Advice on my short-term plan?

Hi there,

In late 2015 I purchased my first PPOR in Tarneit for roughly 330k, I believe the value for it today would be around 400k.

I'm currently living there, and plan on purchasing an IP with my partner this time and renting it out.

The steps I'm considering working through are below, please tell me if you would change, or reconsider any;

1. Finish building a deck and a number of other value-adders to my PPOR (1 month)
2. PPOR to be revalued (2 months)
3. Visit finance broker, work out equity, use PPOR as security and find out combined loan limit
4. Purchase first IP together, at least 500sqm, older house (potential to renovate). (4 months)
5. Rent this out straight away (hopefully cash flow positive) (4 months)
6. Shift all the positive cash flow into paying down PPOR (ongoing)
7. Once enough equity is built up in PPOR & IP, rinse and repeat. (ongoing)

Any advice, opinions or thoughts would be greatly appreciated.

Thank you!

 

Hi Taylor,
Looks good but unless you really want to build a deck, see a broker first. A desktop Val might give you the best outcome without needing to renovate your PPOR.

 

Nice plan - don't forget to leave search & settlement period between items 4 & 5. Likely 2-3 months gap. Can use this to choose PM, start advertising etc.

 

Hi Taylor, adding to what Jess said, I would do some leg work first in your area by talking to agents and if possible visiting home opens of similar types of places to get a feel for whether you planned additions really add value. I would not spend money on the "hope" that the value was increased, it may be the case that the cash is better used for the IP. Also getting a quick desktop val done by a broker or your bank in the as is condition would be a good idea. Also think about structures, whether to have your PPOR as security or whether you can draw out the equity as a line of credit and then use that for the IP, it then removes the cross collatoralisation issue. Also whether you should have the IP under your names or a company / trust, especially if you plan on buying multiple properties in the future. I know there is a lot in my response, hope it helps in some way. Cheers.