jery_wang

Which one do you choose/do when you migrate to Australia?

Ceri

I'd rent first, and then buy. Renting allows you to see which area you'd like to live in, the pro's and con's.
Take for instance, I was going to buy in the Redcliffe area of Brisbane, but decided to rent first. I'm glad I did as this area isn't right for me - I'm now building/buying elsewhere.

I would not rent on a permanent basis, it's a mugs game - you're only paying the Landlords mortgage for he/she.

Cheers

etlniwd

Why would anyone take out a mortgage if they had the cash to buy their own home ?

iancurtis

If the investment returns are better than the mortgage overhead. It's a gamble but it could work out better.

etlniwd

Show me an investment that guarantees me more than the mortgage interest rate in the long term.

jery_wang

This was posted by me sometime ago:

1. Hong Kong property market bubble has burst. It has dropped almost 50% from the peak.

http://special.scmp.com/hkfuture/index.asp7.html
(1 Feb 1999)
Quote: “The Government says property prices have fallen about 50 per cent from their 1997 peak to what it terms competitive levels.�

Nice picture of how property can boom and then bust:

http://www.centanet.com/cci_e.htm

2. Singapore property market bubble has burst too. It has dropped 90% (for private residential) from the peak before Asian financial crisis!

Private Residential Property Index (first chart):
http://spring.ura.gov.sg/lad/ore/rea..._Resi_2Q02.pdf

(You need to enlarge to see the number on the first chart)


So, Beware!! Nothing can last forever……

Terry R Brooking

    > Show me an investment that guarantees me more than the mortgage interest rate in
    > the long term.

There are never any guarantees for any investment, even the poor return bank
savings accounts. There are several reasons for having a mortgage, one of which
is to generate a credit reference - being a home owner does not guarantee credit,
but having a paid up mortgage almost certainly does. You can use the money to
purchase more properties and rent them out. Done properly, this can give you huge
returns - witness many of the richest people in the world have made their money
through property.

Alternately you could buy your home outright, put the money you would otherwise have
paid a mortgage with into a savings account and make your bank richer. :-)

--
Regards -Terry

Grub

Dear Terry

I am very interested in the possibilities of buying 2nd home/ flat in Perth and renting to hopefully make some money. My home in UK has trebled in 8 years so v. happy with that) Considering reecent postings stating that there are more rental properties than 'rentees' is this wise still? We may have money to buy family home and other property (probs have mortgage on second though). Please could you advise me. I know i sound greedy,wanting to make money and stuff but i really want to spend some time being a mum (I work full time at the moment).

Thanks in advance

Nicky
x

etlniwd

It doesn't make sense to finance your own home with a mortgage and use cash to buy additional properties. It should be the other way around.

You won't get any tax relief on mortgage interest payments on your own home but you will on a rental property.

Terry R Brooking

    > It doesn't make sense to finance your own home with a mortgage and use cash to buy
    > additional properties. It should be the other way around.
    > You won't get any tax relief on mortgage interest payments on your own home but you
    > will on a rental property.

Lets say you have 100,000 in cash. You buy a house for cash for 100,000. 1 year later
it's gone up in value by 10%, you have a house worth 110,000 which if you wish to
take the profit you have to sell.

Alternately you buy 5 properties all worth 100,000, with 20% down. Rent 4 of them and
live in one. A year later they're all worth 110,000, so you sell 4 of them and make
40,000 profit and still have your house paid off completely. Simplified, but you get
the picture.

--
Regards -Terry

Terry R Brooking

Hey Nicky,

    > I am very interested in the possibilities of buying 2nd home/ flat in Perth and
    > renting to hopefully make some money.

I'm in the UK so I can't help much with the property market there!

    > Considering reecent postings stating that there are more rental properties than
    > 'rentees' is this wise still?

Certainly true in the UK. Many people have jumped on the bandwagon and are taking
silly risks by paying too much for the wrong property. If you buy the right property
for the right price, you can still make money out of it. Generally I won't buy a
property unless I am sure that I can resell immediately for a profit. I haven't been
active in property since end of 1999, but I was during the last recession 89-94 when
I averaged 2 properties per year. In the mid ninties I went to town! At one point I
had 6 properties all paid for by the bank! :-) I have always made more than 10k
profit on every deal, usually 20-30k and in one case over 60k. Others I know have
made losses but you'd have to be pretty stupid or very unlucky not to make money
overall in, say, 6 deals.

    > We may have money to buy family home and other property (probs have mortgage on
    > second though). Please could you advise me.

I would have to advise you to buy your home outright :-) I don't know what your
temperament is and how you handle stress, so any other advice would be irresponsible.
Only you can decide if it's right for you. Bear in mind that many self made wealthy
people have been bankrupt at some point in their lives, so if you're willing to
accept that, then go for it. Do discuss it with your partner first, and without the
rose tinted glasses!

