Spreading mortgages (personal home, rentals etc)

[wodger]

Hi, Kiwibank have approved our new loan for our first two rentals, meaning we'll be with them for these and for our personal home loan.

Quick details: 100% finance on the rentals but our LVR including the personal home will be about 70%. The rentals will return about 7.9% gross. Overall though because of rates, management, and insurance etc. we'll be topping these up. We have owned a share in and managed a rental before.

I saw comments here about spreading mortgages among banks. I appreciate that it's probably the best thing to do, but given our intention/desire to keep buying rentals will realistically take 2-3 years to actually continue after buying these, is there any compelling reasons to worry about the idea of splitting our borrowing for now?

[PTILoveYou]

Given Kiwibank is one of the worst banks to borrow from (ie more difficult to borrow), I say sooner or later you will be looking for another lender anyways.

[wodger]

Thanks. You can't see any particular dis/advantage for me at this stage being with one bank? Or would this be a source of regret later on for some reason?

[PTILoveYou]

Thanks. You can't see any particular dis/advantage for me at this stage being with one bank? Or would this be a source of regret later on for some reason?

It's ok to stick with one bank for now. After 4 or 5 properties then start looking for another bank.

You can always refinance 1 away from kiwibank to a new bank some time later.

[Damap]

The whole reason wodger is for risk minimisation. Plenty of people stick with one bank and are fine. So it's really more about a left field event taking you down or something unusual.
In my case when the GFC hit I had loans with 11 banks so was not super exposed to any one. This gave me more options and flexibility in sorting things out. If I had been with one or two banks we would have lost absolutely everything instead of only losing out ot the banks who treated us like sh*te if that makes sense.

[wodger]

Yeah, that's what I thought this was about. Kiwibank is happy to lend to me at the moment and it keeps it simple for now. Our fallback is for my wife to go back to work (early childhood) which would increase our ability to service dramatically if we needed a boost. My job is secure.

[Damap]

Just dont forget if you get the bug and keep buying start using other banks. You want to be with Westpac and BNZ I have found them great for investors over the years especially if things go wrong.

[wodger]

Noted, thanks!

I've already got the bug. My wife and I have talked about getting into this for years and are finally doing it. With her being off work and us having little kids, we just have to pace ourselves. Getting two at once like this is about as much as we can stretch to.

[Damap]

It's amazing how creative you get once you have the virus. I bought 20 in one year after I bought the first 1. Mind you we had no doc loans then it was oh so easy!!!

[wodger]

It's amazing how creative you get once you have the virus. I bought 20 in one year after I bought the first 1. Mind you we had no doc loans then it was oh so easy!!!

Noob question, but how on earth do you buy them so fast? I would be happy to get 1 or two per year. I realise the first mistake is buying ones you have to "top up" but it's hard to find any other kind (browsing on trademe anyway). But considering I'm maxed out with kiwibank, if I wanted to buy just one more this year, how would I do it?

Cheers

[Damap]

Oh man it was the wild west 15 years ago it was easy. These days the rules are so different. I would have to sit down and look at your whole situation to give you any ideas. And as I am not a licensed advisor I cant do that.
However in principle you could buy will some seller financing. If you talk to a good broker I do know of a lender who will lend very high LVR but you pay one point for the privilege.
I was able to do it as every property valued up more than 20% above what I paid so I was 100% borrowing using RC and my LVR was static or dropping.
BUT as I say those were the days of no docs so it was easy. If you could fog a mirror you could get a loan.
I was looking at some land last week and my agent friend said he had 100% finance available through his in house broker so there is good money around. But assuming you are young don;t rush too much. Wait for the next bust and be in a position to buy then!
5 free hold houses and no debt and you are retired for life it doesn't have to be about big numbers.

[wodger]

5 free hold houses and no debt and you are retired for life it doesn't have to be about big numbers.

That's the strategy I can get my head around. I'm 39 and realizing that if I want to work dramatically less in 20 years than I do right now, then something has to change! I'm reasonably well paid but if I stop working then I presume they'll stop paying me - haven't asked.

[wodger]

That's the strategy I can get my head around. I'm 39 and realizing that if I want to work dramatically less in 20 years than I do right now, then something has to change.

I wish to goodness I'd been capable of thinking like this when I was in my early 20's. Actually I was, but I didn't understand much of what i do now and, same problem, I couldn't fathom how to get the money. Could have bought the state house I was living in, and the one next door for $60,000, moved in with a mate, and received $12,400 in rent. And now have something like $25,000 rent to play with. I actually did enquire with an agent what it would cost to buy them, or what the GV was, but didn't take it further.

[Damap]

I remember living just off Campbell Rd, one of my first flats. I could have bought my 3 bed rental for 65K. Thought it was ridiculous why own it :-) It would be a mil today at least

[spaceman]

.....! I'm reasonably well paid but if I stop working then I presume they'll stop paying me - haven't asked.

Try it and see....you might get lucky

Cheers
Spaceman