My Situation...

Hi everyone,


I've been reading these great threads for a little while and thought I would get involved in the conversation in hope of finding guidance. I purchased an apartment in March 2015 with the thought that I may as well be paying off my own mortgage rather than someone else's. Absolutely no thought went into possible growth or cash flow, I just purchased it.


It's a 2 bedroom apartment in Melbourne which has recently been valued at $500k, with $350k still owing. I live in the apartment and rent out the other room for $200 per week. I have $70k in savings which is currently sitting in my offset account.


Over the next few months I'm hoping to purchase an investment property in the Geelong region worth $300k - $350k and am wondering a few things:

• Would you suggest I use the equity in my current property to purchase the new property or should I use my savings?

• Am I able to purchase more than one property using the equity in my apartment? If so, should I be looking at more than one property? I had a read of terry_w 's 'consider multiple cheaper properties' article and found it very insightful, but I'd love to hear others' opinions.

As my current property has good cash flow potential, I'm looking at buying and holding this/these IP's (or if you suggest otherwise, I'm all ears).

I'm quite green when it comes to the ins and outs of property so I'll take in any information given (hence my name).


Regards,


Sponge

 

You're probably better off using your equity to maximise tax deductions.

I also think it would be worth speaking to a broker to find out your borrowing capacity/serviceability. This will give you an indication of the options available to you.

Others will likely be able provide more meaningful advice.

 

Thanks Kat.

 

Use equity and put your savings into an offset account. This will allow you to use your savings later on for a private benefit.

When you buy a property the primary driver should be return of the investment. Do not buy multiple dud investments rather than one good investment to save on stamp duty.

Have a clear exit strategy for your investments. If you are renting a room out it is likely that your are either not yet into a family or you are senior and beyond a family. Either way the future will most likely change in the medium term so make sure you are financially able to deal with those changes.

You do not want to settle down with a family, have the market change on you and he stuck with a loadstone around your neck that you cannot escape from.

 

Thanks Ross, great advice!

 

Also, you're spot on. I have a long term partner but don't have a family.

 

Look at your big picture and goal and figure out a borrowing strategy to see what's actually possible for you

 

Thanks, I'll get onto it.