All Topics / Help Needed! / Leap frog

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  • Profile photo of NewcoolkidNewcoolkid
    Join Date: 2015
    Post Count: 3

    Does buying a positive cash flow property automatically leap frog you to the next property I.e the bank will lend you more money?
    Also what if the property covers everything bar a few things like I.e rates and insurance. Will the bank still loan you money?

    Profile photo of Kinnon BellKinnon Bell
    Join Date: 2014
    Post Count: 151

    Not automatically, no. It certainly contributes towards your serviceability but doesn’t mean that if a property is CF+ automatically qualifies you for the next IP.

    From memory, the last time I did some modelling as to what gross yield you need to start contributing towards serviceability it was ~9.5% so would need at least that yield and then some to start contributing to your serviceability with the bank.

    There’s a lot more taken into consideration then the income you receive from your investment property as to if and how much the bank will lend you.

    Kinnon Bell | Kinetic Funding
    Email Me | Phone Me

    Mortgage & Personal Loan Broker based in Cairns and Melbourne but servicing clients Australia wide.

    Profile photo of BuyersAgentBuyersAgent
    Join Date: 2005
    Post Count: 338

    Hi @newcoolkid, as @kinnon said not always. It is a part of the 2 sided equation banks use to assess. LVR is about equity and deposits, DSR is about income and ability to service.

    Banks look at risk, so LVR is about their ability to sell the assett and get their capital back if you fail to make payments. DSR is about your ability to make payments so that doesnt happen.

    Positive cashflow GENERALLY preserves or slightly improves your DSR. It has to be a strong yeild though to actually improve things. You still need to come up with more deposit money each time so you need a combo of cash flow and growth across a portfolio. Many of my clients blend a couple of growth properties with a couple of cashflow ones to get the best of both worlds.

    BuyersAgent | Precium
    Email Me | Phone Me

    South Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at

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