X
The Property Couch Logo

TPC Gold | Lenders Mortgage Insurance (LMI): What It Is and When You Need It

By in Podcast

Subscribe On Itunes Subscribe On Android

In today’s bonus episode, Bryce and Ben dive into a listener’s question about the mechanics of lenders mortgage insurance (LMI).  

Find out what LMI is and how it relates to your loan-to-value ratio (LVR), as well as whether the premiums are refundable or transferable.  

Ben shares his frustration with the system but also explains how, in some cases, paying LMI can be a strategic move to unlocking more property investment opportunities.  

Tune in to hear their insights on whether you should embrace or avoid lenders mortgage insurance (LMI)! 

For the full Q&A episode, tune in here: Episode 97 | Q&A – Mechanics of LMI, Purchasing Foreclosed Property, Stretching Your Investing Budget and more 

__________________

Did You Enjoy Learning More About Lenders Mortgage Insurance (LMI)?

If you have further queries about your mortgage or want to have it reviewed, book in a free initial consultation with our sister company Empower Wealth. 

Have a burning question of your own?  

We’d love to hear from you! If your question is answered, you’ll get our premium Start & Build course (RRP $497) for FREE! 

 

If You Enjoyed TPC Gold | Lenders Mortgage Insurance (LMI): What It Is and When You Need It, You Might Also Like:

Transcript

Bryce Holdaway
So there you go listeners, we don’t really prep, we just come in here and riff it, but we’re very fortunate to get lots of really cool questions.  

Ben Kingsley
What are we doing?  

Bryce Holdaway
I’ve got a question from Volkswagen.  

Ben Kingsley
Bang, straight into it.  

Bryce Holdaway
Volkswagen.  

Ben Kingsley
Volkswagen.  

Bryce Holdaway
On Facebook. “Good afternoon gents, thanks for the gold that you provide. It’s both educational and inspiring. I enjoy listening to your show on my commute to and from work each day. And now that I’m fully up to date with your shows, I enjoy the footy banter, so keep it coming.” Mate, we gotta wait for footy season. 

Ben Kingsley
I know, bring it on!  

Bryce Holdaway
“I have a quick question. How would you tackle this situation? I’m 33 years old and married with two young kids with plans for number three in the future.” 

Ben Kingsley
Well, there’s one way to do it…probably invest in property and not have that third kid. Just kidding of course, children are beautiful.  

Bryce Holdaway
We’re not the family planning podcast. “I’m currently rentvesting. I have subsidized housing thanks to my career, with one investment property in Warner, north of Brisbane. (I bought this before I started to listen to your podcast). I 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.”  

Ben Kingsley
Maybe.  

Bryce Holdaway
“My question is in reference to LMI and LVR.” LMI of course is lenders mortgage insurance and LVR is loan-to-valuation ratio. “Is the LMI attached to a loan dissipated over time as your 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%? Thanks again for your time.” Really good question about the mechanics of lenders mortgage insurance.  

Ben Kingsley
Okay, so we’ll start from the top. What is lenders mortgage insurance? Lenders mortgage insurance is an insurance policy that the banks take out against you in the event that you don’t repay them their money.  

So if you think about it in a comical sense, the insurance has knocked on the bank store one day and said, “I know you only lend to 80%, but how about we put something together, a JV together where you lend up to 90% (and in some cases back in the old days) 100% of the value of the property, and we’ll insure the risk of you doing that…but guess what, we’ll make the borrower pay for it, okay.”  

And so in some cases you can capitalise that insurance premium, which means you can add it to the loan and in other cases, depending on some lending criteria, it might cap out at say 90% or 95%. It’s very hard to get 100% lending. There are some house-and-land package companies that work in with the banks to do 100% lending, but it’s unusual. Alright, so that’s the concept. Now, so it doesn’t protect you as the borrower.  

