So we’ve bought our eighth investment property.
‘How do you feel?’ Serina (my wife) asked me.
‘Great of course.’ ~~ my standard short manly answer when she asks me this kind of “girlie” questions.
How do I really feel? I asked myself when I had a quiet moment that night. I guess there is some proud as well as a sense of achievement. Not just because of the number of investment properties, but because of the difference of organising the purchase and completing the transaction this time around.
It all began in March this year. While I was chatting with my brother Jeffrey, I realised that he had a few units for sale. Some of them are owned by himself. The others are in joint venture with his friend. Jeffrey has been an architect in Brisbane, Queensland for the past fifteen years. He knows the market in Brisbane and Queensland in general because he is also a keen property investor. He also owns (and runs) a golf driving range where he has his office on site. A very busy man indeed.
‘Why do you want to sell them?” I asked him.
‘Just want to release some cash for property development”.
We were in advance of our home loan repayment by about seventy five thousand (the amount can be redrawn), and I was thinking of doing something with the money anyway. So I started looking into the units Jeffrey owned in South Brisbane. To find out which ones we can go ahead to make a deal with Jeffrey, the first thing I did, as usual, was to check with our financer to see how much more we can still borrow. Preferably not to use the equity of other investment properties.
I decided to talk to HSBC and IMB first because we have ongoing relationship with them in the last five to ten years. When I say I talk to them, I mean I literally TALK to them. I live in Taipei, but it’s not hard, neither expensive, to call them to have a general chat with the lending officer, relationship manager, or branch manager. This gave me a rough idea where I was and what’s my next steps, and which one (if any) should I do business with this time.
It was a bit of a surprise after talking to our relationship manager (Let’s call him “Joe”) at HSBC Canberra. First of all, it’s so hard to find “Joe”. I rang him a few times without any success until the fifth or sixth time. I asked him how much we can still borrow from HSBC. Also I asked him if my Aussie expat friend, who has been working here in Taipei for years, can get a home loan to purchase an investment property in Brisbane.
“Joe”, based on the information I gave him and our other loans with HSBC, said in his email we can afford to borrow an additional $1.035 million. However HSBC’s top Loan to Value Ratio (LVR) is 90% with lender’s mortgage insurance (LMI). For high density units (>30) the highest LVR is 80% with LMI. As to the question for my expat friend, he gave me the following answer:
“There are no restriction for expats however we assess applications using 75% of income earned in other currencies (non AUD).”
Not very good answer for my friend. Not so good answer for my own question either. Why only 80% /90% LVR? Why only using 75% income earned in other currencies? I guess it’s HSBC’s policy. Quite disappointing.
I then talk to IMB’s call centre- IMB Direct. They can lend us up to 95% of the property value (with LMI), although according to their calculation they can lend us around $950K . Cheryl at IMB Direct replied my email enquiry right away and she even rang me to clarify a few things after I sent off the application form for a pre-approval. She was extreamly helpful from my first phone enquiry to settlement. Customer services! I just can’t stress that enough.
Did we buy any property from Jeffrey in the end? No. Not because they are not good investment. Not because Jeffrey changed his mind either. I need to start a new post to be able to record how we decided on which property to buy, because it’s a long story.