Strategy to start out. Buy a PPOR first shortly followed by IP.

Whats MP costs?

When renting it all costs would be deductible. And don't forget depreciation costs and LMI.

 

Why would you only do this if you could get 80% LVR or lower?
The total debt stays exactly the same, the end LVR on the IP will be exactly the same - the only thing that actually changes is the amount of deductible vs non-deductible debt.

 

The difference is the new split is now deductible against your IP, whereas before it was PPOR debt. Taking the cash out of the offset would effectively increase the interest you pay on the PPOR.

In regard to the bank lending you the rest for the IP, that depends on the banks servicing/policy etc. If they say no, there are likely others that will say yes.

 

Sorry I meant property manager.
I did a new excel file from scratch and yes I get completely different results. I missed the LMI deduction over 5 years thing.

 

In my experience, a PPOR will only be a stepping stone to your dream home if you pay down the mortgage quickly or if it increases in value so that you can use the equity to upgrade. I really cant see any advantage buying a property that will be slow to grow or not grow at all.

We all know that units and apartments in the CBD are oversupplied and have negative growth. Your choice of suburb may mean that your place will grow but I cant comment on Melbourne, I'll leave that for others.

 

Be careful, just being a CA/CPA does not mean you qualify. There are other criteria you must meet to be eligible. I would hate you to wait an extra six months only to find out can't get it, have a broker look at your individual situation.

 

My broker said I would qualify all other criteria.
However if we are to move towards rentvesting we won't wait 6 mths just for the LMI. Tired of waiting!

 

@Angel this property is rare, there's only so much 4 bedrooms units in inner north. The new build are vastly 1 or 2 bedrooms with sometimes a couple of 3 bedrooms. So I believe it will hold its value.
However you're right, the numbers don't add up for our end goal...

I'm so sick of looking at the wrong properties Getting excited about something in our price range then run the numbers and figuring it out it won't achieve what we need.
Sound like we need to reevaluate our selection criterias

 

Just got the contract of sale and the BC/rates quoted by the REA are way off the real numbers...
That just settled the discussion.

If anyone is interested in a 4 bedrooms unit in Inner North it's for sale on Saturday
27/9-19 Miller Street Fitzroy North Vic 3068 - Townhouse for Sale #122808818 - realestate.com.au

 

While you are right about the amount of debt staying the same, I would do this to avoid paying LMI.
If I wanted to build a large portfolio quickly, I might use a lower LVR and take the LMI hit, but because that is not the situation for me I would rather avoid the extra expense.

 

Fair enough, however whether you pay LMI or not does not change the fact it's a beneficial thing to do.

 

Nice unit!

 

Well no regret, it sold way over our budget. 915k