Bryce Holdaway
What?! Come on…

Ben Kingsley
It doesn’t protect you as the borrower. It only protects the bank, but they get you to pay it. So that’s the sneakiness of it. In fact, I’m a bit angry about the amount of lenders mortgage insurance that gets paid out there because I think it is absolutely money for jam for these insurance companies.  

Bryce Holdaway
Yeah, let’s get all of our listeners to…we’ll pool our money so we can all go to capital base. Then we can become the third LMI provider in the country. 

Ben Kingsley
Wouldn’t that be good?  

Bryce Holdaway
Yeah, because you sit in the back room counting checks, don’t you?  

Ben Kingsley
Postcode protect it, and you’d knock back certain types of properties and you’d be…yeah, anyway, we’re not here to make money that way, but all right. Now the question you’re asking is how long does the premium last for? Well, this is what the insurers argue, that the premium is for the life of that loan. Okay, so it means that for the 30 years you’re protected…but you make a great point Volkswagen, in terms of coming back to when your value of your property grows beyond the loan-to-value ratio of 80%, then technically there’s really nothing that they’re insuring.

They can almost go to the bank with that cash. So that is where it becomes really frustrating because unlike car insurance and house insurance premiums, if you do choose to change lenders in terms of refinancing your car loan or whatever, you get a rebate. But these lenders mortgage insurers do not give a rebate. And it’s non-transferable, Bryce, and now I’m getting angry.  

Bryce Holdaway
You’ve got your angry voice on.  

Ben Kingsley
I’ve got my angry voice on because it should be transferable and there should be a rebate. It’s bulldust. Call it bulldust. There you go.  

Bryce Holdaway
It is a moment in time, isn’t it Ben? You’re paying a premium in a moment in time, and therefore, as you said, there’s no money back at any point. There’s no pro rata-ing. You’ve paid it, move on. So the LVR becomes irrelevant after that moment in time.  

Ben Kingsley
Correct. So let’s say you buy a 95% LVR, okay, and you pay your lenders mortgage insurance, and then you see a bank who’s got a better deal. Well, if you want to refinance them and let’s say your LVR (loan to value ratio) is 85%…which LVR is basically measured by the loan amount divided by the value of the property as a percentage. So that’s the loan amount divided by the value of property, just repeating that, just so you got that right.  

Bryce Holdaway
So a loan of $800,000 against a property worth $1,000,000 (is) 80%.  

Ben Kingsley
Correct. Okay. So the reality here is if I then say, okay, I want to refinance to another lender, but I’ve got to pay a brand new premium and I don’t get a rebate on the old premium that I’ve paid…it’s a rort. I’m calling it, it’s a rort.  

Bryce Holdaway
It’s a privilege. We just get the opportunity to pay it twice, mate. If we want to revalue it to a better opportunity, we get to pay it twice. 

Ben Kingsley
Well then obviously then you think the interest rate’s better, but ultimately once you put them all together, no, you may not be better off financially. Now one good thing about lenders mortgage insurance, and it’s got nothing to do with the insurance companies or the banks, but the ATO does recognise it as tax deductible. So effectively you can claim the lenders mortgage insurance premium over five years. So it can be written off over five years as a tax deduction.  

Bryce Holdaway
Subject to your accountant’s advice.  

Ben Kingsley
Yes, well I think that is tax policy so I don’t think we need to go there but you’re right, you’re right. We’ll protect ourselves.  

Bryce Holdaway
Exactly, so there you go, Volkswagen.  

Ben Kingsley
Volkswagen. Do you have a diesel or do you have a petrol? You might be able to get your money back on your Volkswagen.  

Bryce Holdaway
They might get a rebate there. “And given I’ve saved up a good cash reserve would it make sense to pay just enough to make my LVR 80%.” I’ve got a rule on mortgage insurance. Most people say to me…  

Ben Kingsley
Listen to this because it’s gold.  

Bryce Holdaway
We’ve said it before on the podcast: embrace it when you have to, avoid it when you can. And embrace it when you have to is largely if it means that you can control a better quality asset and the benefit outweighs the cost. Lock and load. Knock yourself out.  

