Are you aware of what your maximum borrowing limit will be with the various lenders? If you reach the limit with a lender, what's plan B?
Plan B is to go to another lender that will give you more money. Different lenders have different borrowing criteria.
Plan C is to plan ahead before hitting capacity Plan D is to consider teaming up with others - potentially risky though Plan E is to perhaps wait and while waiting start paying down debt and improving income
Plan A should be - speak to a decent mortgage broker and ask them to map out a strategy that shows you what lenders to use in which order and how many properties this will allow you to purchase
Plan be is realizing that you will hit a borrowing limit at some point, so come up with investment strategies that either pay down debt or don't require lending.
I don’t really do that anymore. Too many variables. Apra and lenders policy changes, client situations change too. I prefer to do more high level DTI type analysis to see what’s likely to be possible in the future in terms of total loans with total incomes.
Interesting, I do it fairly regularly for investors who are seriously looking to build a portfolio in a reasonably quick time frame. High level talks are ok as a starting point but when wanting to take action having a plan of attack is important, optimising the strategy is too, consideration needs to be made on lender choice and order, which can be modified as necessary. Each to their own
Obviously if someone wants a plan to buy 2 or 3 IP's in quick succession and they know the type of property and rents etc sure
Even if it's not in quick succession, best to start with a plan and modify in regard to any lending changes as necessary. Failing to plan, is planning to fail.
Lets agree to disagree Lindsay. What I meant was I don't pick lenders 2-3 years ahead. I look at the modelled future DTI to form an opinion on what's feasible and what type of lenders will be suitable at each step
Back in 2015 I could put together a plan of how to organise lending for investment. Then APRA became a thing. Today we still plan ahead, but they're very general in nature. I know how the environment looks today and at this point I don't think there will be massive changes going forward, but that's not something you can rely on absolutely. If servicing is tight for someone right now, it's not going to magically improve. Rates will increase which will erode serviceability. Living expenses are problably going to increase which has the same effect. People might argue that rents are also rising, but realistically an increase in rents has only a negligible effect on borrowing power. It's not going to get you into another property is you're already scraping your limits. Forward planning is always important, but it's not possible to make a concrete plan. Any plan put in place needs to be constantly reviewed and updated. You can't make a plan today and simply assume that it will be good in a year or two.
Agreed, even pre-apra any plan for clients was reviewed every 6 months or as necessary in regard to changes in incomes, lender policy etc.
