Hi KirstyL,

At some stage I was looking at small apartment for investment both e.t.c. "student accom" & hotel investment. But I find when I walk into a bank they usually will not offer a loan if the apartment is less than 50sq & I hope you're not looking at student aprt because the banks are not very favourable towards them, they see this kind of property as a "high risk" property due to the turn over rates of tenant I believe, the only bank that did gave me an offer was from ANZ at that time and they offered a 60% LVR, imagine how much cash/equity you need for a 60% LVR on a 200k property – 80k. And if I have 80k I would rather invest in a property that have good capital growth/cash flow. Not sure if this is still the same trend though, the last time I checked with the bank it was about a year ish ago. Some of the bank I checked with are CBA, ANZ, bankwest, Bank of Melb, St George.

That remind me of this great deal that came up for a studio for 100k, it was under bank mortage and the bank is trying to offload it, similar property was selling for 150k so I know it was a bargain, went to inspect the property and yup it was small, about 30sq, and the first thing the agent told everyone was, yes its cheap but the problem they had was no one could get finance…. Anyway I'm glad I didn't get it because I realised later that it was actually hard to offload the apartment, at least at that area. Mind you it had a  gd +ve cash flow.

I guess it really depends on your goals for both your portfolio. I know most apartment are good with +ve cash flow but most of them doesn't seems to have strong capital growth and is more difficult to sell off later if you bought one at a condense area.

Just my thought here if I have 40k to spend I'll get maybe a unit instead for the above reasons. You don't have to wait till you have 80% LVR to invest, I think as long as you can deal with the on-going servicing of your investment property comfortably then you'll even do with a 90% LVR.

But if guys decided to go ahead I suggest you get a good broker that understand the apartment section to advise you on your finance option as I've mentioned don't think it was easy to get finance for small apartment, but gd broker should know.

Hi Ryallsy, I'm in a similar situation so I thought I'll share some knowledge here.

The difference of using equity from your existing PPOR for your IP deposit is that you it will be tax deductible, happy days during tax return. Saying that just to bear in mind usually bank only allow you to pull out equity for your current property valuation less than 80% the loan currently owe, so just a quick example here. if your PPOR current valuation is 500k and you currently owe 355k, you can pull out 45k of equity.

Calculation I.E (500k / 0. – 355k = 45k

If 45k is enough for your next IP deposit then just pull out the equity for it and it'll be tax deductible. If 45k is not enough then you're best looking at paying down some or all your offset saving into your current PPOR loan to get the requied $ for your next IP deposit. By the way don't forget about other fees like stamp duty, solicitor e.t.c..

Regarding your question on either 10% or 20% LMI for an IP I've sent a few replies on the forum regarding this, some of the guys here doesn't really object doing 10% even though you incur LMI, my 2cents though on this was that by putting only 10% instead of 20% for your next IP deposit, you kinda "saved" the other 10% which you could leave it in your current offset account to reduce some interest you need to pay in the current loan and this also allows you to save up a tad faster for yet another IP down the road.

I was too happy telling everyone about this in office and someone said you'll be lucky enough if the banks hold onto their current rates and not increase them despite what rba rates are, lol.

Yea give Richard a try they're at Kenmore QLD not far from Brissy CBD, he's helping me with an IP purchase in Qld at the moment and have been a great help with his knowledge and quick responses.