Ben Kingsley
Case in point, we’re going back probably to 2010. I was able to release $110,000 by paying I think it cost me $8,000. So it cost me $8,000 to get access to $110,000. Now I still need to service all the loans and so forth, so I might not have had the equity in that property, but I thought what an opportunity this is in terms of my gearing. Obviously I’m in the accumulation phase of building out my portfolio, so at that time I’ve gone: that $110,000 could form a deposit for another property that I could buy, and so it made sense for me playing the long game to embrace it.  

Bryce Holdaway
Mate, love it. There you go, Volkswagen. Two very good concepts there, LMI and LVR. Very, very good. 

 

417 | Home Deposits Made Simple – Chat with Julia Hartman, Michael Ragavan & James Bowe!

By in Podcast

Subscribe On Itunes Subscribe On Android

One of the greatest barriers that an investor will face when entering the property market is… 

Saving for a home deposit.  

With high housing values and a steadily rising cost of living, saving for that first big leap onto the property ladder can seem daunting to some and impossible to others.  

Here to part the sea of confusion and simplify home deposits, we’ve got a fantastic number of guests on the couch (In fact, this is the MOST guests we’ve had on at a single time 😮)  

Please welcome…  

Julia Hartman, founder of the Ban Tacs group and Chief Technical Tax Advisor for Empower Wealth Tax! No stranger to the couch, she’ll be breaking down the Australian government’s latest and greatest home deposit schemes to help you understand how you can maximise the benefits from it.  

Michael Ragavan from Our Leg Up, an innovative and revolutionary platform that seeks to tackle the problems around borrowing power, skyrocketing Lenders Mortgage Insurance (LMI) and Loan to Value Ratio (LVR) stopping investors from getting into the market. 

And last but not least…. 

James Bowe from OwnHome, a mind-blowingly cool product that helps home buyers pay off their mortgages while living in their property.  

Tune in as they dissect and break down the many ways people can save and afford their home deposit, and how it is possible to buy your home with just $35K!   

A super exciting, insightful and practical episode, listen in now!!   

P.S. We have NO commercial ties to any of these businesses – we just think the work their doing is life-changing stuff, and good enough to be shared with the community.  

 

Free Stuff Mentioned… 

 

Want to work with Bryce & Ben’s Award-Winning Team? 

 

Here’s some of the gold we cover… 

  • 0:00 – Here’s what we’re covering today… 
  • 3:59 – Is FOMU stopping you??  
  • 9:59 – Welcome back Julia from Ban Tacs!  
  • 11:53 – THIS is why Julia wrote the blog!  
  • 13:11 – Is it possible to buy a home with $35K?!  
  • 14:35 – What is the First Home Buyers Guarantee (FHGB)?  
  • 15:37 – Here’s how it works… (You can read the blog here!)  
  • 19:09 – This is basically what you’re deciding… 
  • 20:43 – Who would benefit MOST from this?? (+ who qualifies!)  
  • 22:20 – But what if I want that money back from my Super??  
  • 25:17 – What does this look like...as a Sole Parent?  
  • 26:26 – You have to pass these 2 tests!  
  • 28:36 – As a Couple with Children  
  • 30:55 – As a Couple with no Children 
  • 35:01 – And, as a Single Person with no Children! 
  • 40:05 – South Australia: “It’s a brain drain for the other states!”  
  • 43:42 – Meet Michael from Our Leg Up! (& what problems they’re trying to tackle!) 
  • 45:28 – How does “Our Leg Up” work?  
  • 47:25 – Rising LVR and LMI: What’s considered a good rate today?  
  • 48:59 – Let’s break it down: What’s a Charge (aka. Equity investment)?! 
  • 50:50 – “It’s lazy equity”  
  • 52:49 – How does this help first-home buyers??  
  • 53:55 – The process of developing Our Leg Up + what’s next!  
  • 55:01 – …and this is why it’s a Win-Win situation!  
  • 58:01 – If you’re interested, here’s how you can learn more! 
  • 58:40 – What criteria does Our Leg Up look for?  
  • 1:01:55 – Meet James from OwnHome + the challenges they’re tackling… 
  • 1:03:49 – This is how the idea was born! 
  • 1:04:48 – How this 4-step journey works!  
  • 1:07:02 – “You share the capital growth”  
  • 1:08:24 – Who are they trying to help?  
  • 1:11:32 – How does OwnHome make money?  
  • 1:13:47 – Why is there a time expiration? 
  • 1:14:46 – Paying LMI, Capital Gains Tax & Stamp Duty!  
  • 1:20:28 – How do they get their Capital Reserve?  
  • 1:21:39 – Limitations and future plans for this business! 

