Hello to all,
My name is andrew and i am 27 years old and have 1 investment property to my name…… My Biggest problem is wanting to start everything after reading Steve Mcnights book "from 0 to 130 properties in 3.5 years" but never following through, i defintiely have the drive but just need a push every now and then…
I purchased a positively geared property last year for $75,000 with a rental return of $150 a week from great tenants..Now i recently got it valued at over $120,000 which is a nice $45,000 equity in 1 year. My question now is that i intend to get married in the next couple of years or so which means i want to purchase another positively geared property for myslef now and also a property closer to home (sydney) negative geared property with my girlfriend.
My income is only $600 a week
Shares is $20,000
Equity is $45,000
Savings is $2,000My Question is can i borrow another $90,000 for an investment property now with my equity say 5% which is roughly $5000 which will pay for itslef and leave me with $40,000 equity and with that money purchase a neagtively geared property of $200,000 considering the first 2 properties are paying for themselves or does the bank have an issue with that because my income is only $600 a week… so will it still be feasible to pay the negative property with the 2 positive looking after it also….. amke sense i hope…..
help needed and any potential investors who would love to join forces and do it together as i have many goals to live out and hopefully keep purchaseing more like steve mcnight…….
thanks in advance
Hi
Serviceability is going to be tight – is that $600 pw before tax or after?
You may be able to squeeze in another IP now, but the third one may be a few pay rises away.
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
Hi Andrew,
The bank will look at the repayments per month, equity in the positively geared property you purchased and your salary.
Assuming you put a 10% deposit and make the two properties positively geared the bank will most likely won't lend you $200,000 because of your low salary. Especially if the negative property is evaluated under the purchase price and you having no deposit and wanting to finance 100% of the loan.
the best way to do it would be to wait 1 or 2 years for your second property to gain some value and history of having stable tenants or go together with your girlfriend and buy the negatively property so you will be able to purchase it.
michael
Terryw wrote:HiServiceability is going to be tight – is that $600 pw before tax or after?
You may be able to squeeze in another IP now, but the third one may be a few pay rises away.
thanks for the quick response guys…… i also didnt mention that the 2nd property i was looking for would also be a positively geared property also so does that mean the bank would look at that as a good thing considering this eg, my repayments to thebank would be roughly $115 a week just like my first property and my rental return would be around $150 a week like property 1 which gives me $35 extra after repayments .. so does that matter if iearn $600 a week or $800 cause i can service the loan without anymore money weekly………..and then in the future buy a property worth $200,000 and have repayments of roughly $315 a week minus the $35 each i have from the other 2 properties with a $600 a week pay packet that would equal
$600 a week pay paacket
$315 – $70(both properties)=$245 a week repayments …. now with those kind of repayments wouldnt that be possible to service all 3 properties with a wage of $600or do i have it totally wrong……
please i need advice …. thanks again in advance
Banks don't care whether a property is positive geared or not, but the more rent the better. They all have complex ways of calculating serviceability and most will only include about 80% of the rent, they also assume you will spend a certain amount each year on living expenses – roughly $15,000 pa for a single person. Then you have to declare credit card limits and most assume you are paying 3% of the limit each month. Plus some, most, assess the loan at a higher interest rate with some assuming you are paying PI too!
This can make things difficult.
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
thanks terry for your help,
but still a little confused.. So by what you are saying the only way i can get to own say 5 properties is if my income increases to around $1500 a week to be able to afford them roughly……isnt it possible to purchase another property by putting your first 1 up as like a gurantor for the 2nd property and the 3rd up from the guarantor of the 2nd…….
there must be another way to buy all these without them saying i cant afford it .. when i will be getting rents which are higher then what i would owe the bank coming in from the first 2 properties i will be able to afford it……thanks again
Hi andrew,
Don't get confused here. the basic principle the banks look at is as i mentioned earlier. If your salary is $1500 a week vs $600 obviously this will have a greater effect on how much you are able to borrow from the banks.
If you had i.e $1500 you will be able to purchase another 2 ip with some deposit down and having 2 ip that you purchased earlier acting as a security.
in your case i would still rent for another year or so at least as the syndey market isn't going to recover anytime yet (in most areas) so you will be able to utilise your money to buy more positively geared properties before you decide to purchase a home that you want to live in with your girlfriend.
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