Hi there fellow property investors!
If any of you have a spare moment to comment, I'd appreciate any tips or advice as to which direction you think you would head in if you were in my position….
I'm a 21year old from Adelaide, working full time in the real estate industry. In January 2009 I purchased a 1 bedroom unit on the city fringe, lived in it for 6 months to claim the FHOG, spent that time upgrading the unit and then thought i'd try my luck at selling for a decent profit to clear some debt (my car loan was reducing my borrowing power quite substantially)…. I was lucky enough to make $60k profit on the unit…… cleared all my debts, and in September purchased a 2 bedroom 2 storey townhouse which is now my PPOR….. The townhouse is worth approx $300k and I owe $243k on a P&I home loan.
Çompared to my position this time 12 months ago, I'm now in a far better position when it comes to getting my property portfolio kick started and was hoping for some feedback from the rest of you……
I like the idea of renovating and selling for profit as it has worked for myself and my parents in previous transactions, however the 'buy and hold' scenario as read in 0-130 is also going to be beneficial in the long run…. Either way, I'm ready to get things going and am keen to hear your thoughts.
Cheers & all the best for 2010!
Ben
Hi Ben
depending on your borrowing capacity and your ability to service the debt,
I would set up a LOC on your PPOR you will have LMI on top of that as your LVR will be above 80%( but I see that as a small price to pay to leverage into more property) then using a 5% deposit (taken from the LOC)leverage into another property, if you have the surplus funds then reno and sell or rent as is and keep… I prefer to keep but it depends on your individual circumstances this is just my 2 cents and what I have been doing the last few yrs
all the best
ten
Well done Ben and Happy New Year
You may wish to refinance to interest only to improve your borrowing capacity for your next property?
By holding the first property you may use the aquired equity to borrow against?If you wish to renovate and sell there is nothing stopping you either. You are the best judge of your local market.
I'm sure you will do well either way!
Best Wishes
Demkel
Congrats Ben on your launch.
Plenty of experts on here who can give you many scenarios, so crunch the numbers carefully to get the best return.
Finance is a vital ingredient as you know so make sure you discuss scenarios with the finance brokers here who have lots of experience and a willingness to help.
Good luck
cheers
thecrestthecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Meselling motels in NSW
Happy NY Ben and great start. Wow i was 21 once lol
Refinancing your PPOR to release equity is going to fairly tough in the current market place as unlikely you will get more than 90% equity release and then you have LMI again on the increased amount.
Using this to cover the deposit and acqusition costs is going to mean your buying is going to be fairly limited as unlikely you will get anything more than a 90% lvr on an investment loan with curren credit scoring.
Suggestion would be to restructure and then be ready to go if and when something turns up.
If you intend to stay in the PPOR for ever and a day then certainly keep the loan as P&I so you can pay the debt down and then in turn increase the Investment LOC by the same amount. If not i would make it IO immediately you restructure and then utilise a 100% offset account until you decide what you want to do long term.
Richard Taylor | Australia's leading private lender
Hi Guys,
Thanks for the positive feedback, greatly appreciated.
In relation to Qlds007's comment, I plan on living in my current PPOR for 2 years or so, definitely not a permanent thing, so on that basis would you still recommend a loan restructure from P&I to IO?
Is the idea of this scenario to free up extra cash as my repayments will be lower than a P&I loan and put all of this cash into another property?
Cheers!
Ben
Hi Ben
I would recommend an IO loan on every loan where possible even if it is your PPOR.
Flexibility is key and IO gives you that.
Richard Taylor | Australia's leading private lender
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