Hi Wombat

Welcome to the forum.

I've always been a fan of using as much of the banks money as possible and utilising LMI to grow the portfolio quickly. However, this doesn't work for everyone – it comes down to your own risk profile. If owning a couple of properties with high LVRs is going to stop you from sleeping at night, then I'd recommend you don't go down this path. If you believe you can afford to purchase both and aren't troubled with owning a couple of properties with higher LVRs, then I'd consider getting both.

Here's a blog entry on utlising LMI to grow the portfolio – http://www.passgo.com.au/blog/25-the-project/68-lenders-mortgage-insurance-lmi-a-good-or-bad-thing

Cheers

Jamie

Hi Sam

Sorry to hear of your situation.

I'd call a couple more property managers and ask for their take on the current market and whether they are having troubles renting them out.

As Colin mentioned above, it's also a great time to negotiate on your current loan as banks are fighting very hard at the moment to keep their market share – and expand where possible. To put it into perspective, we're are organising rates of 6.8% with ANZ at present (depending on the deal) and they are also covering the costs of refinancing to them (up to $1k).

Cheers

Jamie

Hi Mike

I own both types – and I have a preference towards option 1 type properties in Canberra.

Main reasons being the large land content and the ability to add value through basic, cosmetic renovations (which you will be able to depreciate). You could also look at extending – there could even be scope for sub division if the ACT govt. changes its planning policies in the future.

With option 2, you can't add value and the block is so tiny (which, in my opinion, will jeopardise future growth).

I also reckon you could achieve at least $450 p.w with option 1 – possibly more.

Cheers

Jamie

Hi Fredo

The last time I increased my cc limit they wanted to see all sources of income – including rental statements/lease agreements.

Cheers

Jamie

Good post – the idea that choice stand to make a fair bit of money out of the switch also challenges the whole notion of independence that they’ve built up over the years.

Cheers

Jamie

Hi again

Why do you need to sell?

I'm not sure of your borrowing capacity – but if you have sufficient equity, you may be able to use this equity as the deposit/purchasing costs for your new PPOR.

It's important that when tapping into this equity that you set it up as a second loan split (so you can distinguish your deductible debt from the non-deductible).

If you hold onto your PPOR – best to convert it to interest only as soon as possible.

It's difficult to comment further without more info – but hopefully that helps.

Cheers

Jamie

Hi Dragonflyz

Personally, I'd set it up as interest only with an offset and place all of your savings into the offset account. Why? Because it achieves the same result but also provides flexibility. Five years is a long time – you may change your mind and decide to keep this as an IP and buy another PPOR – hence the flexibility.

Cheers

Jamie

Are either of the properties tenanted?
Is one structurally better than the other?
Which one will cost more to renovate?
Hold old is each property?
What do locals think about either area?
Can you buy both?

Just a few questions off the top of my head that I’d be asking.

Cheers

Jamie

Hi again Sweeny

With the $100k cash out – you just need it to be set up in a way so as you’re not paying interest on it until it’s used. This can be done via Terry’s method above, by using a LOC or placing an offset against the loan and transferring the funds into the offset.

If you only use $80k for investment purposes – that $80k will be deductible. The remaining $20k will simply sit there until you use it.

Cheers

Jamie

Ahh that makes sense. I’ll let others answer that one – I’ve never been to a seminar.

Cheers

Jamie