Investment property loan, unemployed, large deposit

I would check the bodycorp and rates to make sure your purchase remains viable. Outside from that .. if you can manage the purchase with whatever income you are receiving, most lenders will take into account any allowance paid by the government as possible income.

I have had a cousin that couldnt borrow at all first time around and was receiving benefits from the government. However she did have an inheritance .. but nil ability to borrow.

My suggestion at the time was to buy at 100% buying small apartments and get as many as possible. She did this .. borrowing a small amount from family (a borrowing from family whilst still a borrowing is not officially against the title). So she managed to get two apartments at 90k a piece .. returning 150 per unit (7500pa). Nine months later she used the fact she had 100% in the two properties to borrow against them and purchase two more, returning roughly the same amount and borrowing the 180k in total .. lending against ONE of the two flats she had (its all the security they needed).

Summary .. in a year and a half .. 360k spread across four flats with one debt free should she need it .. and 31k in gross income. Not a bad deal for a two year stint with no existing previous income.

Disadvantages? They are relatively small flats in a country town. So the growth isnt ever going to be expected to be that great. However .. 90k for a 94sqm 2BR flat with a balcony, breakfast area and carspace is mighty good value. There is definitely an upside there. The council rates is almost TWICE what i'm paying on my investments for similar in Melbourne. I'm paying just under 700pa in rates .. she's paying 1600pa. Significant differences. Body corp works out roughly the same at about 350pq

Make sure you know your expenses and outcomes when heading into your purchase. And if you find issues with lending with no actual job .. approach vendor financing if necessary. Some people on lower investment levels may find that acceptable.

Your lending level increases dramatically with a job. Simple as that. You'll go from being able to borrow 90k max with no job and a residual 13k from government benefits .. to around 200k+ with a job more than 30,000. Of course .. that means increased bills to support .. but also .. very much increased gains to appreciate.

If the loan services without the use of PAYG income then there are lenders that can accept this. If you cannot show that you can service the loan then there are other options but I don't think they would suit what you are trying to do. 

Regards

Shahin

Yep sounds like a good option.

Even if you're living costs are low – banks will still assign a minimum living cost which they believe is suitable for a single adult (despite your costs possibly being lower).

Cheers

Jamie

I might have this arse backwards but back of the napkin suggests $5-8K net or around 2-2.5% return on capital invested before tax.

Where's the risk premium? Assuming $150k initial investment (inheritance) would generate on term deposit (4.7%) around $7k for no effort or risk.

It looks like she hasn't yet recovered costs (incl potential exit costs) and won't for another few years as well.

Given the current state of economies and the inherent risk that brings to a CG position there appears little if anything to warrant leveraging up to the neck for such a small return. Worse if adjusted for inflation.

Same rule – you will need to be able to show the bank you can service for your portion of the loan.

Regards

Shahin

Agreed – leave your parents out of it.  They've worked hard all their lives to pay off their home and feel comfortable.  Don't upset their applecart, you'll give them a heartattack from stress.