I have just recently been given access to $51K line of credit loan. So I have been shopping for IP’s. I have found a property that is break even but in my view will have a short term capital gain for $73k…yipee! My dilema is do I pay the 20% deposit or payout for Mortgage Insurance and conserve my LOC finance for further purchases?
Comments appreciated..I like the get it while you can concept.
It will be easier to qualify for LMI when starting out, so you might be better off stretching your deposits further.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Brettso,
There’s a card in Cashflow 202, to paraphrase it says…’Fantastic property deal – while you think about it, the player on your right snatches the deal from between your fingers – pass this card to the person on your right’.
I suggest you consider this deal in the same light.
Grab it or lose it
Cheers,
Aceyducey
Brettso
What is your exit strategy? If you plan to hold long-term then I agree with Terry in borrowing as much as you can and keeping your funds for further deals.
On the other hand, if you plan to sell in the short term why incur further costs that will eat into your profit margin? Even though you can get some of the LMI premium back if you exit under 6 months, you still won’t get all of it back.
Comes back to exit strategy.
Good Luck!
Brendon
Acute Mortgage Reductions
http://www.acutemr.com.au
[email protected]Hi Guys,
Thanks for your comments even though I had to think Aceducey about losing the card to the player on my right scenario…Do you mean get Mortgage Insurance whilst it is available to me? The Mortgage Insurance isn’t dependent whether i get the deal or not, only to preserve available funds for further deals. Am I limited to how many policies I can take up?
Answer to Geronimo and TerryW, Yes I think I’m in this for the long haul. 5- 10 years and using the equity on these properties hopefully as well to find more properties.
Am I thinking OK?
regards Brettso
[confused2][eh]Brettso,
My comment was around how long you are spending thinking about the deal. If it’s a good deal put in an offer fast, worry about the amount of cash you’re putting in while you’re going through the price negotiations.
As you’re in this for the long haul it’s generally better to buy as many properties as possible when starting out…the leverage is better. At the same time you’ll be learning from each so spread out the purchases a little
BTW – long haul is really 20-30 years….5-10 is not long enough…you barely get through a single property cycle!
Cheers,
Aceyducey
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