Serviceability

Early posting i made
Passed over a property that settled last month at 10pc net ..self managing will be 10.5pc net cap
Funding cost 4.2pc
So 60pc of net rental is profit
Purchase cost $900k so $54k profit pa

I don't do high yields anymore my low yield 6.38pc net return purchase last year on (100pc borrowings) yields $300k pa

So they are out there

Note the 10.5pc is higher risk
The 6.38pc is very very low risk

 

Hey beano what was the $900k cip? And what made it high risk?

 

Commercial tenancy ...most commercial properties are risky
To make commercial less risky you need
1 long leases
2 wide spread of tenancies
3 large investment by the tenant in the property
4 reasonable equity in the property
Google it ..4343 great north rd glendene auckland colliers listing
Pm me and next week when i am back in oz i will send the IM
Took time but my mate is right into commercial now ...the third one ...all 10pc net yields (had 50 residentials) ...he finally will crack the $1m net profit in the next 12 mths.
I have switched to extremly low risk, low yield , low management properties now so profit is low....but very safe.. (racket clauses, tenants owning the building (i own the land ) and investing up to $28.4m in the property )
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Great knowledge on this forum guys and girls, thank you.

Are any brokers aware of lenders (banks or otherwise) that are offering incentives to re-fi investment loans? Also, what are the max interest only periods customers are gettting? Who is the most flexible?

 

Yes, I think St G are offering a cash back amount and have longish IO periods - 10 years still possible i think.

 

Cash back vs actual interest rate is a big consideration too - some of the most cost effective refinances we've been doing are with lenders which do not provide cashback, so it's a matter of balancing short term upfront fees vs long term saving.

Likewise you have to consider whether what is cheap today will be cheap tomorrow - so lenders which have a long track record of providing cost effective rates for existing business is important. Anyone can offer a cheap enticing short term rate - the key is having that consistency for the other 29 years, 11 months.