This morning’s Geelong real estate success seminar focused on the importance of a solid financial strategy when starting a property investment portfolio.
Our guest presenter this month was Mark Petterwood of Australian Mortgage Brokers. Mark has 20 years experience in the property and finance industries, and is a licensed mortgage broker as well as a licensed real estate agent.
The presentation began with an insight into how the banks think and what they are looking for when they assess any finance application. Mark highlighted how the banks see you purely as a business decision and that the personal touch has virtually gone out of the assessment process. Investors therefore need to know exactly what forms part of the assessment criteria including income, credit score and “genuine” savings.
Investors also need to understand some of the lending terminology, said Mark. Things like Loan to Value Ratio (LVR), Equity, and Lender’s Mortgage Insurance (LMI) are important terms to understand as they are essential to understanding your borrowing capacity and to being able to structure a long-term financial strategy.
Mark also pointed out that another essential element to understanding borrowing capacity is the amount of cash and/or equity you needed. He highlighted this in a couple of examples, before going on to demonstrate how, with a reasonable small initial deposit of $23,000 and an income of as little as $60,000 per year you can go on to then create a portfolio of 5 properties over 8 years without any further cash required.
The example Mark chose was based on purchasing house and land packages as opposed to established properties as this saved significant money on stamp duty, provided great depreciation benefits and, if done wisely, creates instant equity in each property.
Following the seminar the feedback was excellent. Attendees were impressed with the “great speaker” and “clear” information being provided and how the “property investing strategy” provided them with assurance that what they are “currently doing is structurally sound.”
Our next Geelong property success breakfast seminar will be held on Tuesday 9th July from 7:15am at John Doe Cafe, Ryrie Street Geelong. This seminar is a must for anyone thinking of subdividing or developing property. Our guest speaker with be a property developer with over 30 years experience in property development throughout Geelong and Melbourne.