Hi K

It looks like you have enough equity to cover the next purchase – which I'd (personally) be inclined to use over cash due to it being deductible and cash being a good risk mitigator.

Whether you should sit on three properties with high LVR's comes down to your own risk profile and what you'd feel comfortable with.

From an equity point of view, it looks like the deal could be done. From a borrowing capacity point of view – there's not enough info to advise.

Cheers

Jamie

I know which broker I'd be going with.

I assume the broker that knew a thing or two about investment properties was the one that suggested they be set-up as stand alone?

Cheers

Jamie

New flooring can make a difference to both the yield and value.

I'd opt for something sturdy like floating floorboards over carpet – less wear and tear in my opinion. Also quite easy to lay yourself if you can be bothered.

Cheers

Jamie

Hi brokota

A couple of points regarding the structure.

Do you ever intend to buy another PPOR? If so, you should convert IP1 to interest only and stop paying down the principle.

Instead of using your cash to fund the deposit/costs on IP3, you could look at paying down one of your loans by $35k and then "reborrow" it which will make it deductible (cash isn't).  This will only work if the lender will allow you to access equity up to 90% LVR and the valuation on the property doesn't come in short (so hopefully you're with a lender that allows upfront valuations).

Cheers

Jamie

Hi and welcome to the forum.

What do you need and what can you afford?

Is the home just for you or for your family?

If you’re looking to purchase a second soon (and keep the first) you’ll need to know what your borrowing capacity looks like.

Cheers

Jamie

Hi winadil

If you redraw the funds from your PPOR loan it may be difficult to claim the deposit as a tax deduction because you've mixed it up with your PPOR loan.

The cleaner option is to arrange a second loan against your PPOR. This loan will act as the deposit/costs on your investment property – the remaining funds is then set up as a third loan.

So it would look like this:

Loan 1: Current PPOR loan
Loan 2: Equity release against PPOR (usually enough to cover the 20% deposit and costs)
Loan 3: Separate loan against IP (the remaining 80%)

Loans 2 and 3 should be set up as interest only (no point paying down this deductible debt whilst you still have non deductible debt in the form of your current PPOR loan).

Hope that helps.

Cheers

Jamie

Not a great deal different. One might look a bit prettier than the other but all of these desktop val programs generally draw the same data. They can be handy as part of an overall due dilligence process but shouldn't be relied upon too much. They're just statistical estimates after all.

Cheers

Jamie

You need to work out what's best for you.

Is the townhouse in an area that could achieve capital growth in the future? Will that growth make up for the short to medium term holding costs?

Your brokers structure sounds fine.

I'm not surprised the real estate agent provided that advice – he/she wants to sell your property.

Cheers

Jamie

Hi Steve

I don't know about the areas so can't offer much help there.

What I can recommend, and what's worked for me and quite a few clients, is searching for properties that you can add value to. Preferably something that only requires cost effective, cosmetic renovations. This way, you can manufacture your own equity instead of waiting for capital growth to kick in.

You can then leverage this newly created equity to move forward with the next purchase….and so on.

I'd also look to invest in an area that shows signs of achieving capital growth. There's not much point in having a large portfolio of $200k properties that aren't growing in value – unless of course the rental yield is high (which even then, it would need to be a pretty impressive yield spread over quite a few properties to provide any sort of decent passive income).

Cheers

Jamie

Hi Karl

Welcome aboard.

What's your longer term plan? I assume being on an investment forum you're considering building a portfolio?

I actually don't mind paying mortgage insurance  – if leveraged correctly it can be a great way to quickly build a portfolio.

You asked for links – so here some are:

This about leveraging mortgage insurance.

Why a 20% deposit is not always a good idea.

Hope these help.

p.s – a financial planner is not the right person for your situation – instead you should speak with a decent broker about your future plans and what's achievable (I know, I know – sounds biased).

Cheers

Jamie