And… 

  • 1:24:54 – Julia’s Special Appearance Life Hack: CGT Record Keeping & the best way to do it! 
  • 1:29:56 – NSW’s (great) Stamp duty legislation change!  

 

344 | Have You Made The Wrong Investment Decision?

By in Podcast, Q&A

Subscribe On Itunes Subscribe On Android

“Have I made a mistake?” This is a common question we get from investors who just start listening to our podcast and learn the fundamental principles we teach for the first time.

Sometimes it’s directed to a specific property in their portfolio or is based on an investment decision they were initially considering but are now unsure if it’s a good idea or not.

And today we are answering some of these key questions – one, in fact, where the listener is not entirely “wrong” in their choice, though at face value seems to go against our general rule of thumb. You’ll learn why exactly this is and how to use this information in your own decision making process.

On top of that, we’re unpacking how to tell HOW MUCH a property is worth – including common D.I.Y mistakes folks make when trying to value their property and some simple (but overlooked) tips to assess this yourself and how to recognise when it’s time to bring in an expert.

Plus, if you’ve ever considered if solar panels on an investment property will increase its value and even the amount of rent you receive, then definitely tune into this episode… ‘cos you might be surprised by our answer!

You can suss all the questions we answer below – otherwise simply hit play and enjoy the show!

 

Oh, and, yep – Next week we’re kicking off our NEW WINTER SERIES. It’s kinda like our Summer Series but, umm, in Winter 🤣 So we’ll be interviewing our listeners who’ve had Real Life Financial Transformations! And we gotta admit… these stories are off the charts!

 

 

Free Stuff Mentioned 

 

The Questions

Question from Ricky Comerford on “Getting Solar Systems For Investment Properties”

Hi Ben & Bryce and all the team working behind the scenes. I just want to thank you for these podcasts and all the wonderful things that you are doing at Empower Wealth. I have a question today in regards to Solar Energy in a Solar System. Now, we’ve got a strict budget for our primary place of residence that’s currently being built. This house is going to be turned into an Investment Property in 6 years’ time. We’ve been quoted for a solar system and it’s pushing the budget by $3000. Now, the return for investment for this Solar System will be 3-5 years, not taking away the fact that solar power is great for the environment. I just want to know strictly financials What is your opinion on solar systems for an investment property?

Do they increase the value of the home by much and the rental yield? And should we get one installed knowing the situation of this house and our budget and the fact that it’s going to be an investment property? Thanks for your time and yeah, hopefully I get a response.

 

Question from Riley on “Buying New with Grants Instead Of Established”

Hi Bryce and Ben, I’m just wondering with all the government grants that are coming out at the moment, if it’s almost a bit too good to say no to at the moment as a first time buyer. I’ve been looking to get into the market for a while now. And down here in Tasmania, we can access up to $45,000 in grants to build a new place. I know it sort of goes against everything that you’ve taught in your podcast. But I’m just wondering if it’s probably now with these grants a better way maybe to get into the market. I know certainly from my perspective, that’ll help with cashflow as well, given that I’ll probably get an extra, maybe bedroom and bathroom into the house as opposed to buying a smaller townhouse type of property closer to the city. So just wondering what your thoughts would be on that, if it is now possibly a better option to be building a house rather than buying existing? Thank you.

