Lake Albert is a nice suburb. The lake itself isn't spectacular but the suburb has a nice family feel about it.

I was there in Jan 2010 and don't recall seeing any construction at the shops – maybe it started after I was there.

It is a little further out, but nothing seems too far away in Wagga (I think the drive to the CBD was about 10 mins).

What are the numbers telling you? When investing in regional areas, such as Wagga, I'd be looking for a decent rental yield. I've have an Investement Property Analysis spreadsheet that my clients use – it will give you an idea of how much the property will cost you to hold per week. Just shoot me an email if you'd like a copy.

Cheers,

Jamie

There's better deals out there. As Banker said, if you go to $250k you'll be elligible for discounted rates with some lenders.

Homeside will be cheaper than those mentioned – 6.57%, $763 establishment fees, $10 p.m ongoing. It's about $20 cheaper per month than the Bwest Premium.

Jamie

You don't have to  come from a wealthy background to do well.

Read, read, read is my advice. Knowledge is key – so is a positive attitude.

I'd also get into the habit of saving each pay.

In a years time, you can use your knowledge, savings and the new $40k salary to buy your first property.

Cheers,

Jamie

Yep, Pete Tersteeg from Sage Lending – http://www.sagelending.com.au

He helped me build my portfolio before I became a broker my self. Extremely knowledgable broker and based in Melbourne.

Are they telling you top-up the LOC routinely (eg. once a year) and use it to make the repayments? If so, it's a dangerous strategy that's based on the property appreciating by a certain amount each year. What happens when that property has a year of negative growth?

1. Yep, if you want to increase cashflow then setting up an offset is the way to go. Basic benefits of offset acount – the amount of cash you have in your offset account will reduce your loan by that amount (the lower the loan amount, the less interest you pay). When you take this money out of your offset account, your loan will obviously increase. Offset accounts put you in control of your money – unlike a P&I loan, when you drive down some principle and want to access some of the equity, you need to refinance. With an offset, you can access the funds as you please. This is a simplistic explanation.

2. Yep, top-up this loan. Set up a second loan (or LOC) that will be used only for investment purposes. Depending on your current lender, you might be able to top-up to 90% of your properties value. You can this use these funds as a deposit towards your investment property. This way, you avoid cross collaterising your properties and it will make future property accumulation much easier.

Cheers,

Jamie

I don't see any problem with being geared at 85% LVR – differen't strokes for differen't folks. My portfolio is highly geared at present – as long as I can sleep at night I don't see a problem with it.

Gcamilleri, it sounds like the bank is trying to cross-collaterise your properties.
 
From an investing perspective, there's a much better way to structure your finances. At present, the bank will lend you money for your second property but will take both properties as security (this is the cross-collaterisation).  This can be a real nightmare in the future if you decide to accumulate more properties. Most investors avoid this like the plauge.

Instead, you want ONE loan covering ONE property – don't give the bank more security than they need.

Cheers,

Jamie

Congrats on deciding to delve into property investing – and an even bigger congrats for managing to save $50k, well done!

Personally, I'd opt for the second option – IO with offset account. It will give you more flexibility in the event that your investing strategy changes and you decide you want to access the additional repayments will little hassle.

More good signs

Hi Mandi,

Yep, you sure can. To give you better advice though, I'd need to grab some more details.

I assume you have a current mortgage on your PPOR? How much is this loan and what is the current value of your PPOR? How are you intending on paying for your next property (the soon to be PPOR)?

Cheers,

Jamie