Hey FXD,

Yes, having lots of money always helps 😂

As a side note, I always calculate gearing on 100% of the costs, regardless of the LVR, because my money could work somewhere else instead (for example, offset another mortgage).

The lender will look at your salary and at the rental of the existing and new properties. They will take into account 100% of your salary but only part of the rental. This is for prime and for low doc. The more income you show, the better, it’s just that not all of it is recognised (for example, some lenders recognise 100% of commissions, others only 80% etc).

Buying via a company (so that the company gets the rental money) has its own extra costs AND if your payslips are from a company you own, the lender will want financial reports of that company and will discover that the income is derived from rental. That’s not the way I would go.

The experts to talk to about such matters are finance/mortgage brokers. Situations like yours are perhaps the main benefit we bring to the table. I would suggest considering a broker that walks the talk, i. e. an investor as well. It helps when they know first hand what you’re talking about, I reckon 😎

Hope this helps?

Cheers,
Ethan

Hey mate,

Thanks for sharing and sorry for your loss and pain. Definitely not cool.

Yeah, the ‘malicious acts’ clause is a real gotcha. Some policies today state in their summary if they include such acts. Those policies that don’t, usually don’t mention it (except somewhere along in page xx, as you found).

Definitely something for all of us to pay attention to.

Thanks again for sharing.
Ethan

Sure thing, alway happy to help.

I still learn a lot just by looking at properties and running the numbers. Most properties I don’t end up buying but I do learn something from most of them anyway :-)

Will be happy to read more on your progress as your journey progresses.

All the best,
Ethan

danechch wrote:

Hey guys,
I am new to property investment and looking at buying my first investment property but have no idea if I have enough equity or how much I need etc. I want to buy a townhouse around the 280k mark, I have my own house that got valued at 450k month or so ago and i owe 405k on it so 10% equity which is 45k. Is this enough to buy a 280k investment property or do I need more? Any help greatly appreciated!

Hi Dan,

If your existing equity is only 10%, doubt you could use much of it, if it all. I personally wouldn’t bother unless the new valuation is much higher?

To buy an IP at the $280k mark, you would need at least 5% + the purchasing costs (which I usually calculate as 5%) = 10% = 28K.

Hope this helps? :-)

Cheers,
Ethan

Hey mate,

My 2c are that after all the theories, hands-on experience is the next step.

You don’t have to buy in order to get some experience!

You can find potential properties that are for sale and that their value can be increased and start crunching the numbers on those specific properties. You can call tradies, surveyors, real estate agents, anyone you need. I’m sure at least some will be happy to help in order to get a serial investor as their client.

Hope this helps? 😊

Cheers,
Ethan

Completely agree with Benny. I would just add that buying properties for so cheap would usually mean that the end profit (after reno) would probably not be too high, in dollar amount.

That said, starting small could be perfect, then gradually building up to more expensive properties (the amount of effort is about the same for 60k property and 600k but the profit amount in the latter should be much bigger). We also started at the cheapest properties we found but today we don’t bother with such properties due to the above.

Hope this helps? 😊

Cheers,
Ethan

Mikey66 wrote:

Great insights guys loving it!
Ì was planning on buying a Postive cashflow property. I found a few where even if I used a 5% deposit which I won’t it will still be cashflow positive.Thanks again for all your help and thoughts!

Yeah, love these forums too 😍

As one investor to another, I always calculate the cashflow on 100% of the cost, not just the mortgage bit (because my money could have sat and offset another mortgage instead of serving as a deposit on this property, if that makes sense?).

Is this going to be your first IP?

Wishing us all a great long weekend!
Ethan