!!  Are you serious??   This sounds very awesome w4l… are you converting the whole building or just one hotel room?

Either way, it might be an idea to consider refinancing the Joondalup property to be an IP loan, and pull some money out of it (then the costs associated with the property would be deductible).  This money could be used to get rid of the investment loan in shares & managed funds, while you rent something to live in elsewhere.  Or it could be used to get you into another property.

It might be an idea to have a chat to a mortgage broker to understand whether you would have enough borrowing capacity to get another place at this stage or not.  You wouldn't have to actually submit a loan application.  Just have the conversation.

You might consider the following option:

Refinance the unit to be an investment property loan, and rent it out. 

If you are really precious about it, sure, buy another house for yourselves to live in.  Put as much cash in as you can, keeping the debt on the IP high.    However, it could work out cheaper for your second property to be another IP, an in fact for the pair of you to rent something for yourselves to live in.  That way, you'd have two IPs, both of which have expenses that are tax deductable.  (If you live in one of your properties, the expenses for that property are not deductible.) 

Anyway, it's an idea for you to consider and research…

… not necessarily so.  apparently if you have more than $5500 in ready cash, you are ineligible.  Refer here:
http://www.centrelink.gov.au/internet/internet.nsf/payments/newstart_iat.htm

I recall once upon a time when a friend of mine was made redundant from his job.  Someone advised him to immediately put his cash onto his homeloan so that it would not be assessible income for benefits.  Had he not done this, he would have received no assistance.

Where are you living that is demanding this $1800 per month of rent?!

What help is Centrelink providing at the moment?  Are you receiving an unemployment or disability benefit?  Do you have concession cards that give you discounts on medication, household bills, car registration etc?

Where are your medical appointments located?

Can you arrange for it to be the case that you have less than 10% in your bank account then?  It seems that if you can do that, then you'll get your letter of rejection.  Maybe that is illegal.  Does anyone know if it is legal to do that? Or in fact would a loan offer letter offering 85% achieve the same result?  (Because 85% is not the required 90% as specified by the subject to finance clause in the contract of sale.)

Hi Thomas

You mention you are a 17 year old student.  Does this mean you are in high school or university?  Do you have an income in the form of a part-time job or otherwise?  The bank will probably insist on seeing an income stream before dishing out money.  If you have no income stream, what is the plan if the tenant in your investment property fails to pay rent, or if there is an unexpected cost associated with the property?  (Perhaps a plumbing problem…)

When do you plan to no longer be a student, and instead be in the workforce?

If you are unlikely to have an income stream for a while, an idea to add to the mix might be considering buying something "Off the plan", which means you are buying something that is still under construction, or proposed to be constructed.  You pay a small amount, and  the balance is not due until the property is completed in a year or two.  It is important to be careful such properties are not overvalued, or in fact that there are too many of them, causing a situation where there are more properties (of its kind at least), than there are available tenants to live in them.  I read recently that it can be possible to buy a deposit bond or bank deposit for say, $2500, which secures the property (you'd still want to ensure the bank was prepared to loan the rest tho!), but you don't have to find any other money until the property is completed.  Hopefully by that stage it has gone up in value and you can refinance with the bank, thereby getting a higher loan-to-value ratio.

Another possibility is doing a joint venture – perhaps with someone that has access to money or has equity in a property.  You could offer to do your bit with the cash you have, and also doing a lot of the legwork in finding a suitable property, and perhaps doing some minor renovation work, based on your skillset.