 

Question from Kate on How To Calculate Loan To Valuation Ratio

Love the show. I’ve been listening for a few years now and I’ve done all the episodes and I tell everybody I can about The Property Couch. So my question relates to loan to value ratio.

Obviously, it’s easy to determine what the outstanding loan amount is, but where would you go to determine the best value do the free bank valuations cut it? You know, the ones, I mean, I’ll flick by most of the big banks put the address into the website and they spit out a value, but it is generally so broad that is almost useless. Should I ask the bank where the mortgage is held for evaluation? If so, would there be a fee payable? Should I get a real estate agent thing? I probably want to over the value of the property and use RPM. Isn’t that the same as what the bank is? Please help.

 

Question from Riley on “Have I made a mistake?”

I just want to start off by saying that I absolutely love your podcast along with the books and resources you provide. I have just signed up to your workshop and the Money S.M.A.R.T.S portal, which I am excited to get started on! You’ve probably heard this a lot but I wish I had found The Property Couch sooner!

My wife and I are settling on our first investment property in Vasse, WA next week.  I only found your podcast 4 weeks ago and have a lot of catching up to do! I have a couple of questions if you guys have the time to go over them.

Little bit of background:

We are 34 and 30. Bought our first home together almost 8 yrs ago in Padbury, WA and still living in it now. Had the expensive wedding, bought the dream car (for my wife who has expensive taste) and now we are just about to settle on the first investment property.

Together we earn $203,500 before tax but we are hoping to start a family asap so we will drop down to one wage of approx $104,000 (self-employed and pay myself $2k p/week before tax) in approx 6month – 18months.

The house is a 6yr old 4×2 in Vasse on 570m2, great spot (I think) between the high school and primary school in a fast-growing area (they predict the population of the South West will quadruple in the next 20yrs) and rentals are very scarce. We paid $416,000 and it is currently rented out for $480 p/week on a 18month lease. We signed up on a very low rate 2yr interest only loan and I have worked out that after expenses (mortgage, prop manager fees, insurance, rates and 1.5% maintenance) we will have approx. $10,240 left over making this property positively geared.

In my view (prior to discovering your podcast) I thought it would be great to have it positively geared straight away as we can put that surplus towards the deposit for the next property and/or renos for the Padbury house (want to make it into a 4×2, currently a 3×1

and already have plans drawn up) but from everything I have heard is that when you first acquire a investment property it starts off negatively geared and may take 5-10yrs to become positive.

 

So to the questions:

  1. Have we done something wrong?
  2. Do you recommend that we put all that surplus into the Padbury house (PPOR) offset until we are ready for the next deposit or would you put it into the investment house offset?
  3. Do we make it negatively geared for the short term to pay less tax? (we have surplus cash that I’d love to put towards our next property asap even though we are paying lots of tax)
  4. After the 2 yr period would you switch to a P&I loan or keep it on a IO loan?

 

I know there are a lot of factors at play, and I hope I have given you guys enough information to comment on our situation and we would love to hear your views. Sorry if this has been covered in your podcast but I am still only up to episode 40, I need to do some more long drives as that is the only chance I get to listen 🙂. Again, thanks to both of you for your time and knowledge, you make me excited about property investing and I can’t wait to learn more and more as I go through TPC free resources.

 

 

343 | “Pass Go & Collect $200” – 6 Property Lessons From Monopoly!

By in Podcast

Subscribe On Itunes Subscribe On Android

Ah, Monopoly – the classic board game… chances are you’ve got fond (or maybe even frustrated?) flashbacks playing it…

[… Nothing quite like the feeling of “Passing Go”, getting a quick cashflow lift, and then proceeding to bankrupt your loved ones in a friendly-but-no-so-friendly game of Monopoly… 😅]

Well folks, Did You Know… the 100-year-old property-trading game actually has 6 Proven Property Lessons that you can (and should!) apply in real life!!

Yep. And here’s the deal… today we’re unpacking exactly how you can apply these key lessons from Monopoly to YOUR own lifestyle design!

