Hi Lalibella,

Thanks for your comments. I know we are looking at a very large investment (and debt). One of the reasons for this is that we are very fortunate to be able to live rent free for the next year or two (my parents are moving overeseas and would like us to look after their home).

Hence, we will need to come up with approx $400 per month to cover the shortfall on 2 IP's – that's $200 per month for myself, and $200 for my partner. Given the no rental expenses, and our relatively high incomes, i think we should be able to cover this cost. We also aim to keep an emergency fund of $10k for anything that pops up unexpected (do most people do this?).

As for why we are looking at inner city property's – we know the melbourne market quite well, having already purchased a property, and prior to this rented a property within the same suburb. Hence, i guess there is a 'comfort' factor for buying the IP there – we know the tight rental market, and feel confident we can rent out our first property well, and any subsequent IP's.

In addition, we have found looking at property under $500k (and even higher than this) we are up against huge competition – first home buyers. We have seen many houses in this sub $500k bracket go for much higher prices, as first home buyers are 'desperate' to purchase, and many are purchasing with emotion. We are keen to avoid this bracket (although at the $600k price point, we will still not completely avoided this).

May i ask why you suggest using a different lender for each property? Also, is the best set up to have an interest only loan, with an off-set facililty so as to build up 'accessible' equity to use for the next purchase?

Thanks,

Fiona