G'day
I am currently in the process of looking around for a 2nd Investment property in Brisbane. We (myself and brother) have managed to rake up about 110 gs in the first house, and feel the time has come to start building up the things.
So what is the best way to go about financing the 2nd IP? We are planning to buy and hold all future properties, and I think basically we have 2 options;
1. Use House 1 equity for a deposit on house 2, how much I don't know, or
2. Save an independent deposit on house 2 and refrain from rausing equity from house 1So if option 1 is the go, then what is the best amount to send over i.e. As much as we can until house 1 is 80% LVR, or $60,000, or the minimum required for house 2 deposit etc.
We rent out rooms to students, and currently, house 1's rent is paying the interest. House 2 will have an IO/Offset Loan, and be simular to House 1 (townhouse, 3/4 bedrooms). Do you think it be best to set 2 up in the same, neutral manner? or is there a considerable benefit running 2 a negatively geared job?
And a tip for all the studenteers – foxtel is the best investment , because it replaces boredom which leads to shenanigans.
Willso
G’day Wilso
I’d tap into the equity in property 1 for the deposit – I would take out a separate loan against it that covers the 20% deposit + costs on the next purchase. You could then apply with the same lender or another for the remaining 80%. This clean structure keeps both properties separate – ie. one is not securing the other.
I’d avoid using your own cash for a deposit because it won’t be deductible and from a risk mitigation perspective it’s good to have some cash stashed away – preferably in an offset account.
One issue I can foresee with the student accomo is that the lender may consider it be like a boarding house – which they’re not fans of.
I’d keep both loans IO (as their both securing investments) and have an offset attached to one of them. Place any spare cash in the offset.
Feel free to shoot me an email if you would like a hand with setting it up.
Hope that helps.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I think the second option is better – saving an independent deposit on house 2. It will give you more flexibility.
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