The Late Payment Problem

Applying for a mortgage for your first home is scary.

You’ve been saving your deposit forever.

You’ve prepared the paperwork and sent it to the lender.

Your fate is in their hands.

So many aspects can lead to rejection.

That’s what Tom and Sally discovered.

They rented while saving to buy their first property.

They thought a few years of renting and saving would set them up perfectly to buy their first property.

For over three years, they made every rent payment on time.

They were model tenants.

But one oversight halted their plans.

The couple decided to treat themselves to a holiday in January.

Sadly, they forgot to transfer their rent money from their savings into the main account.

The money came out of the account on Monday and made it overdrawn.

Their rent went into default.

They resolved the issue when they got back home.

But, when they wanted pre-approval on their first home loan, the lender said no.

They cited poor rental conduct.

Luckily for Tom and Sally, they managed to resolve the issue.

But not everyone has such an understanding lender.

Their story shows that you have to account for every little detail when applying for a mortgage.

Lenders check every aspect of your history.

Something as small as a single missed payment could ruin your plans.

We want to ensure that this doesn’t happen to you.

And to do that, we aim to make it as easy as possible to get your first mortgage.

We’ll show you more about the grants that are available to you and how to get your first property faster.

Join our First Home Buyer Facebook community to learn more about the framework
https://www.facebook.com/groups/firsthomefirstinvestment/

Episode 9 of The First Home Buyers Show – Where you can afford to buy

In Episode 9, we talked about suburbs and where you can afford to buy.

Episode 9 of The First Home Buyers Show – Where you can afford to buy

Now, if you are someone who’s a first-time buyer, an investor, someone who’s going for the First Home Loan Deposit Scheme, then you would not want to know where your money is going to be the best spent.

If you are going to buy under the FHLDS, there are some property purchase caps, depending on whether you’re in capital cities or regional areas, and they change state by state.

We covered that off in the full episode https://www.investorschoice.com.au/FHBSEp9

• Now, if you are a first home buyer who’s going to think strategically about this home not being your forever home and potentially changing it into an investment property in the future, then you definitely need to listen to this.
• If you’re an investor who’s just found your way to The First Home Buyers Show, and you’re kind of interested about how to buy and where to buy, you definitely need to listen to this.
• And If you’re someone who thinks, look, this is gonna be my home for quite a period of time, but in sometime in the future, I’m gonna sell it and hopefully upgrade, and I’d like to have more equity in the property, this is definitely for you.

Let me tell you what we did. A number of the community members in the First House Buyer Facebook group nominated some suburbs for me to have a look at.

Now, I looked at three suburbs, one in Sydney, one in Melbourne, and one in Brisbane.

I used different techniques to look at each of those suburbs, but I was looking at all the same things. So, in the very first suburb that we looked at, I used all the free software that is available.

First of all, we went into realestate.com.au, and I showed you where the suburb profiles were, domain.com.au, we then headed over to SQM Research.

We then went to Census as well. We gathered all the information from all the different areas, and the information we’re looking at is information that’s going to give us an indication about whether that suburb is going to perform well.

Now, first and foremost, we were looking for pricing pressure.

This is sometimes called the ripple effect, and the ripple effect just means that when people can’t afford to buy in one area, they kind of move to the next area, and that’s when the prices start going up.

We looked at ripple effect. We then looked at some of the filters that I have used as I’ve been investing over the last 20 years, and what I have done in looking at the last 20 or 30 years of pricing in different suburbs.

I try to work out what suburbs have outperformed the others in some of the filters. And then, I’ve applied some low risk categories as well.

Some of the filters that we were looking at, I want to have at least 30% renters in the area. So, we jumped over to census, and we found that. I want to see how many sales are happening as well in the year, because I don’t want to be wasting my time in areas that haven’t had a lot of properties for sale.

If there’s only two properties coming on the market every single month, am I going to spend every week in there, hoping that the property’s going to come up?

No, so I look for a minimum of about 60 sales. I then also looked at vacancy rate.

Now, vacancy rate is another measure of demand for rental properties. It is accepted that 3% is considered to be equilibrium. So, when the vacancy rate is 3%, there’s as many people looking to rent as there are landlords putting their properties on the market.

So, if we want an in-demand rental property, we want to be below 3%, so we look for vacancy rates below 3%. And you can pull all that information from all those different websites. But then we went to the second suburb that I reviewed, and when we looked at the second suburb, I used my proprietary Suburb Selector Software, which I have available in my location masterclass, and we have links to that.

