

pro's
low interest rates and moving even further, maybe even to around 4% mid next year

slowing prices (but not for long...)

lack of housing relative to demand thats expected to last up until around 2015 or so

high rents

etc etc

Con's

Well, maybe if all stays 'bad' for a while there could be little growth for a short time, or, there could be good growth because of rates and first home buyers grants, you just dont know but Im thinking more good than slow.

 

[undercover]

Why wait 2-3 months to buy just because your waiting for IR to drop so you might save
$10-$50 a week on repayments?

When that property you delay in buying is growing in CG by $200-$700 a week

 

[devo76]

mate a bit more info would be good - you can keep the whiz bang place to yourself

what is the place worth - 200, 300k? I met a guy who owed 200k and the rent doesnt cover it.

So you expect to get the tenant to pay for all expenses and debts without you kicking in anything or much?

Hope you see where I am heading. Is it your first one?

Ok. No its not my first but i am far from a seasoned investor. And yes i do expect the tenants to pay for everything plus a bit more actually.Your price range is right, more on the lower side. Loan repayments will be about $295 pw at 6% plus $70 in holding costs pw. So with a rent potential of around $400. Its looking good.

My example was just to show how some attractive deals are out there and how dropping interest rates are making more of them. I am comfortable with my decision.

 

[Xenia]

If you are basing purchases on percentages of loan repayments you should not be in the property market.

People that buy because loans have droped or sell because loans have risen by a few percent are not investors, they are side line speculators!

Rather than wasting time following sensationalised media coverage on property investing, learn how to spot great deals with profit to be made at purchase. sure loan repayments are factored in but the individual deal should look favourable with all current and future projections taken into account.

waiting for external factors to become favourable to the "average newspaper property" so that the speculators could come in and make a small profit while those external factors remain is not a good way to look at property investing!

Harsh but true sorry!

 

[StuartW]

If you are basing purchases on percentages of loan repayments you should not be in the property market.

People that buy because loans have droped or sell because loans have risen by a few percent are not investors, they are side line speculators!

Rather than wasting time following sensationalised media coverage on property investing, learn how to spot great deals with profit to be made at purchase. sure loan repayments are factored in but the individual deal should look favourable with all current and future projections taken into account.

waiting for external factors to become favourable to the "average newspaper property" so that the speculators could come in and make a small profit while those external factors remain is not a good way to look at property investing!

Harsh but true sorry!

I could not agree more.

The average pro pack variable rate since 1990 is 6.70%. If I assume that the past 18 years is a good indicator of the next 18 years (who know if this is right?), then locking in at a rate below 6.70% should be a good strategy. I think you need to take a long term approach to these decisions - particularly if you plan to carry investment debt over the long term.

 

[devo76]

If you are basing purchases on percentages of loan repayments you should not be in the property market.

People that buy because loans have droped or sell because loans have risen by a few percent are not investors, they are side line speculators!

Rather than wasting time following sensationalised media coverage on property investing, learn how to spot great deals with profit to be made at purchase. sure loan repayments are factored in but the individual deal should look favourable with all current and future projections taken into account.

waiting for external factors to become favourable to the "average newspaper property" so that the speculators could come in and make a small profit while those external factors remain is not a good way to look at property investing!

Harsh but true sorry!

I assume this is directed at me. To say that interest rates are a small consideration to investing is absurd. Cashflow is very important to purchases and interest rates affect cashflow. I do agree they should have no bearing on property selection.( It played no part in my selection i am looking at the add value potential). What i am saying is many people have a certain type of property in mind or they may even have the actual property picked out but the numbers dont add up just yet. But with a combination of lower prices,rising rents and dropping rates. Everyone must have a point where they jump back in. This is the point im trying to make. To some people a bit more of a drop in rates will be enough.

 

[ArJay]

We're waiting...not so much for decreasing IRs but to see what the market holds in the next 6-12 months.

No use buying now when you could get in cheaper if you have the patience....

If the market doesn't drop...so be it.
IMO it's going to be a buyers market for quite some time yet so we'll buy then.....

R

 

[Xenia]

I assume this is directed at me.

sorry devo it wasn't directed at anyone just making a comment.

I agree interest rates should be factored into the individual deal but there is no majical rate that would mean that people should start buying. My dad was an investor in the 80s and he purchased deals at 18% loan repayments becuase the individual deals made sense at that time.

Other people were waiting for rate drops and seems like they are still waiting 30 years later.....

 

[Mom]

I'll buy when I have the deposit and found at least cf neutral property in capital city. I care about interest rates as much as I care about CF- properties: I care not about them.

 

[letiha]

We have 3 loans all with the NAB and crossed colateralised ( yes i know i know) Their 2 year fixed rate dropped to 5.59% as of Monday. We are considering fixing after Xmas for 2 years on 1 of the 3 loans.

At this rate we are going to be cash flow neutral before tax and about $100 at least a week positive after deductions such as building allowance ans depreciation.