Saved $200,000 and now ready to buy my first IP!

1. Definitely to use the $200k upfront in one go. Set yourself a long term goal and determine how much to use. Particularly with those loan amount – the LMI is not going to be overly high. So if the plan is to go to 95% LVR go hard and go early.

2. There are excellent buys in the $250k range in a lot of areas that are close to neutrally geared. Make sure you do your cashflow numbers and see how much you will be out of pocket. 

3. Plan a strategy for your portfolio – this may include a combination of strong cashflow properties and development sites. 

Regards

Shahin

Ability to access equity for future purchases is a big one. 

What's the point of using a no frills type lender who's going to save you $20 per month on loan repayments but not be willing to allow you to access equity for you next IP purchase? Sure you've saved a few dollars in the short term – but you've also lost the opportunity to purchase your next IP which may cost you more in the long run.

I have lots of clients come to me wanting to purchase an IP but their no frills, on-line lender with the super competitive rate are no longer conducive to their needs.

Cheers

Jamie

I agree……. its just logical to have more properties if you can afford the depoists on them. Imagine having one IP paid off and recieving $200 cashflow a week or 4 properties breaking even but growing by 5 or 10% pa. You may not be able to access the money unless you sell but you will be making a better profit. Plus the more properties you get the easier it all gets. Cheaper conveyancing, property management fees etc.

Hi well done on saving such a large amount so early in your life.

Like most of the advice I would caution anyone about using online services to set up any sort of structure themselves (trust, company etc) unless they are a trained accountant or really understand what they are doing. If you set it up in-correctly any mistakes you make have the potential to cost you greatly through tax implications later on so it is reccommended to go through a good accountant for this. 

Good luck.

I wouldn't call spending two years at your age procrastination. It sounds more like you have been setting yourself up and have reached the position you are now in through diligence and hard work rather than procrastination.

Making sure 'everything is correct from the beginning' is admirable but trying to be perfect can be a big hand brake on your plans. That is not to say be foolish and reckless, rather to let you know that you will probably make mistakes along the way. Just try and keep them to a minimum.

I would be interested in what your goal for 'financial independence' really looks like. Later in your post you talk about a passive income. Do you see your whole portfolio being cashflow positive? combined with growth property/ies? some more advanced strategies (renos, subdivisions, developments, and so on).

The question I am asking is what will your portfolio look like when you have finished accumulating property and how will you use your properties to be financially independent?

You may end up having all sorts of rubbish thrown at you. There are a great many agents who would not know a good investment property if it bit them on the proverbial. In my opinion a better approach would be to find agents (even consider a Buyers Agent) who are also property investors and have a lengthy chat with each of them. From these discussions you should be able to identify one you can work with and they can become your preferred agent.

Then tell them what parameters you have for your property and work from there. Mind you a word of caution, by law the agent is required to represent the best interests of the vendor and not you.

When talking to your broker and talk about step 2. Mortgage rates are only a small part of the bigger picture – it is more important to get loan structuring right from the beginning. Ask you broker how they will set up your loans for property number 2 and then 3 and so on. This will give you a pretty good idea of whether or not they are going to be able to work with you over the long haul.

Is this figure net or gross?

See my previous points about hot lists and agents. make sure you know what a 'hot' property looks like – this is where a scaffold or framework of your overall plan is invaluable. .

Hope this helps.

A lawyer! trusts are nothing but a bunch of legal obligations and rights.