Q&A Archives - Page 19 of 25 - The Property Couch

116 | Q&A – How does Guarantor Loan actually works, Fixing a Joint Venture, Investing in WA and more

By The Property Couch May 18, 2017 in Podcast, Q&A

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It’s Question and Answer time! Now, we answered a few questions in the last episode but realised that we wouldn’t be able to respond to all of your questions at this rate, so we will be doing a Facebook Live very soon. Stay tuned for that!

On another note, there’s an exciting announcement at the end of this episode so make sure you stick around. And here are the questions that we would be answering today:

Question on Guarantor Loan from Kate:

My partner and I earn a combined gross income of roughly $130,000 annually. We have a small amount of savings – about $5000 (remember we’re getting married). But really nowhere near the amount needed for a deposit on our first home. Listening to your episode about guarantors got me thinking. Is it possible to borrow the full amount for an invest-grade property in Newcastle? Do banks really loan 105% with interest only repayments so that we can continue putting money into an offset account? Or are we better to wait and rent and continue saving?

My parents have been lucky enough to own a home in Sydney that has enjoyed the crazy house price growth. Their home would be worth at least $1.5 million at the moment. How long would my parents need to be guarantors – would it be until we had saved 20% of the loan? Perhaps in our offset account? Or would it be until the full amount was paid down?

My dad is from the generation of debt is bad and avoids risks. If you thought this was a smart move, do you have any tips on how to explain the risk/benefits so that he can understand?

Question on “To Hold or Sell” from Warren: Hi ‘couchers’, thank you for your entertaining, informative, and thought-provoking podcasts. I’d like to know what your thoughts are on rescuing a situation where someone has an investment property they’ve had for 10 years that isn’t performing. Cut the losses and look to replace it, or hang onto it? (I bought this place at age 20 on apprentice wages, it was all I could afford) Thanks! (specifics: paid $195k, current market value $240k, current rent $270/wk)

Question on Property Investing in WA from Daniel:

My partner and I recently bought a duplex (2 bedrooms, 1 bathroom, 2 living rooms, 475 m2) in Spearwood for $400,000. We have $112,000 equity in the property and $73,000 cash in our offset. Our salaries are $50,000 p/a for my partner and $71,000 p/a for myself, and we do not plan to have children for another 5 years. There is an opportunity to buy the second duplex (also a 2 bedroom, 1 bathroom, with a small granny flat at the back) for $385,000. The site is zoned R40 on 950 m2 (we see a 4 property potential), 3 km from the new Port Coogee Marina, the North Coogee development estate and the potential South Fremantle Power Station development bringing 6,000 new high-density houses/apartments into the area. We are 300 m from the local shopping centre and 5 km from the satellite employment hub of Fremantle (Bryce’s old hood). It ticks all the lifestyle boxes bar being near a train station (it is currently challenging to access the freeway to the Perth CBD). My two part question is:

I am currently weighing up the opportunity cost. What is your inference of Spearwood as a potential “wave rider” suburb piggy backing off the growth of the coastal development? Do you feel that it would have long-term, consistent capital growth or a short term upswing, followed by a flattening capital growth and thus be better to buy into a blue chip area?
As a first time investor, would it be wise to buy the adjacent duplex and land bank the asset, then develop the land after we have acquired several more properties in our portfolio or focus on the subdivision straight off the bat?

Question on Joint Venture from Tristan:o

I am in a bit of a bind and require some help. I currently have 4 properties. PPOR, a house in country VIC (Nathalia) that my father rents, a house in Frankston (that’s had 10% growth in 5 months!) and the front house on a sub dived block in Seaford.

The last 2 properties were purchased with friends as tenants in common.

I wanted to try and get another property with just my wife and so (as my friend has changed his plans a bit) I spoke to a well-regarded mortgage broker and they told me that the banks have changed the rules and that now they take the full loan amounts of the split properties and only half the rent!?

This destroys my serviceability. I am now not sure what to do, my friend is moving interstate and will not be ready to buy again for 2 years. (which I think my turn into 5 years) and I am keen to keep purchasing.

Should I concentrate on paying down the debt on my PPOR (280k worth 750k) or look at selling one of the joint houses (to gain the serviceability)?