Look, this episode’s a bit of fun BUT, most importantly, is full of timeless takeaways that’ll shake up the way you look at property investing… (and help cement the wisdom!)

 

Can You Guess The 6 Property Lessons…? 👇

  1. Always Be __
  2. The Most __ __ Is Not The Best
  3. Focus on __
  4. __ Your Investments
  5. __ Matters
  6. __ __ Is The Key

 

Tune in now to get the answers!

 

Free Stuff Mentioned

 

Here’s A Bit Of What We Cover…

  • 02:49 – Your BIGGEST Competitive Advantage!
  • 04:24 – Wait, you’ve NEVER heard of Monopoly..!?!
  • 05:43 – Bryce first thought you had to do THIS when negotiating…
  • 07:46 – LESSON 1: Always Be __
  • 08:39 – Trying to buy everything you land on… (and The Meltdown!)
  • 11:43 – How to Hack Probability WITHOUT Gambling…
  • 13:09 – Things we ask ourselves BEFORE we purchase anywhere
  • 13:22 – Can you get it right 100% of the time!?!
  • 14:17 – The block of dirt Ben almost bought…
  • 15:14 – LESSON 2: The Most __ __ Is Not The Best
  • 15:28 – When you’re caught up trying to buy Mayfair and Park Lane…
  • 17:48 – The most expensive properties on Monopoly… but in Australia!
  • 19:55 – LESSON 3: Focus on __
  • 20:18 – How to recover when you pick The Unlucky “Chance” Card
  • 23:20 – When the borrower is at the mercy of the lender…
  • 25:06 – The BIG yield between the “red” and the “blue” properties!
  • 25:47 – LESSON 4: __ Your Investments
  • 28:26 – What Monopoly teaches us about BORDERLESS investing…
  • 32:19 – LESSON 5: __ Matters
  • 32:45 – What squares are MOST landed on in Monopoly? (And what does this hint at when you invest in property…?)
  • 37:19 – LESSON 6: __ __ Is The Key!
  • 40:32 – Robert Kiyosaki’s cashflow game…
  • 43:42 – What the creators of Monopoly quickly realised…
  • 44:38 – 7 reasons why playing Monopoly is a great for kids!
  • 46:42 – Bryce’s version of Monopoly at home (LOL)
  • 46:57 – The Reality of Retirement WITHOUT a passive income…

 

 

342 | From $250K to $2M Properties: How To Invest No Matter What Your Budget Is!

By in Podcast, Q&A

Subscribe On Itunes Subscribe On Android

Have you ever wondered how to invest in property with YOUR specific budget?

Like, what if you DON’T have a big budget to spend…?

Or, on the contrary… what if your budget’s actually quite healthy – but you’re not sure if a $1 million – $2 Million property is really a premium investment (Should you buy two cheaper investment properties instead?)…

Folks, they’ll be something for you in this Q & A episode… ‘cos we’re covering A LOT of ground here – how to invest no matter what your budget, age or strategy is!

We’ve got everything from…

  • Investing at 21… and 60!
  • Buying $250K or $2M Properties
  • Getting the “Big Rock in the Jar” at every life stage
  • Selling an investment to buy a dream PPOR
  • Understanding The Donut Ring concept
  • Unpacking new ATO data that reveals current investment trends
  • Helping kids get on the ladder
  • Why Rentvesting is mathematically a better idea, BUT….

Let’s just say: you’re in for a solid treat.

Listen now and find out how to successfully invest at any stage of life or budget 🕺▶

 

 

Free Stuff Mentioned

 


The Questions We Answer…

 Question from Sharon on Buying Higher Priced Properties

Hi Guys, Thanks for having such a great podcast. I’ve recently got very addicted to it and I’m really enjoying it. I do have a question though around the value of properties that we should buy. I hear you talk a lot about your asset selection but I never heard you talk about higher priced properties, so like when you’re well over the $1 million mark. We live in Melbourne in the North, so we’re looking $1.5 to $2M for our next purchase and I’m wondering if you consider that a best investment or what you think about high priced properties ‘cos obviously that’s still just like a very average 3 bedroom house in the North. So I am just wondering if you don’t talk about it for any reason, or if there’s some reason you should avoid that price point.

