All Topics / Help Needed! / Advice needed in financing for my first IP

Viewing 8 posts - 1 through 8 (of 8 total)
  • Profile photo of RinoaRinoa
    Participant
    @rinoa
    Join Date: 2014
    Post Count: 4

    G’day everyone,

    I’ve recently purchased a PPOR and wished I had read Steve’s book prior to purchasing it.  The PPOR was purchased 322k and the settlement was only completed last week. I had 70k savings and used about 56k for deposit, fees etc. My current debt is 280k.

    The remaining amount of m y savings will be used for repairs and emergency money.

    My question is,  is it possible for me to get another loan for about 280k-320k? I have found an IP in an area where rental demand is high. I have thought about joint ventures if I can’t get it by myself.

    Thank you in advance for your time.

    Irene

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Hi Irene

    Firstly welcome to the forum and i hope you enjoy your time with us.

    In essence when you purchase an investment property you are probably going to need 10% deposit and another 6-8% to cover your acquisition costs.

    You have limited equity in your own home and i think you would definitely need to apply some of your cash reserves to improving your equity position.

    Certainly don’t use the cash as deposit but look to pay down your PPOR and create a separate sub loan. This will ensure the interest charged on the loan becomes a Tax deductible expense.

    There are a couple of lenders that will let you borrow your purchase costs so if you can come up with 10% of the purchase price and serviceability is ok then you should be able to get the deal over the line.

    Cheers

     

    Yours in Finance

     

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of RinoaRinoa
    Participant
    @rinoa
    Join Date: 2014
    Post Count: 4

    Richard thank you for your response.  That was rather quick!

    In your opinion, would it be ideal to use a guarantor to secure a loan for investment properties?

     

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Rinoa

    Welcome aboard :-)

    Personally, I’m not a big fan of using  a guarantor to purchase an IP. For a ppor I think it can be worthwhile but for an IP, it’s kind of mixing business and family which can cause issues.

    Property investing isn’t a race, another opportunity will pop up when you’re ready to purchase the next one.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of RinoaRinoa
    Participant
    @rinoa
    Join Date: 2014
    Post Count: 4

    Thank you for your input Jamie.

    I’m glad that you mentioned property investing is not a race as I always thought it was.  Properties around here are being snapped up rather quickly, which gave me the illusion I had to get in quick or miss out.

     

     

     

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    No worries.

    Some markets are moving really quick – whilst others are starting to rise, some are steady and others are dropping. There are so many markets within the country so there will always be opportunities.

    In the mean time, stick around the forum and continue to ask questions and provide input. We’re a friendly bunch :-)

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Little_StoneLittle_Stone
    Participant
    @little_stone
    Join Date: 2014
    Post Count: 17

    Property investing isn’t a race, another opportunity will pop up when you’re ready to purchase the next one.

    Superb advice here. Property investing is as much about strategy as it is having the means to action it.

    Researching areas for their growth / yields and speaking with real estate agents, looking and monitoring prices/rents on the ground  you want to buy etc are extremely important to ensuring if you buy a “dud” on your 1st IP it can leave you chasing for a few years before you can then again re-invest with is why >90% of property investors in Australia never get past TWO INVESTMENTS as they dont see the results and lose passion.

    Your first investment should be the “springboard” into your next IP (meaning you shouldn’t have to load up your cash savings again) and so forth with good capital growth and rental yield you leverage off #1 IP to buy #2. With the growth comes a higher rent return and then it’s a no brainer from there.

    Good luck, L_S

    • This reply was modified 5 years, 11 months ago by Profile photo of Little_Stone Little_Stone.
    Profile photo of RinoaRinoa
    Participant
    @rinoa
    Join Date: 2014
    Post Count: 4

    Thank you for the advice L_S.

    The advice given by all so far has pulled my head back in. After reading Steve’s book, I got over enthusiastic.

    At the moment, my strategy is to stay in my PPOR for a year due to the fact that I got first home buyers grant and work subsidises some of my mortgage (provided that I stay in it for at least a year).  During this time, I will save up and continually research the areas I am interested in. Once my year is up, I will turn my PPOR into an IP and hopefully by then I will be in a position to get IP #2.

     

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