I know this is 5 years old, but you failed to explain why in secnario 2 you can't borrow another 300k for lender B for IP2? If you've got servicibility in secnario 1, surely you should have servicibility for secnario 2 with lender b again?
Good point - yes assuming all else being equal, in scenario 2 you would be able to fit IP2 for with Lender B as well. So the order would be IP1 & IP2 with Lender B, then IP3 with Lender C. However if IP1 is with Lender B and IP2 with Lender C, then from structuring perspective we would have problem coming back to using Lender B for IP3 at that point. We'll have no choice but to use Lender C for IP3.
Give the chaos and the competition in the space of buying house, what’s your opinion on buying land and building a house? I know the builders are also tight on supply and delays are possible but if doesn’t bother me for 1.5 year’s wait time would you recommend taking that path? This is my first time buying /building a house and am totally confused as to what to do. Like Dave mentioned. There are 1 house per 4/5 families so getting a house from market is very hard unless you pay crazy extra amount and the seller can not refuse.
If you are building in a tightly held suburb, no more than 25km from the CBD ring, absolutely. If you a new estate housing estate with lots of land for sale, I would stay away. Have a chat to Dave (Shih) about construction finance and the possibility of capitalising in your interest into the construction loan to reduce your holding costs whilst construction is under way. I'm happy to refer you to two reputable builders who typically construct slab to keys in 10 months for single story and 18 months for 2 story. Think about buying a proposed subdivision lot, this way you can negotiate to get your DA, building permit and builder selected before titles are issued, meaning you are not paying interest whist going through this process. Once you have titles you can then commence construction. This will save you the interest rate cost on the land, and hopefully will see some equity in the block.
A video on borrowing in trusts would be great. Im at 2 properties in aus and considering next to be in a trust purely to extend my borrowing capacity for future purposes. Thanks!
Great video. Is it true that a property with granny is more difficult to sell? If so, maybe better to buy where you can build a granny flat, but without building the granny flat ...
It depends - it'll be targeted for investor buyers who can see cashflow stacking up or owner occupier buyers with big family. In a high demand city like Sydney it may not be as difficult to sell.
Respectfully disagree with John on the P&I point. If I’m in the accumulation phase of my portfolio, why would I willingly MINIMISE my available income, limiting further purchases? Not only that, but you can mitigate the risk of the property going backwards by buying well (under market value, gentrifying suburb etc) that this can be a total non- issue. I’d prefer not to pay a CENT back to the bank, and instead let the market and value add improvements do all of the heavy lifting for me, saving MY cash for anything I like: renovations, buffers, more deposits for more properties. Get through the first 15 years of pain of paying P&I? No thanks lol, I’d rather accumulate everything within 5, then wait another 10 for the market and inflation to do its magic.
I think David is way too optimistic about the current market. The stock has fallen, so has the number of buyers. It definitely isn't anywhere like throwing a chip on Bondi.
I thought I was the pessimistic one between me and John :) Stock numbers have been about 20% below but the demand is still in-line with previous 5 year average as according to Corelogic data. I guess it also depends on the suburb and type of property you're looking at. Anecdotally from the agents, there was definitely a lot more caution in the air and buyer behaviour last weekend so who knows we might be on the start of second dip now.
Diesel mechanics have always been in demand. At least for the last 15 years. Because ..... who wants to do that job? Not our tiktok star young people anyhow.
Just to understand. If I buy a house in Perth and its first home, I can apply for the federal first home grant as well as the state grant? Does it apply only to new builds? Thanks
Here is the link that should help you - this is specifically for WA: www.wa.gov.au/organisation/department-of-finance/fhog There is currently no federal first home grant anymore so you'll just be looking at what each of the states are offering.
Interested in buying a house in Perth. Not for investment but for me and my family. I am in Auckland and would like to do the groundwork before I travel. Can this gentleman's service be used .? Sorry I just came across the video and do not know who he is and what he does.
You can definitely engage Dave Hall for your owner occupier purchase in Perth. Feel free to email Dave on david@buyersagencyco.com.au or +61493405084. Good luck!
Hi George, I don't know Perth apartments well enough to be able to comment whether this will be a viable investment. Having said that purely from asset selection perspective if it has river view then it's got a unique & distinguished feature so may not be a bad idea. Please do your own DD.
Indeed, why pay rent when you can own in the long run? I think the biggest challenge though is still putting the deposit together, once that hurdle is crossed then easy to own property from there.
Actually, the next 12-24 months is going to be hardest when a lot of people got off their fixed rates. Interest rate will be above 5%, double or triple of the initial rate.
While the market is red hot know, but if hold for long time. Would you still see a mining bust, that will drag down the property market like the last time.
