How to keep the investing dream alive
As a property advisor my role is to educate investors, help them choose their strategy and set up their plan to grow a portfolio to achieve their goals. Along the journey I help them assess their borrowing capacity, share reports and research, review suitable investment areas and properties so they can make an informed decision of where and what to buy. This takes time and commitment from all parties as they move through the process of buying, finance and contract stages for the investment so they can realise their dreams.
So imagine the disillusionment and frustration when investors hit unexpected hurdles requiring them to put their investing dreams on hold or abandon them altogether. You guessed it, the problem has not been their strategy, their plan or the property they want to buy. It has been the changes to lending with the banks and the valuations that have stopped many investors in their tracks.
Finding the money
Investors looking for investment loans face very high hurdles to obtain finance approval with the tighter lending conditions. The banks have upped their assessment criteria for borrowing, requiring more savings, adding more to living expenses, buffers and income thresholds. APRA has also limited the banks to 10% investment lending of interest only (IO) loans. It used to be easy to have a 10% deposit and secure a 90% IO loan, now it is much harder to find and qualify for and investors without a 20% deposit have often been the losers.
Even if you can find a bank who will lend you the money, you are then faced with the next hurdle to overcome, the bank valuation. Many an investor has been about to reach the finish line when a low valuation has stopped them in their tracks. A low valuation can result in investors not being able to complete their purchase.
The disappointment and cost of letting go the property that they have spent months finding and researching, preparing loan application paperwork, paying for legal advice and signing contracts is a bitter pill to swallow.
Investors need to ask themselves is the property worth fighting for? Low valuations can be challenged and there are other banks to get a loan. There are still lenders who will offer 90% IO loans and other valuers to achieve a fair valuation.
Giving up at the first hurdle when one bank says no, or one valuation comes in low could mean giving up on your dreams. If you are a fighter my advice is to change brokers, change banks and change valuers before you give up on the property. Even in these tough lending conditions, I have seen investors keep their dreams alive and continue to push to achieve the results they need to build their portfolio. Well done to them. Happy Investing!
NEED HELP WITH YOUR PORTFOLIO? Ian is passionate about helping others realise their goals through investing in property, and can be contacted at Ph. 1300 850 038