Financial plan for 2x IP

Hi all,

Keen to get your thoughts on this.

$500k to spend (not a loan) on a property. Hoping to actually have 2x IP. I’m currently not employed but will be returning to a P/T basis in the new year and starting my own business so this isn’t something banks will love.

What would be the best way to get ahead with the $ that I have?

Could I get a 2brm place around $500k and then use that as equity to go towards a smaller 1brm apartment? Or 2x smaller places?
Or am I completely off the mark and simplifying something that’s not actually an option?

Hoping to be a wisdom sponge

 

Assuming you've got $500K cash to spend?

You couldn't just go and buy a property worth $500K - there are state charges and registration costs to pay on top of the purchase price.
If you buy it as a Owner Occupied you could reduce those state charges significantly if you're a first home buyer.

If you buy 2 cheaper IP's what would you get for around $230K - $240K? you might end up with two worse properties.

You cannot 'access equity' rather borrow against it - if you have no income, you cannot borrow, thus no 'access' to equity until you're receiving income.
Even then, the part time income is what can be used for borrowings, the self employed income can be used after at least 1 years trading, only few lenders allow this, most want 2 years trading history.

 

You could lend a company $500k to buy a property. later the company could borrow from a bank to refinance your loan and give the money back to you. Company could be acting as a trustee or in its own right.

 

I have about 600k so would be looking under 500k - was looking at apartments as houses/units are out of my range unless it’s the only property I own. I understand what you mean sorry my language isn’t on point around property.

I think I’m just super confused as a couple friends/family mentioned that if I fully owned a property with nothing left to pay this could then be used for an additional property. Getting very confused at how to best set myself up.

I lost my partner so am trying to do this on my own and look after myself long term but it’s honestly very overwhelming.

 

say you own a 500k with no loan. You could borrow against this for a deposit. But this only works if the bank will lend to you, and without a job that will be very difficult.

are you sure property is a good idea for you at this point? Property generally works because of gearing (borrowing). If you dont borrow the returns arent usually that great. And not liquid.

 

You could buy something outright with a total cost of $500k .

Then once youre working, depending on servicing..you could buy another property with using equity from Property.

 

Thats something I have been considering too. Do you think it’s smart to start with a place that holds more value like a 2brm apartment instead of 1brm?

 

Thanks Rolf, if we are talking about me I’m 30 years old and at this stage don’t have a PPOR. Have the ability to live with family for a little while and do this on the side it that is a good plan. But also open to PPOR if that is a better method of doing this.