Hi all, This is my first post and I am optimistic that I can get some useful insight on ideas for my next investment step. I am currently living in my PPR with my partner and we are looking to purchase a new PPR in around 3-5 years based on kids and we will keep the current property for investment. We currently have a monthly surplus of around 2k, just under 50k in savings and borrowing capacity of around 400k. My question is, is it realistic to try and purchase an investment property now and have a deposit ready to go in 3 years confidently? My partner is a bit more hesitant on investing so I would like to be confident and possibly a bit conservative with my numbers so she is also happy with the decision. Also as a follow up, my current PPR is just in my name and my partner "rents" off me (nothing official as we plan to have this in joint names in future. Am i better off viewing this as her paying off the loan or should I claim part of my PPR as an investment property? Looking forward to hearing your responses!!
You tell us. How much deposit do you need in 5 years for a ppor? In 3 years you might have another 75k. Also look at your borrowing capacity. Will the bank lend you enough for 2 ips and a ppor?
Your partner lives with you and you have kids. Hard to convince anyone that she rents off you? Are you claiming the rent as income? Her paying the loan has no meaning. Question you may not know to ask, do you have an offset or are you actually paying down the loan?
Welcome to the forum A few quick thoughts from me: 1) If you're converting PPOR to INV you need to be mindful of how you structure your finances and seek specific tax advice. E.g. Would it be beneficial to be in a IO OO product at the moment given future plans? 2) With your figures you should validate this through a broker and use them to help you with your next move. E.g. Do you have equity in your current OO you can use? What LMI is applicable at different LVR%? 3) You most definitely need tax advice on claiming part of your PPOR and renting it out- I suspect this may not be favorable.
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We don't have kids and she has only been living here around 1 year. No I have not declared her rent as income. Yes all the money is in an offset account, I only pay minimum to the loan with the possibility to change it to IO when I get below 80% LVR so I can refinance free of LMI.
Thanks 1) I am planning on going to IO OO however I have the dilemma that my LVR is currently above 80% and paying LMI once was bad enough let alone twice 2) I have spoken to a broker however I am just trying to get as many different views as possible. I don't have a lot of equity, maybe like 10K until I start getting in to high LMI territory 3) I figured that was the case and do plan to speak to an accountant but thank you!!
Fair point. 75k would definitely be enough of a deposit for the area we are looking to move to but yeah my concern is how drastically an IP can effect borrowing capacity (even if it is positively geared)
I do plan on having a buy and hold strategy for all my investment properties but that is still something interesting to look in to, thank you!
Excellent - then I think the short term focus is clear (no advice) reduce leverage/debt as quickly as possible and open up future opportunities
