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  • Profile photo of cherylcheryl
    Participant
    @cheryl
    Join Date: 2003
    Post Count: 10
    October 13, 2003 - 11:44 pm

    I am about to embark on my first investment adventure.
    My sister and I have recently acquired a small inheritance and have decided to team up and buy a property together. My question is. Should we use the combined total of our money – approx $140,000- to purcahse a property outright, or would we be better to use it as several deposits and purchase more than one property. I have plenty of time but little income/equity. My sister is working full time and owns her home. She also recently bought a property in Queensland using her home as equity.

    Profile photo of Mortgage HunterMortgage Hunter
    Participant
    @mortgage-hunter
    Join Date: 2003
    Post Count: 3,781
    October 14, 2003 - 12:05 am

    Cheryl,

    Here is how to do both.

    Buy a property using a 20% deposit (to avoid LMI) deposit the remainder of the cash into an offset account which will virtually reduce the loan.

    If you choose to buy again use the offset money for the next deposit – this avoids cross collaterising the two properties.

    All the best,

    Simon Macks
    Mortgage Broker
    [email protected]
    0425 228 985

    Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

    Profile photo of luckyoneluckyone
    Member
    @luckyone
    Join Date: 2003
    Post Count: 148
    October 14, 2003 - 3:17 am

    Cheryl,
    In my opinion yo would be best off doing what Simon has said and buy a place with the 20% deposit so that you avoid LMI. However, I would only buy a property worth less than $150,000. That way, you can buy potentially 4 of these properties (deposit of $30,000 each + room for expenses). That way you are minimising your exposure to risk in case you were to lose a tenant.

    For example, if you have one property renting for $500 per week and you lose that tenant, then you are $500 our of pocket for each week you go without a tenant.

    However, if you have 5 properties each renting for $100 a week. You still have a total rental income of $500 per week, however if you were to lose a tenant you will only be out of pocket by $100 for each week you are without a tenant.

    I think that makes much more sense than buying one expensive property.

    Good Luck!

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