I’ve just found my dream property today in Sydney. I plan to purchase it as an IP.
Property portfolio currently stands at $1 mil, with $460K I/O mortgage. This dream property is approx $550k. If I borrow to purchase the dream property, my property portfolio will be about $1.5 mil, with $1 million debt.
Obtaining finance is the problem, current lender will only loan max of $750K. I’ll also need an extra $70K to refurbish dream property.Is this possible with $70K available redraw, $60K cash and a salary of $120K? Interest on $1 million would be $77K, rental income about $40K.
Hi Mortgage Advisor,
Current lender is Macquarie. I got some line about them not making any profit on the loan because current interest rate is too competitive at 6.5% variable..Reason I had to go to Macqaurie in the first place is that I’m an IT contractor, therefore not permanently employed. I’ve been contracting for 2 years now.
Thanks
Swampy 30
G’day, i’ve just read your two post, and still am only an ametuer in the property investing market, just some still looking at the numbers, but you said that the interest is 70K and that your rent is 40K(i take it this is the entire rent from all your properties) but this means that each year you are negative gearing and losing 30K per year, which is tax deductible. Just wondering how these properties are making you money?
Cheers,
DamienDamien
I think you will find that this property is costing Swampy money ie. negatively geared. Not all posters on this forum are strictly positive cash flow investors. I have 4 properties and only two are +ve CF. To me it is a question of diversifying if you can afford it. In your situation though, I would suggest +ve CF only until you have an enough income to support a -ve geared property.
You will see various strategies on here, just keep an open mind and you will discover that +ve CF may not always be the only strategy to use to create wealth. -ve gearing works well in capital cities and large regional centres when you are guaranteed good growth.
Good luck, I wish you all the best in your property investing dreams.
“Life is not a journey to the grave with the intention of arriving safely in a handsome and well preserved body, but better to skid in sideways, thoroughly used, totally worn out and loudly proclaiming . …… Hell, what a trip !!”
Sounds like you a little over geared. Why dont you sell an investment property or two. Get the dream home under control then try and cash up for the opportunities that will exist in 2-3 yrs time.
Damien,
Like Rugby I’ve got a mix of properties. While I’m drawing a salary and paying lots of tax I’m happy to have negatively geared properties in great spots. One IP I’ve got in Sydney is worth $800K and rents out for $500pw. On the face of it, a dumb investment.
It’s a renovated 1900 terrace in Annandale, though (that’s where people who can’t afford Balmain buy). Over the last 5 years, it has shuffled up in value by an average of around $70K per year. And there’s good depreciation in the renovation i.e. a non-cash deduction.
I’ll hang onto it for as long as I’m paying tax. Of course, having said all that I freely admit I’m not the most savvy of investors – I probably need to read some books on investing.
None of this helps Swampy, though. Sorry. One of the brokers will sort you out.Scott
Swampy,
I’m surprised that, on an income of 120k, you are only able to borrow 750k. wow- some of the people on here have an income of pretty much nothing, and tell tales of borrowing millions!
I would imagine you should be able to buy your dream property as your LVR would still only be @ 70%. I reckon a good Mortgage Broker on here could sort you out
kay henry
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