I think you’ll find most of metro Perth will be negatively geared, but obviously the higher the purchase price the larger the negative gearing generally! Clients have been finding mostly yields <5% across the metro areas, with some inner suburbs floating around the 2-3% mark.

In any case if you make a purchase be sure to have your loan setup correctly, otherwise you’ll have a costly mistake when it comes time to purchase your PPOR. Setup your loans as interest only with an offset account attached for any extra repayments, so when time comes to make your dream PPOR purchase, you can access all your offset funds for your deposit, minimising your non deductible PPOR loan, whilst maximising deductible debt.

Have a chat with a savvy finance broker specialising in investment properties if you haven’t already so they can make sure your finances assist with your future goals.

Is the intention to generate an increase in total asset value from titling each unit? Determine how much it costs to achieve, any increase in ongoing costs and whether this justifies the increase.

I’ve had some clients achieve fantastic results in metro areas doing this, achieving 80-100% increases in value, but these were purchased well before the popularity of unit blocks set in, so didn’t get slugged with the premiums which can be found on many blocks today.

Get the tenants to pay property manager until end date, then agent can provide statement of accounts for hand over.

Good luck to your father self managing, switch over is the least of his worries!

Jaryd be sure to have a strong look over the strata details. Some apartment blocks have run-away strata fees which keep rapidly rising, eating away any profit. Naturally these usually are complexes with gyms, pools, spas etc.

I’ve seen apartments advertised as 7% yields, only to decrease to 3.54% after all costs are taken into consideration.

Hi Tracey,

How many units in the block?

That’s a common problem when you look at multi level sites with shares pools, gyms, saunas, tennis courts etc. Strata costs will only go one way too, up.

Has the property declined in value since the purchase? For LMI to be liable on a refinance in that scenario the LVR would need to have increased and or $ value of the loan in the meantime.

If you refinance before an official maintenance figure they will factor full expenses for your children being covered by yourself.

Unfortunately this is a type of scenario that I (and I’m sure a lot of brokers) get to deal with quite often. Your situation may be tight but your ability to service any payout will largely depend on the lender. Have a chat with a broker who can look at your scenario and provide you with options. In the meantime be sure to keep your payment history clean, a single missed payment on a mortgage in recent history can unravel some of the simplest deals.

Hi Maddy,

Make sure you build yourself a good team of related professions, including finance, solicitors/conveyancers/accountant etc. Get your finance in order if you haven’t already. A good broker will be able to set out a plan for your finance structure to make sure you first purchase helps the 2nd, 3rd, 4th and onwards by being placed with the right lender from the start. Remembering that interest rate isn’t the most important thing with portfolio finance. :)

And great work taking the effort to enter the market at a young age, I’ve got a lot of younger clients who are building their property portfolios in leaps and bounds, it’s great to see!