And here are Free Resources mentioned in today’s podcast:

Property Research Site | LocationScore – Register your interest here
Kids Savings Calculator – Download Here
Video on Buying A Property with Someone Else – Watch Here
Fact Sheet on Guarantor Loan – Download Here

If you like this Q&A episode (How does Guarantor Loan actually works, Fixing a Joint Venture, Investing in WA and more), don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

111 | Q&A – Borderless Investing, Loan Redraw, Suburb Demographic and more

By The Property Couch April 13, 2017 in Podcast, Q&A

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Can’t believe it has been 11 weeks since our last Q&A! We’ve got quite a line-up of great guests on the show for the past couple of months so for today’s podcast, we will be doing a Q&A instead. Thanks for sending in your question and Bryce and Ben will be answering questions from:

Bernard on Borderless Investing: I love your show; it’s really given me a different perspective from some other property educators, and it’s one of these differences which gives rise to the following issue. You speak a lot about being a borderless investor and buying quality assets in those locations where the market is in the right stage of the cycle. At the moment, this might mean Brisbane or Hobart or Adelaide or wherever. That’s all good. You are also clear that Sydney and Melbourne are the places which will grow most long term. That’s all good too. If I’m only going to buy 4-5 properties to secure my retirement though, as you advocate in your book, I certainly want to be buying the best long-term performers that I can. I know that done well, I can make good money doing this in smaller markets, but long term I wouldn’t expect to do as well as in the larger metropolises.

If I was buying ten houses, I could carry some weaker assets, but with four it’s obviously vital to get them right. How would you advise someone who already owned a couple of (hopefully!) well-selected properties in Brisbane or Adelaide or wherever who was able to re-invest? Should they hold off, build up a bit of equity and increase their cash buffer before looking at Sydney or Melbourne when the heat has come off there? Or would you suggest buying again and taking the risk that they will never get into the larger markets?

Alisdair on Loan Redraw Facilities: Can we have a finance expert tax expert come on the podcast? I have a loan where I have paid in extra to the redraw, not offset. I had a strategy to break the loan and refix for a few reasons. The rate is significantly lower. I’m hoping I can claim the break fees as a cost, reducing their effect. Also I want to pay my interest out of the redraw. Can this be done? I feel the break fees are permitted, but the part where I pay interest from the redraw seems an impossible dream due to a mixed purpose loan affect and that the ATO considers it tax avoidance. Any guidance in this matter?

Lakhwinder on Location Research: I have been listening to your podcasts while driving, thank you so much for such a priceless info you share with us. I recently started my property investment journey bought new house in Western Sydney to get government benefits and bought two investment properties in Loganlea after rezoning, after listening to your podcasts I realised I didn’t apply most of the filters you guys talked about. Both my properties are over the median price of suburb. Both are over 6% yield so not that painful to hold.

First investment property 3bed 2 bath 2 living areas 800msq with pool for $400k. Second 4beds 2baths 800msqr $380k. Westen Sydney property (owner occupier)did great, bought in end of 2014

By June 2016 property revalued at $150k more without landscaping done.I know you guys talked about Brisbane few times but it will be great to listen what you think about logan area and recent rezoning of Loganlea. Questions:- is it ok pay higher price for the properties (houses)that fall within the high-medium density or residential core for a future land bank?

Clayton on buying off the plan properties: Hi, I would LOVE to get your opinion on buying off the plan properties and what to look out for. This course of action has been put forward by a mortgage broker/real estate developer in Brisbane who will benefit from both the commission on the mortgage and the property itself (they have openly disclosed this). The property will be an investment and NOT my PPR. Love the show and keep up the good work.

If you like this Q&A episode (Borderless Investing, Loan Redraw, Suburb Demographic and more), don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

099 | Q&A – Tips For Investing Late In Life, Selling Your Home, Fixing A Downward Portfolio Spiral and more

By The Property Couch January 19, 2017 in Podcast, Q&A

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As Bryce puts it today, we’ve made it to “99, not out!” and with just 1 episode to go before the big 1-0-0, we’re back to provide you with another Q&A Session. In today’s episode, Bryce and Ben give advice on whether to sell your home, tips for investing later on in life, what to do when your property portfolio is falling into a downward spiral, and more. Today’s questions are from the following listeners:

Fernando on whether or not to sell his home: My wife and I moved from SYD to MELB four years ago without not even knowing where its north was. We rented an apartment in the beautiful East Melbourne for a year as we wanted to enjoy this beautiful city life style but also knowing that we needed to buy a property after that time so we were not building someone else’s future. So we bought “with our hearts” a 3 beds, 2 bath, studio + man cave OLD house out in Donvale with the “vision” of slowly renovate it while starting a family, be surrounded by green, live the Australian dream and on top of that, generate a good growth on the property in a medium term. We love the area BUT… Now, after 2 kids, our cash flow is quite dry and we need to do something about it (classic isn’t it).

