Simon, there is definitely that option, and we have done that in the past.

I didn’t offer it as I didn’t know how good the current one was, but I guess another opinion will not hurt either way.

Cheers
Mel

Lozza, I think you need to reward yourself at times. There’s no point making yourself miserable now, so that in future you’ll maybe have some (hopefully lots!) spare cash to spend.

I think it’s a matter of balance.

Cheers
Mel

Cornel, is that the next deal that you have found and trying to finance, or just a ‘potential’ next deal?

Did they factor in the rental that you would get?

Might be time to look for an income partner if that is the case that you cannot borrow. Or sit back and start saving some dollars. There’s nothing says you absolutely have to buy in the next 30 days.

Cheers
Mel

James

The ato wouldn’t necessarily know, but i wouldn’t want to risk the chance of them auditing. I think one of the things they have been cracking down on lately is where landlords claim repairs etc. on IPs but it’s really been at their residence.

Cheers
Mel

Prop16

Are you saying that you want to use your LOC to purchase the No 2 and 3 houses outright, or use the cash in it as the deposits?

Either way is fine, and the fact that you have a LOC at that level suggests that the bank already thinks that you can service the debt. If you are using it for the deposits, the bank will probably take into account the payments on $190K anyway, plus the new loan you’re looking at.

Fudge, what Shaun said is correct.

Using your strategy. In year 1, you buy a house for $160K (borrowing all) – LVR 100%. You pay off say $30K, and maybe it rises in value by $5K to $165K. Your loan is now $130K (160 less your 30), and your new LVR is now 78%. In year 2, you pay off another $30K, and it increases in value by another $5K. Value is now $170K, loan is now $100K. LVR = 59%.

If you went to the bank and asked them either for a new loan of $136K (80% of $170K), they will do it in one of a couple of ways.

One way is as Shaun said, pay off the old loan, and have one loan now of $136K. This I would not recommend, as you would be using that extra $36K as the deposit for your next property, and one loan would make it a bit harder to work out your end of FY figures, especially if you are paying off the loans ASAP.

2nd way is (either LOC or standard) to ask them for a 2nd loan (same bank, same standard interest rates) for the $36K. This way, your accounting is easier as the loans are separated. May pay more in account keeping fees though.

Cheers
Mel

Congrats aussierogue! Good to hear that all is well.[]

Cheers
Mel

Good on you C2. I’m glad there are people around who won’t ‘sell their souls’ or any ‘secrets from the stars’ for money.

It’s a shame there aren’t more people like that. Look at Diana’s butler – the one who ‘knew her best’ (or something like that), so he writes a tell all book!!

Cheers
Mel

sunshine, without knowing any other details on the property, and therefore giving no opinion as to sell/hold etc., I hope that you are on a P&I loan, and can therefore save some $$ out of pocket by refinancing to IO.

If you are already on IO and it’s costing you $500 per month – ouch[]

Cheers
Mel

But alf, surely if the property was not completed, you hadn’t paid for it, and therefore there were no interest costs, so it didn’t matter if it was complete or not?

I know with some of our OTP purchases 2 years ago, we were cheering when there were delays, as we had a locked in price to purchase, values were rising all the time, and we had not had to pay any money (other than our deposit which was in cash, as we weren’t organised enough to have Dep Bond or Bank Guarantee).

Cheers
Mel

Magnet I think they do that in the States a lot, but the banks mustn’t hold the title the way they do here.

In your scenario you would not have the title of the property in your name (same as a wrap buyer I guess), so you would really want to have a contract drawn up to protect yourself in this case.

There would be stamp duty implications once you had title transferred, which you’d want to do sooner rather than later to draw on some of the equity that you have created.

I’d be very wary of this strategy. I think it would take a good solicitor, and a desperate seller to ensure you don’t get burnt.

Cheers
Mel