Help with strategy to get property #3!

Discussion in 'Investment Strategy' started by rookie101, 2nd Apr, 2017.

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  1. rookie101

    rookie101 Well-Known Member

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    Hello,

    We are trying to devise a strategy to obtain property number 3.
    Weve got 1 IP in bray park qld and PPOR in north lakes qld. We are now trying to get number 3 however feel so overwhelmed at the options! CG is important to us this time.

    We don't know whether to cut losses and sell the PPOR which has pretty much done nothing in 6 years or dump it onto the rental market and look for a ppor to flip.

    The stats on the north lakes property aren't great.
    Value 490k, rental appraisal only around 415/wk. So crap yield...

    I'd love to get into Sydney but the yeilds are not that great so we can keep buying IPs...
    Very unsure about holding onto North Lakes or renting it out and or/ which areas would give us great CG/yield if we move into a ppor flip .....
    Any help would be really appreciated... ahh!

    Which other suburbs are good yield/potential for cg in Brisbane? Under 500k
     
  2. Xenia

    Xenia Well-Known Member

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  3. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    @rookie101 - Will come down to where Brisbane was in the property cycle. 2008/2009 was the last peak and....6 years ago was still early in the Brisbane cycle. The rental return does seem low should you turn the property into an IP.

    Have you been paying it down? If so, I would make it Interest Only and utilise the offset.
    Did you buy this as a brand new property? If so, no surprises there if the property hasn't moved

    What are the chances of it moving over the next year or two?

    In Sydney there were people selling who bought at peak and sold their properties to cut the losses right before the market took off....That would be painful.

    If you rent it out have you done the numbers pre and post tax (i.e. taking the outgoings and depreciation into account) on what it will cost you to hold it?
     
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  4. rookie101

    rookie101 Well-Known Member

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    Hello!
    Thanksso much for your response. Sadly that was us who sold out of sydney to come here... Jamisontown penrith which we sold for 385 to buy the north lakes property!!! Doh!
    I don't have alot of hope for this area but am not a fortune teller so seriously don't know. Thereis alot of vacant land between here and brisbane cbd though...
    We owe 320k on this property but the two are cross collateralized (bray park) and north lakes. North Lakes is 15 years old and in the first estate, but still is a low-set 3 bedder. Do you think we should give it a go getting a tenant (2.97%) vacancy rate in north lakes atm, Moreton bay overall is only 1.97% average though....
    ?? Humm...
     
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  5. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    What did you pay for it? It's below 80% LVR. Don't have the big picture in terms of your other IP. Look at uncrossing the two so you can minimise risk going forward.

    There is a lot happening in North Lakes - IKEA, Westfields, Costco, new train in surrounding areas. I wouldn't go by the vacancy rates alone. I understand some of the other Moreton Bay suburbs have high vacancy rates - something I raised with a local sales agent sometime last year and he said that he couldn't get his head around that as they had little vacant properties on their books. So talk to a few GOOD local PM's who can give you a better idea. If you can get a tenant to cover your mortgage, the vacancy rate means very little.
     
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  6. rookie101

    rookie101 Well-Known Member

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    Thanks so much for your input!! I appreciate it.
    I'm still getting my head around the finance side of things, how does cross collateralizing the properties increase the risk?
    We purchased NL for 401k, now worth 480 via rp data but we've done cosmetic renos. Bray park was 337k, rp data at 370k.
     
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  7. Property Twins

    Property Twins Mortgage Brokers & Buyers Agents Business Member

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    Lots of blogs out there. Documented the same for when you get an opportunity to take a look.

    Sounds like you've had some growth....I can understand your frustration however. Jamisontown vs. North Lakes - understand - way different growth levels
     
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  8. Marg4000

    Marg4000 Well-Known Member

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    Have you had an actual appraisal by a local RE agent? Those online estimates can be way out.

    Anecdotally North Lakes has been doing quite well, particularly the older parts closer to amenities.

    I would be surprised if you had not had decent growth in 6-7 years.
    Marg
     
  9. Phantom

    Phantom Well-Known Member

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    @Property Twins have given some sound advice above. It's always a difficult task trying to piece together someone's situation when you don't have the full picture. Why not give them a call and have your situation looked at from a holistic point of view? Can get a lot of clarity this way.
     
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  10. rookie101

    rookie101 Well-Known Member

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    Hello!
    Sadly North Lakes hasn't really done much in the past 6 years. I think top value could be 500k? I like the idea of trying to hang onto it for another 12 months to allow cg.
    Perhaps my next move is to go to the next PPOR and renovate it to rent out later etc?

    Hummm...?
    I have read up on cross collateralizing loans, although my current broker states it's not applicable to those who only a few properties?? Confused
     
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  11. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    It's something you need to do properly from the start. It's actually quite difficult to cross collateralise early and then not continue to do it.

    Avoid it from the very beginning and it will never become a problem. In todays lending environment, it's more important than ever to avoid crossing properties. You should consider getting a new broker who understands this.
     
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  12. rookie101

    rookie101 Well-Known Member

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    I thought so too, especially if we're looking to flip?
     
  13. Jess Peletier

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

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    If you're looking to flip and you're crossed, the bank could literally take your profit and apply it to whichever loan they please, leaving you with no cash out of the deal. This is not to say that they will, but it's best avoided if at all possible!

    It sounds like it is going to be easy enough to uncross before moving too far ahead so get your foundation right and plan from there.
     
  14. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I've actually seen situations recently where due to cross collateralisation, people are unable to do anything. They can't move forwards because of the cross collateralisation, they can't undo the structure because lending criteria has closed up behind them. Their options are literally sell, or do nothing for a significant period of time. This is occurring at property number 3.
     
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  15. kevilian

    kevilian Well-Known Member

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    I used to cross collateralised 3 properties, luckily 2 years ago I refinance one to another bank with enough equity increased to be stand alone loan. ( the loan amount is $460K but the property price increase to be more than $570K).
    now I am waiting for another one to have enough capital gain so that I can make it stand alone loan as well... or I can just put some capital to make it so... probably need another one or two years.
     
  16. kevilian

    kevilian Well-Known Member

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    but considering current lending criteria tightened a lot, not easy to borrow more to buy... so maybe just put extra into offset or super...