Our first bet is to sell as Donvale is not a good suburb from a rent perspective (Yield), put whatever money we can make from the sell – We bought at 520K, the median is 650K and we’ve been slowly renovating a few things, but again, without enough cash to finish it, we are not expecting making a huge profit – into an investment property and then became “Rentvestors”, we wouldn’t mind to sacrifice moving out to a suburb where rent is half what our current mortgage is. In our raw calculations, in 3 – 5 years we could be saving enough to buy the second investment property.

I believe the best things Australia has to offer are for free (parks, security, culture, etc.), so for now, not living in the suburb we’d prefer is not such a big deal when thinking on our medium-long term goals which are given to our kids the best that we possible can and start a passive income strategy for our future ASAP. On the other hand, if we keep the property, we’d need to put a considerable amount of cash on top of the rent in order to pay the mortgage, so our savings wouldn’t be enough to think in buying a good investment property any soon. We will regret not keeping this property… I can guarantee you that but we don’t see any other immediate solution.

Monique on whether or not to sell her home: Taken your advice, but what now? Given the projected apartment oversupply, should we sell our inner suburbs 1bdr flat to put towards our next home? Or is it still a good investment worth holding on to?

James on interest only loans:Part 1: 2 years ago my wife and I purchased a property 5km from the Brisbane CBD for $530,000. Unfortunately we only spoke to 1 bank, didn’t seek advice and fixed the whole loan for 3 years at 5.05% so have no offset and no way of paying more off the loan than prescribed fortnightly payment amount. After listening to your podcasts and just starting to read your book just this week, we have since found a decent mortgage broker and are considering refinancing and setting up the money smarts structure. We are considering an interest only loan, as discussed in your podcast, to give us the flexibility to purchase another property over the next 2-3 years, but currently we are getting conflicting advice from our financial planner who is against interest only and our mortgage broker who is telling us ‘cash is king’ in your offset account and we should consider it. The idea is to pay the same amount as we are paying now with our P&I loan but go onto interest only 100% variable (4.3% int rate) and let the cash stack up in the offset. What are your thoughts on this?

Ronie on investing late in life: Hi Guys, Loving the podcasts. Only started a month ago and am devouring them. Ben, I don’t know if you’ve been told this before, but when I’m listening to you, I can’t help but associate your voice to radio celeb Fitzy. Anyway, my question is, how to start in the property investment after 40. We are self employed, and although have a few savings, is not near enough the 20% asked for a deposit. We don’t even have our own house. Should we work towards that first? Thank you guys!

Lyell on the next steps to take in fixing his property portfolio: : I bought my first property at 22 in Kalgoorlie WA. I know i know, mining towns are dangerous. We bought that property is 2010 and have see no capital growth what so ever. Property was bought in 2005 for $197k and we purchased it for $340k in 2010. Not a bad profit for the previous owners. As soon as we bought it, growth stopped. We are however getting 7% gross yield (leased at $460pw). We then bought a house on a big block in Ballajura in the north eastern suburbs of Perth. We bought that for $450k in 2014. Unfortunately that house has dropped by around 7%. We now love in this home. But we leased it at $435pw. We are now at 90% LVR. Both properties are 3 x 2’s with the Perth property on 760sqm. This house was bought for $128K in 1998 prior to us. Very disheartening for a young couple. Could i get a rough idea on what you would do in the situation (in a completely general sense)?
Also, could you guys discuss ways to get yourselves out of sticky situations like this? I think a lot of people will be feeling this kind of pinch right now (especially WA).

If you like this Q&A episode (Tips For Investing Late In Life, Selling Your Home, Fixing A Downward Portfolio Spiral and more), don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

097 | Q&A – Mechanics of LMI, Purchasing Foreclosed Property, Stretching Your Investing Budget and more

By The Property Couch January 5, 2017 in Podcast, Q&A

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First thing’s first, Happy New Year everyone! And what an exciting new year we have for you all here on The Property Couch. We’ll let Bryce and Ben fill you in on what’s to come, but for now we thought we’d kick the new year off with a fresh Q&A session. In today’s episode, Bryce and Ben answer the following 7 questions which are:

Volks on Mechanics of Lenders Mortgage Insurance (LMI): I have a quick question, how would you tackle this situation. I’m 33 yo and married with 2 young kids with plans for #3 in the future. I’m currently rent vesting (I have subsidised housing thanks to my career) with one investment property in Warner north of Brisbane. (I bought this before I started to listed to your podcast) I have bought off the plan and in hindsight now, armed with the information provided by your podcast and other books on investment property, I would have steered away from that investment and bought based on location. Hopefully this property will do some heavy lifting in the future.

