Where to begin?

If your unsure where you stand, its best to start from the basic;

1. Speak to any accountant about how a IP will suit your overall financial/tax return ie what is the expected tax advantage if any ( depending on your tax bracket etc…)
2. Have a chat with family and friends
3. Speak to a broker or banker to work out how much you can afford and what the best loan structure/ lender would be.
4. Do some home work and start shopping

Regards
Michael

Hi Denny Crane,

“Is it better to use cash as a deposit or save it for reno costs?”

Save it for reno costs, in my opinion. And also, speaking as an experienced property investor, I’d highly recommend that you have a decent additional, cash buffer for contingencies – minimum 3 months mortgage/expenses.

“Can you include the reno budget in the borrowing of the property?” Not exactly – banks will usually only lend max 80% of a property’s unimproved value. If you have additional equity/capacity in your PPoR, you could draw that down.

Going by what you say, if your PPor is valued at roughly $500k, then the max 80% lending against that property is $400k, but you only already have $320k loan, so only an extra $80K available (without Lenders Mortgage Insurance – LMII). Check with a broker how much additional capacity you have based on your salary/financial circumstances.

Yes, basic renos can be worth it, depending…how good are your skills? You got any builder/carpenter friends in the family? Or will you be paying tradies to do everything?

Congratulations on starting the property investing journey!

Cheers

Swampy30

Hi again

I've never heard of this rule – but there are thousands of different rules kicking around by thousands of different property investors….

I'm all about cosmetic renos. They are affordable – you can often carry out most of the work yourself if you choose (I actually like doing that sort of stuff when I have a spare moment) and they add value as well as increase the rental yield.

My wife and I recently carried out some cosmetic renos on a house in Canberra – we spent $7k on internal renos including new carpet, paint, refaced kitchen, window fittings and other bits and pieces.

It's being rendered this w/end and we'll spend the rest of spring tidying up the landscaping.

All in all, we would have spent around $13k on this house once it's done. It was purchased for $415k and should be worth quite a bit more once it's all done.

At that point, we'll get it revalued, tap into some equity and purchase the next.

Cheers

Jamie

Only initial advice I can give you is to read, then read some more, and when you’ve finished, don’t forget to read. Oh, and then, before you’re ready, jump into the market with something close to cf+