What I wanted to tell you about, that is, I kind of got a bit lazy. I thought, I’m going to all these websites, I’m trying to find this information, so I thought why not just get it all and put it in one spot?

I buy data from SQM Research, I get all the data from census, I add it all together, I allow you to put filters in there such as, this is what I can afford to buy, and very quickly I can have a look at the information. It gives me an idea of pricing pressure. It gives me all the data that I need to know, even down to the amount of public housing, which did come up as a concern in one of our suburbs.

All the information in one place. And as you can see, in the analysis, if you go back to the full episode of episode 9 in The First Home Buyers Show, you can see it took a lot less time.

And then we looked at what the typical property is. So, when we went into suburb number three, we once again, quickly did some analysis, but then I looked at another paid tool, and this is RP Data. And RP Data Professional, which is $150 a month, allows you to go in, and once again, you can create alerts, which I showed you how to do.

Now, you can do that in Domain and Real Estate, which are free, but some of the things you can do in RP Data which I just love, is that you can also go in, and you can have a look at the area, making sure it’s a typical type of property. You can have a look at comparable sales, you can have a look at recent sales, but you can also go in there and you can generate your own valuations.

Now, this is the same tool that a lot of the banks use for valuations, so you’re ahead of the game. So, not only are you going to be notified when the typical property, well, let’s say it’s a three bedroom house, comes on the market, and you get that information from census or from my Suburb Selector Software, you get that information because you want to have the typical property. And why is this so important?

Well, I’m glad you asked. It is so important because we need to have the typical property that most people want to buy and most people want to rent, if you want to rent it out, because we want to minimise our risk, and not having property that is so obscure that you’re going to have a really limited market to rent or sell it to. So, we want a property that the typical people want. So, there you have it, I have covered off a lot of information.

We looked at three suburbs. Now, these three suburbs were actually on my list as well. We looked at the pricing caps for the First Home Loan Deposit Scheme, and another thing that we did is, I actually shared with you, the suburbs that have come up when I’ve done my analysis over 8,500 suburbs, in the month of December, 2019, that I think are worth a second look for a savvy investor or a first home buyer.

Please, go into the website, check out those suburbs, have a look at the analysis, learn how to do it, because this is something you can do yourself, and it gives you the information that you need, so that you can be ahead of the game. And if you like this information, please, go over to the first house buyer page, check it all out.

I really encourage you to get your lending assessment, eligibility assessment done if you are looking for the First Home Loan Deposit Scheme. Head over to firsthousebuyer.com.au, where you can have a two-minute quiz to work out if you are going, how you’re going to assessed by lenders.

Go over, also, to that firsthousebuyer.com.au website, because I have a link there to the grant eligibility quiz as well. So, both of these quizzes take about two minutes each. It gives you an idea whether you’re going to be eligible for the grant and for how lenders are going to look at you.

Watch the full SHOW here
https://www.investorschoice.com.au/FHBSEp9

Type ‘REMIND’ on the post of the full video and we will let you know when we are going live and you will get a copy of ‘The Australian Guide to First Home Buyers Grants”

And Join our First Home Buyer community
https://www.facebook.com/groups/firsthomefirstinvestment/

Links shared in this episode:

Lending and Grants Eligibility Assessment http://firsthousebuyer.com.au/ 
Domain www.domain.com.au
Real Estate www.realestate.com.au
Suburb Selector Software https://www.locationmasterclass.com.au/join
RP Data http://www.rpdata.com.au

Click here to see all the episodes > First Home Buyer Show Playlist

An FHLDS Alternative?

If you are one of the the lucky few chosen and get access to the First Home Loan Deposit Scheme, you can buy your first home with a 5% deposit and avoid dreaded Lender’s Mortgage Insurance in the process.

The scheme starts in January 2020… But it is only available to 10,000 people per year!

Start preparing for your application now. There will be a lot of competition from other first-time buyers. Most lenders will want to see at least 3 months of savings figures.

The Simonds Group predicts that the demand will far exceed the 10,000 the government’s allowed for.

This means you will see Simonds and others rushing to promote this and get unsuspecting FHB’s into their new properties, which we know don’t grow as fast as established homes, however their promotions will dry up the 10,000 fast.

