Ep.116 | Q&A - How does Guarantor Loan actually works, Fixing a Joint Venture, Investing in WA and more
Summary: It’s Question and Answer time! Now, we answered a few questions in the <a href="http://www.thepropertycouch.com.au/ep115-2017-federal-budget-mean-to-the-property-market/">last episode</a> but realised that we wouldn’t be able to respond to all of your questions at this rate, so we will be doing a Facebook Live very soon. Stay tuned for that!<br> On another note, there’s an exciting announcement at the end of this episode so make sure you stick around. And here are the questions that we would be answering today:<br> <br> <br> * Question on Guarantor Loan from Kate:<br> <br> My partner and I earn a combined gross income of roughly $130,000 annually. We have a small amount of savings – about $5000 (remember we’re getting married). But really nowhere near the amount needed for a deposit on our first home. Listening to your <a href="http://www.thepropertycouch.com.au/christmas-pack/" target="_blank" rel="noopener noreferrer">episode about guarantors</a> got me thinking. Is it possible to borrow the full amount for an invest-grade property in Newcastle? Do banks really loan 105% with interest only repayments so that we can continue putting money into an offset account? Or are we better to wait and rent and continue saving?<br> My parents have been lucky enough to own a home in Sydney that has enjoyed the crazy house price growth. Their home would be worth at least $1.5 million at the moment. How long would my parents need to be guarantors – would it be until we had saved 20% of the loan? Perhaps in our <a href="http://www.thepropertycouch.com.au/ep44-qa-building-cash-reserve-renovating-for-profit/">offset account</a>? Or would it be until the full amount was paid down?<br> My dad is from the generation of debt is bad and avoids risks. If you thought this was a smart move, do you have any tips on how to explain the risk/benefits so that he can understand?<br> <br> <br> * Question on “To Hold or Sell” from Warren: Hi ‘couchers’, thank you for your entertaining, informative, and thought-provoking podcasts. I’d like to know what your thoughts are on rescuing a situation where someone has an investment property they’ve had for 10 years that isn’t performing. Cut the losses and look to replace it, or hang onto it? (I bought this place at age 20 on apprentice wages, it was all I could afford) Thanks! (specifics: paid $195k, current market value $240k, current rent $270/wk)<br> <br> <br> <br> * Question on Property Investing in WA from Daniel:<br> <br> My partner and I recently bought a duplex (2 bedrooms, 1 bathroom, 2 living rooms, 475 m2) in Spearwood for $400,000. We have $112,000 equity in the property and $73,000 cash in our offset. Our salaries are $50,000 p/a for my partner and $71,000 p/a for myself, and we do not plan to have children for another 5 years. There is an opportunity to buy the second duplex (also a 2 bedroom, 1 bathroom, with a small granny flat at the back) for $385,000. The site is zoned R40 on 950 m2 (we see a 4 property potential), 3 km from the new Port Coogee Marina, the North Coogee development estate and the potential South Fremantle Power Station development bringing 6,000 new high-density houses/<a href="http://www.thepropertycouch.com.au/ep58-apartments-value-drop-by-50/" target="_blank" rel="noopener noreferrer">apartments</a> into the area. We are 300 m from the local shopping centre and 5 km from the satellite employment hub of Fremantle (Bryce’s old hood). It ticks all the lifestyle boxes bar being near a train station (it is currently challenging to access the freeway to the Perth CBD). My two part question is:<br> <br> * I am currently weighing up the opportunity cost. What is your inference of Spearwood as a potential “wave rider” suburb piggy backing off the growth of the coastal development? Do you feel that it would have long-term, consistent capital growth or a short term upswing,
