Is anyone preparing for the next downturn?

Perhaps he should then evaluate his LVR and overall debt rations, that's the point, so yes in his situation and like many others lenders force them to make P&I payments, I don't think that's such a bad thing. If one is over committed then by all means I think the reason APRA stepped in was for such circumstances.
There needs to be a balance between cashflow and serviceability otherwise we would all just borrow endlessly hoping we never to repay?
In my case our LVR is below 20% and and rental yields help with serviceability too. But I never drew on equity when investing, always provided 20% for deposit and 5% for costs, as I was a very risk adverse investor, I needed to sleep well at night.
So all I am saying it is still possible for some to continue having only IO terms whereas others can't.

 

Yes but he's an experienced investor and likely well aware of that.

Also he's in his growth phase so pushing his serviceability is also intentional I assume.

With all that in mind I'm not sure what Ruby's point was.

 

I am not sure whether you heard the term that most people lose money for two main reasons, one is fear one is greed, hence one never acts the other over acts.
So perhaps he is over exerted, I doubt having 19 loans is early in accumulation, early growth phase? I myself have 24 accounts with CBA and as mentioned am refinancing 7 splits into 4 loans with another lender.
I think Ruby's point was made that it is still possible FOR SOME to obtain always IO terms, that's all.

 

Yes but Thunder did caveat what he wrote with "may not always be possible".

And this is indisputably true. It may be possible for some, it may not be possible for others.

I just don't understand the point of responding to this with "nonsense".

 

Precisely. Loans taken out before APRA came into the picture you WILL fail serviceability in many circumstances. I understand quite clearly that continuing to refinance and to continue to extend I/O term but you cant if you cant refinance away. Its happened to me and many others.

 

This is a good strategy... property is not a trading vehicle: it is a leveraged store of wealth with a line of credit attached to it.

the mix of assets is also important... different tenancies on different lease expiries for sustainable cashflow

A few situations I will sell
-large capex or incentives needing to be offered soon
-poor location with limited capital growth
-huge gap between bank Val and its true value (blocking up too much equity)
-roe dipping to sub6-7%
-overconcentration of net worth into a single location/properties

trading is crypto, shares and businesses for us. Done well - you should never need to sell property to buy the next one... we aim to double our equity through an active approach and hence keep recycling into new purchases

 

What is your target maximum LVR across your portfolio for preparing for downturn?

Mrs and I stopped spending during COVID and we have continued to do so, hence we are throwing all this spare money on mortgages for the IPs.

I'm just wondering if we should sell of an IP or two while the market is booming. There is not a lot of fundamentals behind the current boom (besides FOMO), so the correction could be bigger than normal.