My question is in reference to LMI and loan to value ratio (LVR). Is the LMI attached to a loan dissipate over time as our LVR approaches the 80% sweet spot or does it remain until the whole loan is paid off? And, given I’ve saved up a good cash reserve, would it make sense to pay just enough to make my LVR 80%?

Jamie on Purchasing foreclosed property direct from banks: Hi Guys, I’m a long time listener of the podcast and have currently just completed your book. I have a question regarding whether you have previously ever purchased foreclosed property direct from the banks. I have located numerous websites regarding this with some requesting membership’s fees to access the information. Are there ways to retrieve this information yourself and can you expect to purchase this property for under market value and if so how much can this process differ from a typical purchase.

Bohdi on whether to buy comfortably within budget or stretching to the end of your limit: Hey Guys, Came across the podcast a few weeks ago and have binged a year and a half worth of episodes in 3 weeks. Addictive stuff! My now wife and I recently got married and are now looking to get ourselves into property.

We live in Manly in Sydney, have a good double income and a considerable deposit saved and are now trying to decide the best property approach for us. The maternity leave at my wife’s work is fantastic so we are not expecting any dip in salary income as begin to have children. In the long term our goal is to have a few investment properties wherever it makes sense to buy in Australia and then a PPOR in or around Manly.

My question to you: With our income we could probably get a loan of up to $1.5M and still be able to comfortably live. But in your experience, should we start by purchasing an investment property that’s well within our means – e.g. something for around the $700,000 – $900,000 mark and continue to rent in Manly OR should we try to stretch ourselves and buy a property at out upper limit that we live in for now and then think about additional investment properties later on? If we were to buy something a bit cheaper in an area that made sense, I’d imagine we’d be able to continue renting and then buy a second more affordable investment property as equity grows in the property and we continue to save. In other words, are we better to aim for a number of cheaper properties that we gain a small amount of capital growth or one more expensive property that might achieve large capital growth as it’s off a larger base?

Any thoughts/words of advice would be much appreciated as we’re undecided what to do next?

Mike on offset accounts: Love the podcast! Got on board at Episode 69, been back to the start and nearly caught up again. I get excited about driving anywhere now because of your podcast. My question is: do you attach an offset account to each loan, or can you have one offset account attached to multiple investment loans? What makes more sense?

Tim on what to ask a Property Advisor: Apologies if you’ve already covered these and I haven’t got to it yet but I’d love to hear more about the following:
- If looking at a suburb/property that’s historically gone up 10% per annum vs a suburb that’s gone up 7% per annum, you could either conclude that the first is a better performing suburb and assume it will continue to be, or that the second is good value and has room for capital growth. I would love to get your thoughts on how to think about these two very different conclusions that you could draw from the same data. I’ve heard you mention the term regression analysis before and am curious if you’ve done any research into this.
- It’s common to see managed bond/stock funds apply their strategy to historic data to demonstrate what it would have done had you invested 3 years ago, do you guys or other property advisors do the same thing with the principles that you apply and what kind of questions should people be asking their property advisor to validate that their approach is likely to be a successful one?

Mitch on Strategy and Building out a Portfolio: I am currently in the early stages of talking to your mortgage brokers and buyers agent team about my next investment property early next year. My question to you revolves around strategy and building out a portfolio. I am 25 and bought my first investment property with little/no knowledge just over 2 years ago. Luckily I bought a 2 bedroom 1970’s unit (1 of 12) in Hove, Adelaide and so far it has done really well. Historically its capital growth has been 8.5% and yield 5.4%. I understand that this probably won’t continue into the future but feel we did well.

When designing plans and giving the buyers agent team a clear brief my partner and I are beginning to assess whether we chase capital gains property, a cash cow or a mix. Currently our cash flow is strong (minimum 2k surplus per month) but this could deteriorate slightly as circumstances change. I’m curious to know again the rough numbers you guys work off when considering these options ie. What capital gains % do you chase and what yield % do you chase for both types of property.

We are leaning towards a more capital gains focused property as with age on our side rental yields can catch up later, but we want to make sure we can easily manage the repayments so we don’t want to get stuck not being able to live life.

Amber on realistic estimates of holding costs for Investment Properties: I wonder whether holding costs for an investment property after tax of 2% of purchase price is still realistic estimate in the current market? I read your article which was written in 2014 on how to invest without affecting family budget where you used this value.

