How can I purchase my first property investment?

[First time home buyer]

I already own my own home and have 50k equity in it.

I have found a house I want to purchase for $170 k which currently has a rental return of $300. The owners are overseas in Australia and don't want to manage it anymore.

How would you suggest going about purchasing this? Is it impossible? I might be able to get a $20 deposit from my parents if necessary.

I am going to see my bank manager this afternoon to discuss. But any suggestions would be appreciate.

Thanks,

[First time home buyer]

Sorry headline should say second but it wouldn't let me change the headline!!

[PTILoveYou]

1) go to the bank manager and ask for a pre-approval. The investment property will be purchased 100% finance, with your own home as security (unless the equity is not sufficient, where you need to put in more cash). Also handy to give details of the intended purchase to the banker, so he works faster on it, and he can advise if the property is doable or not.
2) get a lawyer to draft up a sales & purchase agreement, and go negotiate with the owner
3) once the S&P is signed, give to your lawyer so that the legal process is sorted. Give any cash deposit agreed only to the vendor's solicitor's trust account, or to your lawyer. Never give direct to the vendor.
4) give the signed S&P to your banker to get the finance/mortgage documents underway
5) immediately approach a local Registered Valuer to carry out a registered valuation. You may also need to get a rental appraisal from a local property manager. The RV and rental appraisal will be required by the bank
6) once the finance is all approved, your lawyer will give you directions regarding when to sign the papers and final inspection etc
7) start advertising for tenants few days before settlement if the place is vacant possession.

[First time home buyer]

Wow Gary - that was explained so simply!! Thanks so much - sounds like you've done this before!!
I really appreciate your advice Have a great day I use to go to school with a Gary Lin in Auckland. Wonder if you're the same person? Did you go to RI?

[donthatetheplayer]

You may want to go to a mortgage broker rather than the bank first. The broker will (should) help you to make sure everything looks presentable to the bank.

What % is your $50k equity in terms of total house value? If it's a $500k house you're bank is not going to give you any more lending I'm afraid. You want to look at the equity above 20%. Provided your income is high enough any equity above this should be accessible.

[First time home buyer]

I just finished app with my bank manager who told me that if I could get a valuation done on my property and if it comes back at what I think it will then it won't be a problem to purchase the property and I won't even need a deposit, they will use the equity in my house. Wow I thought it was nigh on impossible to do that these days.

So yeah i'm so glad I bothered to ask -

[donthatetheplayer]

Welcome to the world of funny money. Technically you are paying a deposit by way of security over your home. This involves risk - If it all goes pear shaped with your investment property the bank can take your home. But risk aside, yes isn't it ridiculous how easy it is. Money is seemingly created out of thin air (capital gains) and then you spend it without ever seeing a dollar, let alone having to do actual work for that dollar. The good news is this process can snowball once you get started. The bad news (for those not in the game yet) is that the RB just made it very difficult to get started.

Sounds like you have a good investment with a 9%+ gross yield there too Fthb. I hope it's not in Tokoroa!

[PTILoveYou]

Wow Gary - that was explained so simply!! Thanks so much - sounds like you've done this before!!
I really appreciate your advice Have a great day I use to go to school with a Gary Lin in Auckland. Wonder if you're the same person? Did you go to RI?

Lol really? What's RI?? I went to Avondale College.

[PTILoveYou]

I just finished app with my bank manager who told me that if I could get a valuation done on my property and if it comes back at what I think it will then it won't be a problem to purchase the property and I won't even need a deposit, they will use the equity in my house. Wow I thought it was nigh on impossible to do that these days.

So yeah i'm so glad I bothered to ask -

Ask your bank manager to do a desktop QV for free. If that values meet the requirement, then you dont need to spend $$ for RV.

[First time home buyer]

Ask your bank manager to do a desktop QV for free. If that values meet the requirement, then you dont need to spend $$ for RV.

Thanks Gary - i'll ask. RI is Remuera Intermediate.

No the property is not in Tokoroa ;-)

[PTILoveYou]

Thanks Gary - i'll ask. RI is Remuera Intermediate.

No the property is not in Tokoroa ;-)

Different guy then, I was too old to attend intermediate when I came to NZ.

[Craig Pope Mortgages]

Good luck with the purchase, it's likely you will need to be at 80% borrowing across the 2 properties' value. I would still potentially recommend a registered valuation (if the e-value looks promising) so you know the exact figure of the equity available (every little bit helps). The bank will give you cash towards the valuation cost and legal fees anyway.
If there is enough equity to allow 80% borrowing across 2 properties, it could be prudent to raise the 20% deposit from your existing bank in cash (might be top up loan or revolving credit), then obtain an 80% approval on the new property from a second bank. That way both properties will not be cross-securitised. Your existing bank should allow this as they will factor in potential rent and the other bank's 80% loan in their servicing calculation.