Hi everyone,
long time reader, first time poster
there is such an abundance wisdom and information in this forum
just amazing
as the subject title says
I've got enough cash for a 200k IP and potentially some equity from my first investment (between 0 and 40k depending on who I ask)
what i wanted to ask was
its only been a few months since i bought my first IP
do i dive back into the market now or do i wait till i can buy something more expensive?
and by more expensive i mean better location and/or with development potential
i understand i would have to go regional for a house in the 200k range
every time i see my bank balance i keep thinking "this could be earning more elsewhere instead of sitting in the offset account"
what do others do?
use cash deposits for future IPs or equity only with cash as a buffer?
cheers,
dafunk
1. Speak to your bank or broker to work out how much you can afford/borrow
2. See if you can draw out some equity and make sure it's a split loan
3. Always better to use equity to buy IP2 as you can claim the interest as an expense + any cash oyu have would be sittign in your offset account reducing the interest anyway.
4. Only use the cash for any short falls + as a buffer
4. Find a property within the budget of your borrowing capacity- happy shopping
P.s Make sure the loans ( IP1 and IP2) are not crossed.
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
Agree with Mick – if you can avoid using cash and use borrowed funds instead, you'd be better off.
Talk with a pro and suss out your options in terms of finance structure.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks for the replies
I've been told I'm good to go on the lending side cash wise.
Just need the bank to value IP1 to find out if i can access equity already.
I'm not sure how others decide their budgets for their IPs
Especially in a moving market
Do you spend what you have now or wait?
Do you wait for 200k? 300k? 400k? 2 x 200k? etc
Cheers,
dafunk
Most new property investors don't realise this very import point: Your portfolio is at it's highest risk when you have less than four properties and your LVR is over 75-80%.
According to the ABS, 85% of property investors don't buy a second property, 93% of property investors don't buy a third property.
Take your time when selecting your next property, we see it time and time again, buying a dud 2nd or 3rd property is a permanent portfolio stopper and often requires taking a lost to get out of.
- Number One Goal: Preserve cash.
- Number Two Goal: Build equity.
- Number Three Goal: Continue savings plan.
- Number Four Goal: Continually reduce your after tax debt.
Modernity Investing
Email MeHi Dafunk
Firstly welcome to the forum and hope you enjoy your time with us.
I am great believer in borrowing 100% of the purchase price where possible so i would probably looking at using a Term deposit as collateral security and borrowing the full amount.
All you need to do is wait for the IP to increase in value and then release the cash as security.
Wash funds and repeat for number 3.
Building a portfolio of 40 + homes won't happen over night but with help and guidance it will happen.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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