Buying first investment property

[TomW]

I have a friend who is wanting to know whether they could purchase there first investment property. It is a 1 bedroom freehold flat/unit bringing in around $175per week in a good location. Rates are about $1200.Asking price is $100,000 .He has $15,000 cash to use as a deposit however has no income as he is a full time university student.
What are the chances of getting a mortgage from a bank? Is there other ways on which he could purchase this property if the bank says No? Thanks in advance

[Orkibi]

Hi TomW,

Best to advice your friend to have chat to a good mortgage broker.

Can you advice re the flat:
How big is the flat by m2?
is it in a high rise building or part of a small block of flats?
any body cooperate fees?

considering he only have around 15% deposit he may need to ask the vendor to leave some money in as Vendor finance.

Also, some bank will not lend 80% on small shoe box apartment under 50m2.

[speights boy]

Please save him from himself.

75% of rental income = 7k
Expenses = 8.5k

No income, low equity, (student debt?? ),
Taking out a 2nd mortgage (vender finance); are you insane??
Even more reason the bank should tell him to stick to his studies

[Orkibi]

I have a friend who is wanting to know whether they could purchase there first investment property. It is a 1 bedroom freehold flat/unit bringing in around $175per week in a good location. Rates are about $1200.Asking price is $100,000 .He has $15,000 cash to use as a deposit however has no income as he is a full time university student.
What are the chances of getting a mortgage from a bank? Is there other ways on which he could purchase this property if the bank says No? Thanks in advance

No mentin of student debt, Speights boy.

My comment was general and not specific investment advice.

In general considering the above description for the property is not a great deal anyway. there are much better opportunities in the flats market then 9.1%.
one can achieve over 10% gross yield, more like 12% in today's market.

[TomW]

Hi TomW,

Best to advice your friend to have chat to a good mortgage broker.

Can you advice re the flat:
How big is the flat by m2?
is it in a high rise building or part of a small block of flats?
any body cooperate fees?

considering he only have around 15% deposit he may need to ask the vendor to leave some money in as Vendor finance.

Also, some bank will not lend 80% on small shoe box apartment under 50m2.

Thanks
Am told its a good size 1 bedroom flat. It is part of a small block of flats with no body corporate fees.

[TomW]

No mentin of student debt, Speights boy.

My comment was general and not specific investment advice.

In general considering the above description for the property is not a great deal anyway. there are much better opportunities in the flats market then 9.1%.
one can achieve over 10% gross yield, more like 12% in today's market.

Yip no student debt. I havnt heard of any 10+ gross yields of good properties in good areas in good towns/cities.

[Orkibi]

I havnt heard of any 10+ gross yields of good properties in good areas in good towns/cities.

TomW,
You should subscribe to my Hot Deals Newsletter then.

Can you advice how many in the block, Building materiel and location?

[artemis]

I'd be very surprised if any lender would look at this due to lack of serviceability. Best bet would be to wait till there is an income coming in, or see if the folks would put up the money.

[ENP]

Does he have a part time job? Even working a Mcdonalds for a few hours a week will bring in some income.

[speights boy]

I'd be very surprised if any lender would look at this due to lack of serviceability. Best bet would be to wait till there is an income coming in, or see if the folks would put up the money.

I agree artemis.

If there is any bank out there that is prepared to loan at 85% LVR to the unemployed I would like to know which one.

That way I can sell my shares in that bank.

I would also suggest that if the vendors are willing to provide the 85% then they must be VERY desperate to offload that unit; and one would be wise to ask why.

[mortgage broker]

A lot of benefits for example the accommodation allowance, ACC and IRD tax credits can be used for serviceability calculations. But on paper the client would also have to be able to have enough left over to be able to eat and pay for petrol, power etc.

[AMR]

A lot of benefits for example the accommodation allowance, ACC and IRD tax credits can be used for serviceability calculations. But on paper the client would also have to be able to have enough left over to be able to eat and pay for petrol, power etc.

Wow, who is this with? I was under the impression that IRD 23 BS no longer counts.