Hi Guys,
After attending Steves conference on the weekend I am inspired by Steve, Jason and all his great speakers. I realise now how far I really am from being in a position to invest professionally instead of buying anything and setting and forgetting speculatively.
Me question is, what do you guys think the minimum position financially we should be in in order to invest in our first IP. Ie. Equity in PPOR and or cash savings. (I have realised first I need to invest in knowledge, how ever would like to be able to have a goal to aim towards as a starting point)
Interesting question. The main issue I find is that the goal moves faster than you can save. For example, if it’s $100k and it takes 2 years for you to save that much in two years time it’s $150k, or worse it moves faster than you can save at all and you never reach it. The other factor is it depends on your goals and where you’re investing – Sydney would require more than regional areas.
At the moment I work on $100k as that allows enough deposit to buy something around $400k mark. But I don’t tend to have issues with serviceability either, which is another factor.
Not sure that really helped but I’d be interested in other opinions too.
Any insight into anyone one else’s opinion is always helpful in one way or another… So thank you
A few others opinions are that generally should have at least 20% of investment purchase price in cash. The rest pay down your own Morgage to allow more equity in your own home should you need to use that
If you have a ppor then you should not use any cash to buy an ip. So if I have a ppor with $300k owing and I win $100k, then I pay down my PPOR by the $100k and redraw a separate (key word) loan for business purposes which I use to cover all purchase costs (20% deposit, stamp duty etc). This loan is against your ppor. Then you get another loan at 80% held against your new property and you now have over 100% of the purchase costs tax deductible.
And your home loan that’s not deductible is also reduced.
Hi Barlow,
You haven’t shared too much in the way of details, so I will answer generically. First off, you are right in that you need some amount saved to kick off. That can come in many forms, depending on your starting point:-
e.g. if you are fresh out of school, I would think other matters are way more important than property investing.
If you already have bought your own home and are paying it off, there might be usable equity that can become your Deposit/Costs for an IP.But if you are not that far along, then take a look at what you DO have – it could be that you have a vehicle that might be worth $20k (or more) that you really don’t need to be using. What if you sold it to kick off your “fighting fund” and bought a vehicle worth $5000 instead (sufficient for your purpose). Or, save like the devil (or both). And yes, look at the option of having your folks going guarantor for you, or even them becoming “silent partners” in your property business. Have them get some equity growth even as you build yours.
ALL of the above would be well worth discussing with someone who is an adviser in finance (e.g. a Mortgage broker) to get some really useful learnings re your current situation, and how best to go from here. You may be surprised with just what CAN be done.
Also, spend some more time here, and reading books, etc just to get the feel for “What works, and what will work FOR YOU”. See, no use talking of “Finding properties that need work, having someone else fund the purchase (another investor, or Mum and Dad) and you investing your time, and small cash, into adding value prior to a resale or a re-finance” if you HATE renovating, or are useless at using a hammer, etc.
So, find a path that sounds like “you”. If you haven’t already, do check out the “Big Picture” thread – it is a sticky in the General Property forum. There are a couple of examples in it about what other people did when they were starting out.
Benny
Hi Benny,
Thanks for getting involved. i left out specifics only for the reason that i am learning that i am a fair way off being able to invest, and like you said there are other things i need to focus on at the moment. (some being setting in place actions to correct stupid financial decisions in the past)
Without specifics i thought i would get a broader range of ideas of where people thought an addiquate “starting point” was to start there journey into property investing.
To be more specific tho. my partner and i are both nearly 30 years old, have our PPOR that has roughly $100k equity in it, a few small loans and bits and pieces for cars etc (Stupid i know), not much savings but both driving cars that are worth more than we need them to be and a harley that sits in the garage and gets ridden every blue moon. so some of your suggestions are very relevant to us.
we have been put in touch with what seems to be a fairly good mortgage broker through Steve McKnights market update and millionaire mega conference and are in the process of refinancing with them to consolidate some debts, set up offset accounts and lower interest rate.
so thats the basics of me. thank you for your input so far, any thoughts are always appreciated.
cheers
$100k equity should be enough to get a deposit ($80k accessible, maybe some LMI) then it’s a matter of serviceability. So depending on your incomes you could be in a position to buy an ip now.
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