@@spiffleable 20%growth in the next 3 years, but 30% correction in the following 3-5 years, if history repeats itself. With 2% interest hike, which means extra 10k for an 500k loan each year. You work it out yourself, Rental yield has to reach 8% (break even) in order for a long term holding.
Wow! Quite an eye opener. Australia is badly broken under Scott's Morrison's government. Perhaps with more investment in TAFE and trades under Labor, some of the problems may ease.
Great info David! Thanks! Quick Q, how long on average does it take for rental property to go positive, based on your own experience. I understand that there are a lot of factors at play, but give us an average, for both a house and land and an apartment. Cheers mate!
Hi Jose, there are a few factors at play here. The main one is whether the loan is on Interest Only (IO) repayment or on Principal & Interest (P&I) repayment. The property will be a lot easier to be positive/neutral if the loan is on IO repayment because you're not "paying down" the loan so ongoing repayment is low. With IO + current interest rate positive/neutral can be achieved with some higher yielding properties from day 1. If however, you want the property to be paying itself down (i.e. on P&I repayment) AND having the property to be positive cashflow, then generally speaking your Loan-to-Value Ratio (LVR) will need to be about 65% or lower for the property to start becoming neutral or positive in cashflow.
@@lendpower Thanks David! Follow up question 🙋♂️ on that. From day 1 you got your IP and started getting it rented, how long on average should it take for it to become positive, for both IO and P&I. Just a gauge for me if I made a good choice 👍🏼 on my IP, because it’s all about location, type and cost of the property, in my understanding at least. Thanks 😊 David!
@@josedarrylalano8356 again there are multiple factors here at play such as the LVR you purchased the property at, the rate of increase in rent, the ongoing interest rate etc..so there is no defined rule here unfortunately. To give you an example however, a few of my Logan properties which had close to 7% gross rental yield from day 1 coupled with IO repayment were positive from day 1. If it’s on P&I repayment with today’s interest rate I would say they’ll be neutral cashflow (while paying down the loan). The one I bought at Murrumba Downs didn’t have as good rental yield so would be neutral from day one on IO repayment but negative on P&I. If I focus on getting that paid down to about 67% LVR and ask bank to reduce ongoing payment based on latest loan amount then it’ll likely be neutral cashflow. However this one does have better capital growth…so again it really depends. Hope that helps?
Thanks for the informative videos! Regarding your few IPs in Logan area, what is your opinion about the social demographic of the area as it has the "reputation". I am interesting in LCC area also which provide decent yield, great potential of development and Granny flat is allowed to be built.
Hi lokyi2. If you can I would suggest to avoid buying in LCC's low socio demographic areas. The yield on paper may look fantastic but the reality is when you factor in a few tenancy turnover, or when tenants are late with their rent payment then you have a gap to fill in the cashflow.
Hi David, thanks for sharing. I just stumbled across your post on property chat and been reading the last 5 hours (your posts + all comments), feeling sleepy now but can't put the phone down. I'm seriously thinking about buying PI in Woodridge cos nearby suburb +500k. Renting wise, is Woodridge better now in 2021? Thanks and subscribed.
Hi Tom, Over time as price continue to rise at Woodridge it will slowly gentrify. However at this point in time I believe it's still attracting similar demographics on the ground. Woodridge's vacancy rate has been trending down due to people wanting bigger places after COVID-19 so there's a spike in demand for houses. Not sure how it's going to go in the long run - but more investors = more stock for rent = higher vacancy in general. My personal opinion is the price will eventually catch up in Woodridge & Logan Central however it may still take a while to hit the $500K+ mark.
@@lendpower Hi David, thanks for sharing your opinion. I'm definitely keen on investing in the Woodridge area. Long term, I think it will pay off. 1. Can you recommend any *gun* property manager in the Woodridge area? Also, I have begun moving to EBM insurance since they did the right thing for you. 2. What is the best way to contact you instead of commenting on RU-vid? Instagram, propertychat and etc. Thanks for sharing! Tom,
@@tomnguyen1015 Hi Tom, feel free to reach out to me via giving me a call on 0410 291 536 or email david@lendpower.com.au and we can take the discussion offline. Looking forward to chatting to you :) Cheers, David
I did the core logic calculation. $785000 estimated sum insured to cover a house on land which was recently valued by bank at $565000. Just cant seem to get a honest estimate . land is valued approx $250000 so house $315000 value .So even if I add $120000 for demolition and legals its $435000 still no where near $785000 , something is definitely suspect
Absolutely loved this video. As a fellow Aussie real estate investor I really appreciate your efforts mate. Thank you so much for this valuable information 🇦🇺😀
