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You’ve got the theory side right, 20% down borrow 80% etc. But I think a lot of people on the forum underestimate the processes in setting up appropriate loan structures.
Most banks are more than willing to lend for 1 or 2 properties initially, based on the 80% lend, but to borrow larger amounts for more ip’s, you generally have to show them that you can manage both their money and the property effectively.
In time, when you’ve proven yourself, they are much more willing to lend you more. But short term, in your position I’d suggest getting any form of employment you can handle, show an increased joint income, then establish a working relationship with a lender to help you reach your goal of passive income from investment property.Finnie
Sounds like you have a good mix of enthusiasm and caution between the 2 of you. Try to encourage your partner to become more involved in property investing, more educated and with your natural positive outlook on things, you will probably find a happy medium.
Remember that it can’t happen too quickly for most people, and to be a full time property investor requires a lot of knowledge, and experience that can’t be learned overnight.Youre right in that you can ‘theoretically’ buy 8 i.p’s worth 100k each, working on the basis of 20% deposit. The banks will lend you the remainder that is required, but will have 1st mortgage over the property until you pay them back.
However, it is unlikely that a lender will finance all 8 at once. Take your time, find a good income producing property, take it to your lender and show them how this property MAKES YOU MONEY. After you do this a couple of times you develop a good history with them, they consider you a ‘good lend’ and then making money becomes a lot easier. Good LuckIt depends on your relationship with your lender. If you have a good history with a lender, and understands your situation, they wont consider passive income only as too rent reliant. I have recently walked away from my business to concentrate only on investing,as I have a comfortable passive income from I.P’s, but checked with the 2 banks I deal with to see their opinion on purely passive income. Both said no problem, that they look at more than just capacity to service loans. But I would suggest that you build a good working arrangement with a lender or 2, before leaving your day job.
Mate, I reckon it depends on your situation. If youre living at home and thats no dramas, then you can make the most of it and rent your property for as long as you can and either use your excess funds to pay the loan quicker or to finance a second property.
But if you need a place to live then personally, its great to live there, pay off as much as you can and in time, use that as well as the capital appreciation to borrw against, to fund investment property.
If you rent it out, and you need to pay rent elsewhere, it kind of defeats the purpose I reckon.Could’nt agree with you more mate. I’m 29, and have been fortunate enough to have a good education, financially from home to enable me to retire from working. But I did this with a view to be able to make a difference in exactly what youre saying. To much emphasis is placed on scholastic results, rather than giving lessons in life!
There are some many good kids who have so much potential in the “school of life”, but have no confidence in themselves and do not gain any for years and years because the education system tells them they are not intelligent in whatever field.
I would love to make changes in these areas, but where do you start?
