Stuck…need help

Hi Jprop,

To me, forcing Equity growth is way easier than saving. As such, the more of your own cash you can retain (to put into reno’s to add value) the better. The flip side is that, with the Equity growth, this provides the deposit/costs to “do it again”. Re LMI, the cost of having it is laughably small. So if you can get it, do consider using it. What is the interest cost of an extra $10k on a mortgage for LMI if it allows you to keep $50k in your back pocket to do renos? It is tiny in the scheme of things.

Tied up with all that is serviceability though. Positive gearing is a darn good start, but so too is a regular income while you go through your accumulation phase. Once the accumulation is complete, consolidation (paying down the debts) is next.

Spoke to my broker and he said serviceability and capacity is there to borrow 300k but would need to draw on the equity of the two properties for the 20% deposit.

Sounds good to me – check whether you have the serviceability to handle another purchase – if another positive geared buy, that will help. Your broker (or one of ours) would be able to give you chapter and verse – just beware of getting both houses on one loan though. You DON’T want to go that way. It might seem easier NOW, but it could tie you up tight further down the track.

It is called “cross-collateralisation” or x-coll – and you don’t want to go there. Be sure your broker KNOWS that !!

Have a read of this pointer:-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/#post-4697974

And, having done that, do read on down that thread – there are some pretty neat “pointers” for newer investors, including (just a posts further on) a story of a young bloke who used positive geared property to set himself up – in LESS than 2 years. It is a good read !!! ;)

Hope that helps some…

Benny

Hi again,

Right now is where talking to me won’t help. The MB’s on here can likely give you all of those answers, and I do know there have been changes recently that might make 90% loans harder to get. But impossible? I am not sure for regional properties – but I keep hearing that “some” lenders are not as hard as others….

Check with some of the MB’s who pop in and offer their thoughts. Hopefully, one or two might follow me up since I am struggling and be able to offer you good value. Look in their signature areas to see “Who’s who”,

Benny

Hi Jad,

We wrote about LMI here if you want to have a read and see what I think.

Definitely stand alone properties. No doubt there.

Presuming you could borrow 88% (usually that’s the sweet spot as far as not paying too much LMI) on your existing properties and that’s enough for a 25% of the new property (20% deposit + 5% purchasing fees), then you should be good in that aspect. Your broker should be able to run the numbers and make it happen 👍😎

CF+ is great for cashflow but wealth is with capital growth.

Could you elaborate on your current strategy? Ok, so you buy x properties that are CF+, then what? Sit and wait for the low capital growth to bring you to a point where you could refinance and buy another property? That could take a very long time… 😁

Hey mate,

Each situation is different but generally speaking I like to manufacture myself the growth of my property. This can be done in various ways and it’s not only a lot of fun but very profitable as well. So you could buy a CF- property in a high growth area, turn it into CF+ quite quickly and enjoy the ride. It’s a double win! 👍😎