All Topics / Help Needed! / Buying 2nd IP

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  • Profile photo of NovacastrianNovacastrian
    Member
    @novacastrian
    Join Date: 2012
    Post Count: 5

    Hi everyone, I am looking for advice on purchasing 2nd IP. We purchase our properties through our SMSF. Our 1st property is positively geared. We are looking at property in regional NSW. We can afford 20% deposit. What are your thoughts on interest only finance. This property is already rented and will be positive geared also. Cheers And thanks Peter

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    Hi Peter,

    Sounds like you need to share your tips on where you are finding these PG IP's?!

    Interest only is great which is why a lot of people use St George for SMSF IO loans. They have a good product and of course a linked offset. 

    The only thing with St George is that you need a company guarantee for a 80% lend.

    Regards

    Shahin 

    TheFinanceShop | Elite Property Finance
    http://www.elitepropertyfinance.com
    Email Me | Phone Me

    Residential and Commercial Brokerage

    Profile photo of CatalystCatalyst
    Participant
    @catalyst
    Join Date: 2008
    Post Count: 1,404

    I always go interest only. Put extra cash either into your PPOR if you have one or into an offset account.

    That way YOU control your money (not the bank).

    Just curios- How are you calculating CF?  80% purchase? 100%? 105%?

    Different people calculate it differently. To me CF+ is taking into account interest on ALL purchase costs + outgoings.

    Profile photo of NovacastrianNovacastrian
    Member
    @novacastrian
    Join Date: 2012
    Post Count: 5

    Hi everyone,

    CF+ created by potential tenants bidding for property to rent. due to shortage in the Hunter region. The tenants that are in the house bid $50.00 over the rent that we thought we would get. After all purchase costs, the tenants are actually paying the mortgage with a little left in reserve.

    Peter

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi Peter

    We do a fair amount of SMSF lending and be suprised how many clients do realise just because the property is positively geared doesnt necessarily mean it will service on a SMSF calculator.

    Also being a regional property you may find it is not an acceptable area for a 80% lend.

    If you want to shoot me an email with the post code and town i can check the geographical location for you.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of vagirl2012vagirl2012
    Participant
    @vagirl2012
    Join Date: 2012
    Post Count: 47

    Awesome! Congrats on buying another investment property. You are on a roll !

    Profile photo of SMSF101SMSF101
    Member
    @smsf101
    Join Date: 2012
    Post Count: 49

    hope you could bye the second propery…

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    New SMSF product released during the week where the lender has waived its application fees on its 80% lvr.

    Makes the overall deal even more attractive.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of House CallHouse Call
    Member
    @house-call
    Join Date: 2010
    Post Count: 165

    I thought that SMSF loans could not be interest only.  In that they by definition have to be P&I in order to satisfy the fundamental super criteria which is to increase equity and maximise the benefit for the members.  (which interest only loans do not unless prices go up, which they don't always)

    ie to minimise risk they have to be P&I.  (Plus the fact that they are limited recourse loans means the banks do not want to fiddle around with anything that has slightly more risk)

    Profile photo of House CallHouse Call
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    @house-call
    Join Date: 2010
    Post Count: 165
    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Hi House Call

    Hate to say that is incorrect.

    The SISA legislation makes no comment about the type of loan one must take out.

    Interest only is a popular loan type for investors who have limited funds in their SMSF and want to try and eak out a second purchase although i must admit i am very much one in the P & I corner for SMSF lending.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of House CallHouse Call
    Member
    @house-call
    Join Date: 2010
    Post Count: 165

    ….Hmmmmm… interesting.  Thanks Richard. 

     A bunch of SMSF schemes just popped into my head that I didn't know were allowed to be in there….

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Certainly House Call i agree it opens up so many more options about controlling your own financial future when you can buy and sell in your SMSF.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    SMSF and property work well, especially borrowing at 80% LVR IO with a 100% offset account. Positive gearing is even better. It won't be long before you save up the next 20% deposit in the offset for the next one.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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