help - property investing

[JD86]

Hi Guys,

as some of you may know, I lost my job around 7 weeks ago, I was made redundant as the boss could not afford to keep the business running.

I have managed to find a new job, and I am really enjoying it. I have been there 5 weeks now.

The only downside is, I am sort of working as a sub-contractor.
I am an architectural draftsman, and have a little business on the side. As I am still young, I want full time employment for security and experience.
I am acting at my new job as a full time employee, in that I work 9-5, 5 days a week. The boss pays for all equipment etc. required. I go to the office every day, do not work from home. By all means I am a full time employee, except my boss likes to pay me as a contractor (I believe it is easier for him).

Now this is working well for me, I am clearing around $200 per week more than my previous job after I put away 20% for tax.

I own a house which is valued at $350k, and the loan is $230k.

My income is now $960 per week clear (after putting 20% away for tax on my mortgage) and mortgage is $360 per week.

I feel I am in a position to buy an investment property, so I have asked my mortgage broker to investigate how much I can borrow etc.

He is mid-investigation but has warned that some banks will consider me self-employed and will need 2 years of financial records.
Whilst I have had my ABN for approx. 5 years or so, I have only eanred minimal amounts through it as I have been a full time employee during that time with a small side business.

I believe that if I ask, my new boss will write a letter stating I work full time and my probabtion period is over.

I am not planning to borrow/buy for another few months so I will have been at new job maybe 4 or 5 months by then.
I have just started this process to get a pre-approval so I can see how much I can borrow and start investigating properties.

What can I do in my current position? I do not want to wait 2 years to be able to buy an investment property. Am I jumpiong too early at my mortgage brokers warning or should I be genuinely concerned that I wont be able to borrow?

Also, do you guys think the following is a good plan?

My house is valued at $350k with a loan of $230k. I can rent it out for around $350 per week which will make it almost neutrally geared.
So my plan in the next few months is to rent it out, and buy an investment property as mentioned above, that hopefully isnt too negatively geared whilst my girlfriend and I rent a house together. Because I'll be sharing rent with my girlfriend, my expenses will drop a fair bit. Then, after a year or so, if both investments are going well, I can borrow to buy another property and so on...

Any advice appreciated

Thanks
__________________

 

[Aaron_C]

If you have your own ABN for 5 years you might be able to do a lo-doc loan to self-declare your income. Your broker should be able to advise you on this option if the banks won't accept your PAYG income.

 

[investor2009]

Nice wage man!

In regard to your question of do I think it's a good idea to buy an IP? I say "yes' it is.

I earn less than you do per week, but have managed to build many times your assett base quite comfortably. Tax breaks are great and will help you out immensly if you buy something with good depreciation. I've never been too concerned with rental return, standard 5% is okay for me if the asset is a growth property but the closer you can get to neutral or positive the easier that growth property is to manage for you.

 

[Rolf Latham]

My house is valued at $350k with a loan of $230k. I can rent it out for around $350 per week which will make it almost neutrally geared.
So my plan in the next few months is to rent it out, and buy an investment property as mentioned above, that hopefully isnt too negatively geared whilst my girlfriend and I rent a house together. Because I'll be sharing rent with my girlfriend, my expenses will drop a fair bit. Then, after a year or so, if both investments are going well, I can borrow to buy another property and so on...

Any advice appreciated

Thanks
__________________

Hi

Dunno if the plan is good or not, I will leave that to others.

WHat sort of loan do u have currently PI or IO ?

ta
rolf

 

[JD86]

thanks guys,

yeh I checked, I have had my ABN since september 1st 2006, so just over 5 years. I will suggest a low doc loan to my mortgage broker to see if that helps.

I know it's a good idea to buy an investment property, I wanted to know if renting my current place out and renting somewhere else with girlfriend whilst investing was a good strategy or should I live in a place I own?

My current loan is P&I. Which will be almost neutrally geared. I am not sure if I can change it to IO? I may have to look into that.

 

[Aaron_C]

That's good Josh - but isn't your broker the one who's meant to suggest these options to you?

 

[JD86]

yes he my well suggest it to me.

as i said, we have only had brief discussions about my situation, he is investigating further.

if he does not suggest it to me, maybe its time to look elsewhere hey?

any other suggestions?

thanks guys

 

[Aaron_C]

yes he my well suggest it to me.

as i said, we have only had brief discussions about my situation, he is investigating further.

if he does not suggest it to me, maybe its time to look elsewhere hey?

any other suggestions?

thanks guys

I'm not saying you have to look elsewhere. But a broker should be able to find something for you since that's his job...lol

 

[JD86]

any other advice?

thanks

 

[JD86]

hi guys, i am dragging out this old thread because i feel i am almost ready to buy an investment.
once this financial year is over, i will have earnt approx. $60k through my ABN, and $13k as a full time PAYE employee at my previous job.
I am still at the new job, contracting.
my house is valued at $360k with mortgage repayments of $340 per week.
i have approx. $10k cash to contribute towards an investment.
my mortgage broker is saying because i am considered self employed, i can only go low-doc. he states that i need t contribute approx. $28k cash towards an investment with a purchase price of $300k using my current house as security, but leaving the mortgage at $230k.
i asked him if i could contribute $10k cash, and lend the remaining $18k against my existing house, as it will still be under 80% LVR, to make up the $28k total needed to contribute to new purchase to stay under 80%, but he has said i cannot

also, if my current employer writes a letter stating i am full time employed, my position, my new salary, my commencement date etc. but i get paid through my ABN and pay my own tax, will they consider me for a normal home loan and not low doc?

i am a little frustrated with my broker, he is from mortgage choice and keeps pushing his calculations towards blue gum

if anyone can help it would be appreciated

thanks

 

[Rolf Latham]

he is from mortgage choice and keeps pushing his calculations towards blue gum

thanks

Hi JD

Id look at maybe having a chat to another Mexican broker, like someone that posts here

Aaron
PeteY
Kristine
Buzz

and others

I suspect that you get a full doc away at 80 % based on what you are saying. Obviously, I have only little details.

If the work ure doiung is very sim to previous PAYG ...........should be a walk in the park ( muddy though probably )

Bluegum is MCs white label advantedge nab funded product. ok, but nothing flash, pays good comms though

t
rolf

 

[Aaron_C]

With a sub 80% lend it's not hard. Once you get into LMI territory then it gets really muddy.

 

[JD86]

thanks guys,

so you think i should get finance ok Aaron? i thought i wouldnt have much of a problem, and wouldnt have to contribute as much as he is saying, but i am not that experienced so just want to check

what do you think about the letter regarding current employment situation?

 

[Aaron_C]

thanks guys,

so you think i should get finance ok Aaron? i thought i wouldnt have much of a problem, and wouldnt have to contribute as much as he is saying, but i am not that experienced so just want to check

what do you think about the letter regarding current employment situation?

Yes it's fine but I am a bit skeptical about the lender he has chosen. But he knows your situation better than me so he's in the best position to make that decision.