 

Question from Steve on Selling An Investment Property for A PPOR Or Buy Cheaper

Hey Gents, absolutely love the podcasts and I’ve been a listener for many years now. I’m 30 years old with a fiancé and we have an investment property fully paid off worth about $600,000. We’re currently renting very cheaply in order to save for our principal place of residence, so we were originally looking around the Ringwood area to spend about $900,000, but due to such limited opportunities I feel, and really average properties that don’t have scope to expend, we are considering selling the investment property off and plunging pretty much all of our net worth into a property that will allow us to get us into something more like around the $1.2 or $1.3 Million mark. In saying that, we’ll still probably only need to take on a loan of about $600,000 between the two of us, which is quite achievable, however just wanting to sort of get some advice from you.

Do you think it’s worth trying to buy our dream home — something that we’re gonna be happy for a very long time — and selling off the other investment, or whether we should be holding onto the investment and obviously sacrificing our lifestyle for the short term and turn to getting into something a bit cheaper?

Really interested to hear your thoughts. I am very, very confused at the moment. Thanks guys.

 

Question from Julia on Sell or Hold An Architectural Apartment in Inner Sydney

Hi Fellas, I feel really strange talking to my computer asking a question but I love your show, really had a great time listening to it. So my situation is I am in my early 60s and I’ve been working on super and all that stuff and I own my own home, but I bought an investment property in the heart of the city of Sydney. It was actually in a designer’s building – it’s got about 51 apartments there. Anyway, COVID came and of course the tenancy situation really changed in the heart of Sydney.

So, I did have to reduce my rent from $650 for a one-bedder down to $520 a week so that was a massive drop for me, but really my question is about – over the last 5 years since I’ve owned the property it’s only gone up about $20,000 ‘cos I think I’ve paid at the top of the Market.

My question is, Should I cut my losses being in my early 60s or should I hang in there and hope for better days?

My original plan is to keep this property well into my 80s and I’m just feeling the jitters because the rent has dropped so much and the value just hasn’t increased over the last 5 years so any input would be appreciated.

 

Question from Gabby on Buying A $250,000 Property

Hi! My name is Gabby and I’m a 21-year-old from West Australia. I love your Podcast, but I feel as though I belong to a bucket that you haven’t talked about much. I’ve been boarding and renting my whole life, but wish to or have to move out of home eventually and hopefully soon especially with low interest rates. I want to buy an old unit with 2 bedrooms in a small block priced between $250,000 and $300,000 and then rent out a room to a friend.

It’ll be in the East Fremantle area hopefully, which is on the premium side of first home buyer suburbs, but it could be out of my grasp if I sit on it for too long. The problem is that I don’t actually have the money needed and my parents are happy to invest as long as it makes sense. I’m thinking that repayments could be roughly $260 a week and the room could be rented out for $120 at least a week. This basically makes almost cheaper than renting but me getting the lifestyle and the property at the end.

Do I get them to go Guarantor or use the complete trust we have with them instead taking on the loan as an investment, but me paying it off behind closed doors and essentially taking it over by the end.

 

 

Instagram

Free Resources

What to be notified when there are
new updates & free resources?

  • This field is for validation purposes and should be left unchanged.

© The Property Couch. All Rights Reserved | Terms & Conditions | Privacy | Who Designed This Website?

×

MONEY SMARTS SYSTEM

  • The Best Money Management System Ever!
  • Worrying About Money is a Thing of the Past
  • Don’t “Unconsciously” Overspend Ever Again

Plus We Will Also Notify You When We Release New Episodes

We Only Send You Awesome Stuff

×

SUGGEST A GUEST!

We Only Send You Awesome Stuff

×