Hi all! Just wondering if I could get some advice from anyone willing to provide any (it'd be greatly appreciated). My circumstances. I currently have two properties (1 PPR, 1 IP). PPR: Single storey 5 BR, 3 Bath (2 master BR), 2.5 car garage in 576sqm block Mickleham. Loan $487k, estimated value 610k. Purchased land in May 16. IP: 4BR, 2 Bath, 2 car garage 369sqm block in Armstrong Creek. Loan $380k, just got revalued by CBRE for $520. Should be close to cash flow neutral or slightly negative before tax benefits once it's rented for ~$430 p/week. Purchased land in Jan 17. Total equity is $262k, but releasable equity is a meagre ~$40k. I have around $5k savings after doing two properties in quick succession after all deposits etc. But, I would love another property in the next 6-12 months. Once my IP is rented out, I should be able to save around $1.5-2k p/month (currently on ~$123k package). My question is, is my goal of another property achievable? Not sure i could borrow anything over $400k based on the bank stretching to lend me $380k for my IP. I've been eyeing off areas like Margate, Clontarf in QLD due to not wanting to pay much landtax in VIC, but would love a property in vic. Looking for something with good yield and some capital growth potential. I could rent out 2 rooms of my PPR, but i've sacrified a lot of my 34 years living at home to save money etc. so I love living alone in the house. I have no kids or wife/gf and isn't imminent on changing... so my life is pretty vanilla. My goal is to accumulate as many properties as I possibly can in the next 10 years. 10 properties in 10 years (2029), including the 2 i currently have. Any advice on what I could do next would be greatly appreciated
I'm assuming you've been going directly to banks so far for loans? If so, I would suggest you reach out to one of the brokers on this forum who can help you structure loans with lenders and show you a roadmap on how you can continue build your portfolio. By the sounds of it, your savings will be the main limiting resource to prevent you from moving forward with your next IP. So ask your broker to see if he can also help you with releasing the $40K equity on your existing property, so you can use that as deposit towards your next IP. Not a bad position to be in though so well done on achieving what you have to-date Cheers, David
I'm pretty much in the same boat as you. Considered renting out the empty rooms but I've come to enjoy and really appreciate coming home to my own quiet space after work. I'm currently trying to knock off my ppor loan as fast as possible and for the time being have no plans to add to my portfolio, beyond my PPOR and 1 IP. 10 properties in 10 years is very ambitious and I'm sure with your determination you can get there. Good luck!
Step 1 is see a broker if you haven’t already. A broker will establish two key things that will dictate your next move. 1 - what is your borrowing capacity. Without the ability to service more debt your equity/savings is fairly irrelevant. Establishing this will also dictate your next purchase price point which translates to area. 2 - What is the true lendable values of your properties. You have some values there but what are they from? A REA a single bank Val? A broker can order you multiple Val’s, free of charge and you may be shocked by the variations. Your 30k at one bank might be 80k at another. Also I have never been a fan of a number of properties. It’s an irrelevant number. It’s the goal of owning properties that needs to be established. For example I want to earn X amount of income from properties. I want to have X amount of value that I can then sell down to fund my retirement. Once you know this then you can start to establish what properties you need to make this happen. As an example I could go out right now and buy 10 shack properties. Does this do anything to achieve my goals?
Yes - it'll be an equity loan or LOC, and once the $40k is used then will need to start paying interest (assuming equity loan is setup as IO repayment). Cheers, David
Aside from the advice you have gotten so far.......... the forgotten non deductible debt .............. Perhaps look at how you could slice that down really quickly with an active debt recycle strategy, might slice 5 or 10 years off that sucker if it suits your risk profile As an aside, if your tight on equity, a valuer shop may reveal some better outcomes for the IP side, but a good DR strategy and loan set up doesnt need much if any equity to start with . ta rolf