To start I suggest looking at rentals in your area, local as possible. Talk to rental
agencies and look in the papers and try and find out where people are renting and
why. Try to stay as local to your home as possible, so any problems can be easily
resolved, rather than having to travel across town or further. People always have
different opinions on the type of property, but I suggest a purpose built 1 or 2 bed
flat in the cheaper end of the market, preferably that needs decorating work. Decide
what it's worth (not the asking price!) deduct your expenses for buying and selling
plus a profit margin and that's your offer price. Don't exceed that however tempting
it may be. Then you decorate it as nicely as possible, but with spending as little
money as possible. Don't try and make it your indicidual taste, make it neutral, so
it appeals to as many people as possible. You need to know your market, so before you
outlay any money, just look at properties and talk to every one and any one until you
can get a pretty accurate guesstimate of the price by simply looking at a property.

I would also suggest buying a property for resale rather than renting at first - just
my preference. A bad tenant can wipe out your profits very quickly and put you off.
The practice at buying and selling is great fun!
<g>

    > I know i sound greedy,wanting to make money and stuff

Pommie attitude! Repeat 100 times every morning - 'there is nothing wrong with making
money' <g>

    > but i really want to spend some time being a mum

My wife might object if I offer to help with this! <g>
--
Regards -Terry

pommie bastard

Might help who knows?



Home loan for battlers

REPORTER: Michelle Tapper
BROADCAST DATE: September 16, 2002


New home owner Catherine Tippler and We Buy Houses' founder Rick Otton.
Saving for a deposit on a house to get a home loan can be the hardest step in trying to own your own home but hard-working families who have been rejected by the big banks have been left frustrated, bewildered and hurt.


Liz and Mike Newstead saved for years to raise a $10,000 deposit for a home loan.

"It was a catch 22. Every time you saved enough deposit the prices of property would go up again," Mr Newstead said.

"It's very heartbreaking. The dream home was going further and further away," Mrs Newstead said.

"All I wanted in life was just to own my own home to give my children something for the future."

When the Newsteads' eldest daughter was struck with Leukaemia, they spent their deposit on her treatment.

Mr Newstead had to quit his job as a travelling salesman and their dreams of owning their own home were dashed.


"Even though we were able to save about $5,000 back as a deposit it still didn't meet the banks' criteria for savings history," Mr Newstead said.

"They said we didn't have a steady saving history and that we hadn't been in work for long enough," Mrs Newstead said.

Catherine and John Tippler also received a similar spiel.


As a self-employed plumber, Mr Tippler was repeatedly turned down for a loan by banks.

"Over the years we would have gone to over 10 of them for sure. They just won't even look at you, won't give you a chance," he said.

Rick Otton is the founder of We Buy Houses, a unique organisation helping families break through the financial barriers to home ownership.

Mr Otton says he will give almost anyone a loan and find them a house.

"A lot of people who are self-employed, or they're new Australians, or don't have the deposit requirements, or don't fit within the bank guidelines can buy homes through We Buy Houses," he said.

"We can help you buy a house if you've got a minimum deposit of $10,000."

If you qualify for the first home owners' grant - a $7,000 government rebate - you only need to save $3,000.

"They don't have to go through the hoops that they have to go through with the banking system," Mr Otton said.

But there is a catch - Mr Otton's organisation charges two to three per cent more than a regular bank loan.

"We are a stepping stone that allows people to buy their own home and after a year or so refinance into the standard banking system," he said.

For Mr Newstead, the higher interest rate was not a concern, as it helped him get his foot in the door of the housing market.

"We didn't mind paying the higher interest rate because it was the only way that we would actually be able to buy a house now and not have to wait for another 20 years to try and save the deposit," Mr Newstead said.

Last February the Newsteads bought a four-bedroom home from Mr Otton and they refinanced at a lower interest rate with a bank earlier this year.

"I love the fact that we're paying off our own home rather than spending the rest of our life renting, paying dead money," Mrs Newstead said.

In April this year Catherine and John Tippler found a four-bedroom fibro home that needed renovating for $168,000.

"To buy a house worth $160,000, to go to a normal lender you need 20 per cent deposit, which is $32,000, compared to our $5,000 that we needed to go through with We Buy Houses," Mr Tippler said.

We Buy Houses has helped almost 40 Australian families in the past three years and some 300 families in the United States, where they have been in business for almost 10 years.

"We negotiate hard to buy houses at a discount and then we just find people - of which there's a whole market share of people - who are unable to qualify for homes tomorrow and we make our houses available to those people," Mr Otton said.

Now these battlers are forging new frontiers.

"We bought it for $161,000 and it's worth between $200,000 and $250,000," Mrs Tippler said.

So if you're one of thousands of families snubbed or rejected by the banks because you don't have a huge deposit or credit history, We Buy Houses might just be the solution you need.

"Now the banks are chasing us, saying 'would you like a credit card?'" Mr Newstead said.

"So it's just really different to be treated differently by a bank when before you just couldn't even get them to give you a free rubber stamp, so it's a good feeling."

For more information call We Buy Houses on 1800-003-588 or visit: www.webuyhouses.com.au