Hi all, I’m thinking of buying my first property in Brisbane, with a view to building a portfolio over the longer term. This first purchase will be a 2BR flat in the inner suburbs – my budget is $350k. I only plan to live there for around 3-5 years, before renting it out as a pure investment. As a first home buyer, I qualify for the stamp duty concession, but I have to live in the place for 6 months, and can’t rent out the second room for 12 months. I have $85k and my father is willing to go guarantor for whatever portion of the loan necessary to avoid LMI, so here’s what I’m thinking… I purchase the property with an IO loan at 100% LVR, which I'm told I'll be able to do with the guarantee, put the cash in an offset account and live in it for a year, after which time I can rent out the second room. By this time I anticipate I’ll have paid off my HELP debt, and with a tenant, I’ll have an extra $1,100~ per month cash flow. Around 50% of the interest will also now be deductible. With this extra cash flow, I’ll be able to afford a second loan for an IP. My question is though, what would be the best way to fund the second, purely investment property? It’s unreasonable to assume there’ll be much equity after just 1 year, which leaves only the cash in the offset account. Should I use this to purchase the second property? I've heard this is a bad idea, as it can 'pollute' the loan purpose, but I honestly can't understand how... Any thoughts on this would be greatly appreciated!