*We own our PPOR. Equity approx. $200k. (Have to get valuation to be more exact)
*Two bedroom home on 50acres.
*We were going to put a kit home in a different position on property and rent 2brm but thought this may be overcapitalizing.
*Are thinking of adding a couple of bedrooms to existing house as we don’t want to live here forever.(So build our “dream home” at a later time!)
*Also want to start buying IP’s
Opinions Please, on:
*What do we do first, renovate, buy IP or both.
*When we buy IP, should we use equity as deposits, closing costs, etc for several IP’s or
*should we use equity to buy 1 IP, pay off as much as we can on that one, use equity to buy next IP and so on, or
*Save deposit, then borrow for IP?
*Can anyone suggest a financial advisor, mortgage broker, someone who we can ask advice (Sunshine Coast/Gympie area)Kind Regards
Les[
]Hi Leswon,
Was going to let someone else have a go at this for you but….
Leveraging available equity off your existing property appeals most to me – this way you can (to a certain degree) have your cake and can eat it too.
One of the first issues you will face is how much security a lender will recognise in your property. I am sure it will be considered ‘rural’ and as such they will not, in the main, recognise it at 80% – so the ‘gold mine’ may not be as big as you think. One of the brokers will confirm or reject this assertion – it is possible that some of the less mainstream lenders may go close to 80%. I’ll await their learned opinion too.
Your long and short term goals will really determine what is right for you – with your short term goals being little stepping stones towards your long term success.
A key question is what is it you want from your existing property – given it is 50 acres I am sure there are some ‘lifestyle’ considerations to be had that will really determine what you can/want/need to do. How much have you ‘outgrown’ your existing property? Is there further ‘outgrowth’ to be had? manage in the future? How long before you become ‘too old’ to manage 50 acres? Is this an issue?
Do some research to determine what effect building a larger house or kit home will have on the value of your property. Consult local REA/valuers to get an idea before you committ to anything.
Over capitalisation may hold you back for an inordinate amount of time.
I cannot think of a reason for not using your equity to fund the ‘deposit and costs’.
The alternative (apart from buying under value) is to save your hard earned cash. Bear in mind these savings are post tax dollars and for every $100K of purchase you will need $25K (excluding LMI) – how long will it take you to save $25K?.
I use a broker who lives 400km away and I do all my business by phone/fax and email.
Unless you are a ‘face to face’ person then it isn’t necessary to see your broker on a regular basis. I am sure the brokers who regularly post here would look after your loan interests as distinct from being qualified and/or legally able to give financial advice.
Derek
Hi Derek,
Once again, thank you so much for your input. It is greatly appreciated.
Les []
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