First over leveraged IP Purchase – Lesson Learned

Discussion in 'Investor Stories & Showcase' started by propertylad, 19th Aug, 2017.

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  1. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    I'm really confused by the finance side of this story.

    Was your contract unconditional from the start or subject to finance? It's not hard to know what the final out of pocket costs are going to be.

    Regardless, I'm glad you came out of it okay and no lasting harm done.

    Don't be too afraid of lmi though - it can have its uses when planned for correctly.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    [QUOTE="propertylad, post: 457826, member: 11324"Factoring in operating costs and P&I repayments this will be a bleeder but our short term focus is turning it self sustainable by pumping some equity into it and re-financing with IO repayments.
    .[/QUOTE]
    Depending on your current situation, paying this down may not be the best use of your funds and moving away from your current lender will make sure that the lmi is completely wasted.

    Don't rush to pay it down more than necessary - plan ahead with your broker to make the most of the current loan as it is.

    Which lender did you use?
     
  3. propertylad

    propertylad Well-Known Member

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    Subject to finance which went unconditional after formal approval. I went to the broker to find out the exact funds required who then referred me to the solicitor who said they won't know until settlement is booked. To be honest I felt a bit palmed off and should of held my ground but between the BA, broker and solicitor (who were all referred by the BA) I thought everything would have been fine if I just continued to save the original sum. The broker is still following up with the lender to find out how we missed $4k.

    Lesson learned. No one cares about your money but you which funnily enough is my BA's favourite quote.
     
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  4. propertylad

    propertylad Well-Known Member

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    Don't rush to pay it down more than necessary - plan ahead with your broker to make the most of the current loan as it is.

    Which lender did you use?[/QUOTE]

    Liberty funding was the only option at 95%.

    I hate the idea of having to fund a property. Would you suggest sucking it up long term keep paying P&I?
     
  5. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Liberty funding was the only option at 95%.

    I hate the idea of having to fund a property. Would you suggest sucking it up long term keep paying P&I?[/QUOTE]
    It depends on some things specific to your scenario and what you're hoping to do moving forward. You've paid the lmi now, it seems a shame to waste it.

    In reality, to pay it down to 80% and then change to IO will require far more in extra payments than just paying P&I long term - those extra payments could be a 20% deposit on another property.

    I suggest getting some specific advice from a broker that has the ability for forward plan for you.
     
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  6. TMNT

    TMNT Well-Known Member

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    Nice post

    I know how you feel, but unfortuantely, stamp duty etc isnt a waste but part of the process...... how do you think I feel when my PM for certain proeprties charges 9.9% with a 2 week leasing fee!
     
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  7. propertylad

    propertylad Well-Known Member

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    It depends on some things specific to your scenario and what you're hoping to do moving forward. You've paid the lmi now, it seems a shame to waste it.

    In reality, to pay it down to 80% and then change to IO will require far more in extra payments than just paying P&I long term - those extra payments could be a 20% deposit on another property.

    I suggest getting some specific advice from a broker that has the ability for forward plan for you.[/QUOTE]

    Hmm I think I know the answer to the question but it's conflicting given it's going to take longer to reach the financial goal. Truth is my spontaneous nature just wants the properties to look after themselves so I can take off to south east Asia and not have to look back but I think we all know how unrealistic that is...
     
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  8. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Hmm I think I know the answer to the question but it's conflicting given it's going to take longer to reach the financial goal. Truth is my spontaneous nature just wants the properties to look after themselves so I can take off to south east Asia and not have to look back but I think we all know how unrealistic that is...[/QUOTE]
    If you pay IO on this one, you would move to SE Asia, only to have to come back once it reverts to P&I - and then you'll be here even longer as the payments would be higher :)

    Ongoing IO payments are not a thing anymore.
     
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  9. propertylad

    propertylad Well-Known Member

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    That's rough, is that in Brisbane? I've been quoted 7.7% with first week fee. Is it student accommodation or something?
     
  10. CROMAX

    CROMAX Active Member

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    Sounds like your BA sucked.
     
  11. Beano

    Beano Well-Known Member

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    What is your net yield ?
    What is the impact of principal repayments?
     
  12. jefn89

    jefn89 Well-Known Member

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    Thanks for sharing @propertylad being a broker and investor myself those changes do come thick and fast + getting anything above 90% LVR at least for now for investors is going to be a challenge.. Times will change though although potentially great time to buy if you have equity given the lack of competition and cooling down of some markets!
     
  13. sash

    sash Well-Known Member

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    Lovely...I bought in Strathpine for 301k...and Clontarf for 325k.....one in 2015 and the other in 2016

     
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