If you like this Q&A episode (Mechanics of LMI, Purchasing Foreclosed Property, Stretching Your Investing Budget and more), don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

091 | Q&A – Affordability for First Home Buyers, Overseas Investment, Is it ever too Late to Invest and more

By The Property Couch November 24, 2016 in Podcast, Q&A

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After two weeks of Donald Trump-related episode, we think it’s time to get back to our listeners and answer some questions! But before that, Bryce and Ben kickstarted today’s episode with a quick update on interest rates and which directions we might be heading to in the next few months. And for today’s episode, they will be answering questions from:

Cody on First home buyers – I recently listened to episode 87. Listening to the content of first home buyers not being able to get into the market unless prices fell 30%. What is your moral standing on this? Are you okay with our kids getting locked out? Do you consider yourselves and like-minded people responsible for aiding in driving competition and prices? Do you think there should be any assistant to our kids from a government policy standpoint to own their homes? Look forward to hearing your thoughts.

Tom on Overseas Investing – Hi guys, just listened to the latest podcast…thanks for the shout out to London, where I have just moved to from Australia. I have 2 IPs in Inner West Sydney and thinking I will be sitting on them to let them grow for a few years until I get back…London property is just ridiculously unaffordable! Would be interested in your thoughts on investing in overseas properties in countries such as NZ or the UK, from Australia, or vice versa and the process involved to purchase and manage. Enjoy what you guys are doing, and I think it’s the best podcast on IP in Australia. Thanks, Tom.

Steve on Overseas Investing – Hi Guys, loving the podcast. In footy terms, you’re both ‘up and about.’ Question for Podcast: Investing in Property Overseas. You talk of ‘borderless investing‘, but that’s only Australia. Is it a bit un-diversified to put all one’s eggs in the ‘Australian Property Market’, just like a Pommy would be putting all of theirs in the UK market, or a Yankee putting them all in the U.S of A? You guys have read Kiyosaki, you must have dreamed of following the world’s market cycles like a real ‘world’ investor. My question is ‘Where can Aussies buy overseas?’ I know an Aussie buyers agent buying in the US for clients at the moment, and you hear of the Chinese buying here. Why aren’t we buying China? Thanks, Boys!

Brett on Setting up an Offset Account – Hi guys, love the podcast, after meeting with a very respected investment mortgage broker, they suggested switching my PPR loan to interest only to help build savings for an investment deposit in an offset account. I couldn’t work out why this would be better than putting my money into the PPR loan to increase equity then drawing it out when there is enough. The money I draw out would be tax deductible on the interest, whereas the money I save in an offset, if I draw this out for an investment, this would keep my PPR loan higher and thus not tax deductible on the interest. Can you guys please discuss this as I am starting to lose respect for this particular broker. Thanks

Nicole on Canberra as the next Investment Spot – Hi guys. Love the show particularly being a Victorian, I love the sports chat at the start 🙂 However, I am now in Canberra and would love it if you could incorporate a bit more of our ‘different’ city into your commentary. It does not fit the usual capital city, but it is nonetheless. Also, can you tell me where you got Bernard Salt’s population predictions? I would love to see them in more detail. Many thanks and I look forward to the next show.

Question 6 from Kieran on whether it’s ever too late to invest – Hi guys, I’m loving the wealth of knowledge you guys put out each week. As a 31-year-old who never really considered what I could be doing now to build for their future it is inspiring to see how accumulative action over time can have such a great impact and how accessible it is to anyone with the right knowledge, advisors and drive to succeed.

My wife and I recently met with your team at Empower Wealth and are now on savings track to secure our first investment property. Bring on the Rentvesting! My question, however, is related to my parent’s situation. I am wondering if it is every too late to help fund your retirement?

My parents are 63 and while they have worked hard all their life, they’ve had a couple of investments turn bad which has them worried about how they will fund their retirement. They currently pay P+I monthly with approx $220k left to pay off on a property valued at approx $550K. As I understand it, they have calculated that if they work for another 5 years they will be able to pay off the balance of their PPR using the superannuation they have accumulated. That will leave them with the house owned outright but only the pension to live on.

I am sure there any many approaching retirements and facing the prospect of having to keep working longer than they hoped or unsure what kind of lifestyle they will have when the do retire. What options are there for someone in their position when it becomes harder to get approved for a mortgage due to their age? Is it ever too late to get involved in property investing to create a passive income?

NOTE: Here’s the video that Bryce mentioned in the podcast > Investing in A Granny Flat

If you like this Q&A episode (Affordability for First Home Buyers, Overseas Investment, Is it ever too Late to Invest and more), don’t forget to rate us on our iTunes channel (The Property Couch Podcast) and our Facebook page. Any questions or ideas? Feel free to drop us your thoughts here: http://tpcaustralia.wpengine.com/topics/

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