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Ok thanks guys for the input. I will take a copy of these points raised to my broker for advice and discuss our options regrding a smaller deposit for the IP.
Of course Richard I will seek advice from professionals in due course, my friend has built his portfolio over 15 years and generates $6000 a week in rental income so when a person with that level of investment experience speaks, I listen, as I do to all.
Yes I live in PPOR and it is interest only and I plan to be there for approx 5 more years. In that 5 years I hope to buy 2 IP's so when we move and upgrade there will be 3 IP's and a new PPOR. So the plan is to constantly expand.
Can you explain
"Saving up a 20% deposit on an IP when you intend to upgrade your PPOR down the track does not make financial sense" more please?My thoughts are that if I pay a 20% deposit the IP may be $200 a month negatively geared. If I pay a 10% deposit it may be $400-500 a month negatively geared and I can only see option 2 running at more of a loss than option 1 after deductions which will ultimately leave me with less buying power in the future…
I understand tax breaks and deductions but I am yet to see the major advantages of being heavily negative and leaving myself with less money to save and expand with.
Excellent and speedy responses thank you so much.
To give a little more info on my situation – I purchased the PPOR in Dec of 2010 for $396K with a 10% deposit so there is no equity to use for IP investments at this stage, sadly I have to use hard earned and saved cash for the time being.
Given that it's a cash only option is it best to put it onto the existing loan and refinance through that equity?
Advice given from a friend who has built a healthy portfolio suggested going with a 20% deposit to avoid the LMI, I was planning on saving up the 20% (and closing costs) and going from there.
Keep the suggestions coming, thanks!
Thanks for the responses
They are very much the responses I was expecting, it's up to me to make that first move, then I can ask for guidance on a particular technique.
I will devote time to working on exact goals this next break from work and decide on an action plan.
Keep the responses coming and any links to additional info is greatly appreciated.
Thanks
A piece of property is something I would hold onto for the rest of my life to use as equity or a capital gains reward in 30 years, so yes it is a long term investment.
Valid info about the savings and employment, I will take that into consideration.
Any other thoughts out there?
