Very True Linar but not to 200% of the purchase price.

Most private loans (and i actually do them from my Super Fund) are done at max 70% LVR.

Yes

Whilst of course we are keeping it simple i assume you have not considered any of the Building Write off if applicable.

Regretfully as the saying goes "Tell him he's dreaming".

Dont want to appear rude but it does not exist.

Mic

There is the problem immediately and thatis the structure of the loan.

Sure some lender has given you pre-approval (for thats worth) on $400K but they will be wanting to take your PPOR as security and that is the very reason why you dont cross collateralise your loans.

Needless to say it is in your lenders interestfor you to do so but you are correct if the apartment where to fall in price and the loan is crossed with your PPOR then your future borrowing is effected.

Structure it correctly with a standalone loan and this does not become an issue.

Your Broker shoudl be able to explain this to you.

Hi Mic

Welcome to the world of property investing.

The main hurdle is to make sure you start with the correct foundations so that you can build from there.

My prefered approach as Daniel has touched upon is a Line of Credit secured against the Principal place of residence which can then be used to draw down to cover your 20% deposit and acqusition costs on the new investment properties themselves.

Then separately you take out a interest only loan with 100% offset account linked to to a level of 80% of the purchase price of each of the investment properties.

The entity that you will use to purchase will vary depending on your circumstances.

Initially a Corporate Trustee maybe overkill for the first property and has certain disadvantages.

it all boils down to your own personal circumstance and the type of property you are looking at acquiring.

First thing is to set up the finance and then work from there.

Hi Daniel

Yes as i say with a DT no problems but MyRate wont touch HDT's.
Interesting on their website how they compare only the standard variable rate of other Banks when in reality no one borrows at that rate these days. 

Hate to say i think your book had not kept up with the GFC times.

In this day and age obtaining Prime finance is hard enough so anything out of the box has certainly gone bythe wayside.

I am with Terry wouldnt use all of your cash on deposits as you never now when you might need it.

Set up a line of credit against the home to fund the deposit and acquisition costs and then each of the standalone investment loans can be interest only with a 100% offset account against them. 

Alternative is to use your cash as security for a 100% investment loan (combination of property and Term deposit) and keep the PPOR totally unencumbered.

Just make sure if you are buying cash flow positive properties that you structure the ownership correctly to maximise your taxable income.

As Terry mentioned as long as the rent is a Commercial rent then you will be fine.

The question on what is market rent will differ from tenant to tenant and landlord to landlord.
If you were using a managing agent you would factor in their costs and charges to the rent.
The same would apply if you were paying for the gardens to be mainained when it should be the Tenants responsibility.

Renting to family members you might decide that Landlords insurance was not necessary and therefore prepared to take a lower rent that normal due to the reduced risk.

All i am saying is you cant give it away.