NSW House IP in Syd - $1.6M loan, want to maximise neg gearing

Hi all,

I posted last year and got some really helpful tips and advice from the community here. Thank you. I purchased an inner city 1/1/1 apartment that is my PPOR, and now I'm about to embark on my second property journey. I have approximately $2M in cash from selling cryptocurrency (net of taxes to the ATO).

After discussing with my accountant, I have decided that my plan is to pay off my PPOR apartment in full, which will free up my borrowing power to purchase an investment property. I am seeking to do interest only, variable with offset, and have been approved to borrow $1.6M on the condition I pay off the first one (which is $600k owing). This leaves me with $1.4M in cash, and $1.6M of borrowing power, for a property of up to ~$3M (minus stamp duty, etc).

I have a stable job in an in-demand industry, and have a balanced stock portfolio, so I am keen to maximise my LVR. If interest rates rise, then instead of re-investing my dividends from my stocks, I can pay for rises in interest rates.

The secondary objective is a house in an area I'd like to possibly live in, in 3-5 years. So I am being a bit selective with my areas due to personal situations.

To maximise negative gearing and leverage, I am looking at a property around the ~$2M mark, and I would like a house with decent land/location, and ideally depreciated buildings. Areas I'm looking at:


- Surry Hills / Erskineville / Inner West: Plenty of terraces in decent locations going for around the ~$1.8M - $2.2M mark. This would allow me to put down as little as cash possible, have a negatively geared property, and own land close to the CBD which I believe will continue to hold value in the long term as Sydney is a world-class city and offices will eventually still exist.

Downsides: terraces feel more like townhouses to me since you share common walls, very little land that you actually get.


- Upper north shore: If I stretch to my full $3M I can get a nice house with decent public transport access on the north shore line, but that's only 50% LVR. If I try to go for something more around the ~$2-2.5M mark, my only options are places like Normanhurst, Hornsby, etc and surrounding areas.

Downsides: have to be really up north to buy for around my budget...


If you were in my situation, what would you do? Appreciate any tips and advice. I get that a lot of people will probably suggest that I buy in another state that's not NSW, but it's not something I'm interested in ATM, especially with lockdowns.