Investors Choice Mortgages can help you to untangle this complicated web of grants and deposits. 

We’ll teach you how to leverage everything that’s available so you can get your property faster. And with our help, you’ll turn that first home into an investment property in 12 months. Contact us today to find out what you need to do to get yourself in a position to borrow https://calendly.com/icm-discovery-call/fhb

Episode 8 of The First Home Buyers Show – Renovation Strategy

If you’re a first home buyer, and you’re looking at adding value to your property, then you can do that through renovation.

It is my secret, sneaky, sixth step in the financial freedom framework.

Episode 8 of The First Home Buyers Show – Renovation Strategy

We talk about the five steps, this is the sixth step. Once you have slammed that property, whilst your living in that property, you can renovate it at a time that suits you, when you get the money to do it, you don’t have to do it all at once, to create extra value.

It is like having your own vending machine. For every dollar you put in, with a strategic renovation, you should be getting $2 out.

What is a strategic renovation? Well, a strategic renovation can only be done on old properties, not new.

Buying new actually takes this entire strategy off the table for you.

Now, I talk about my Trid3nt Strategy, three ways of making money. We’ve talked about how to negotiate to make money when you buy. We’ve talked about how to be in a capital growth area, so your property is making you money for years in the future.

And now, we’re talking about #supersizingit that and doing a renovation that strategically, can add $2, at least, for every $1 that you spend. And if you decide to rent that property out in the future, create a higher rental income for you, so the gap between your mortgage repayment and cost and the rent you get is even smaller.

One of the things that people get wrong, well they buy in the wrong suburb. They don’t understand pricing disparity, the difference between the renovated and the unrenovated costs of properties in the suburb.

You have to be in the right suburb first. That’s why it’s important, in the beginning, to see it, and understand your strategy before you even begin. Then what you need to do, is have a property that has the capacity to add value. Not every property that has the need for renovation deserves a renovation.

Understanding if there’s capacity is by looking at realestate.com.au, domain.com.au, or even using RP Data, that allows you to be able to look at the sold properties, and look at what the renovated properties are selling for, and unrenovated, and working out, using trades quotes, and we’ve talked about at least four, so you’re not ripped off, to be able to understand, is there capacity to make some money?

You need to understand what the buying price is, what the renovation cost is, what the profit you wanna make, and what your holding cost is, and if that, in total, is actually higher than what the renovated properties are selling for in the suburb, or the renovated comparable properties in the suburb are, it’s time to walk away, ’cause you’re not gonna make money out of it.

Renovation is a super sneaky strategy to allow you to make money in any market. So, we talked about also, there’s some room-by-room tips that I wanna share with you.

Check out the link to be able to see the www.janeslacksmith.com.au/roombyroom, all those tips and tricks.  We talked about how to repaint, we shared a few other tips, get in there and watch the entire episode. It is fantastic, and that is it for the super strategy.

Watch the full SHOW here
https://www.investorschoice.com.au/FHBSEp8

Type ‘REMIND’ on the post of the full video and we will let you know when we are going live and you will get a copy of ‘The Australian Guide to First Home Buyers Grants”

And Join our First Home Buyer community
https://www.facebook.com/groups/firsthomefirstinvestment/

Click here to see all the episodes > First Home Buyer Show Playlist

Putting Emotions Aside

We often hear about how important it is to not base your property-buying decisions on emotion.

It’s all well and good to fall in love with a property. But letting those emotions influence your decisions could lead to you overpaying or missing issues.

What we don’t often talk about is the emotional impact that external effects can have on us.

Our client, Jack, lost his father at age 19. 

Worse yet, his father’s modest property portfolio was sold off. Thankfully, Jack inherited some of the money. This was his Dad’s legacy; he needed to use wisely.

In his emotional state, it would have been easy for Jack to go off the rails. 

Many might have just blown through the money they’d inherited and left themselves in a bad position.

But Jack did something different. In honour of his dad’s efforts to build a property portfolio, Jack decided to use the money to buy his first property.

After just 24 months, Jack had repaid the loan on that first property and began building a portfolio of his own.

Now, he has plans to semi-retire in his 30s so that he can appreciate life that little bit more.

Property investing can help you to create the freedom to live your life the way you want to live it.

If you would like to learn more about the Framework to help build semi-retire earlier than visit our Facebook Group First House Buyer where we teach each of the steps to get you to Your Property Success.