Hi everyone
we are a young family with two IP in geelong vic
one was purchased in 2012 for 260k currently rented for 290 a week (although the property manager suggested up to 320) as we needed the place to be rented out asap.
Our second IP was purchased in 2013 for 215k currently rented for 250 a week.
As we live on one income we managed to save only approx 12k at this stage.
We dont know whether we should save a bit more and purchase another property in the nxt few months that we know we will be getting tenants for something around 200k or under in melbourne like a unit or if we should aim to save further and purchase a house in melb under 700k in thr next few years.
We are happy to continue renting for the next few yrs as our job involves
travelling most of the time anyway so we are not after a family home for many yrs.
So far from reading posts i feel like we made a mistake of not going with a broker but only working with a loan manager at one of the major banks. It sounds like our borrowing power maybe increased if we go with a broker?
We are a young family and we are eager to learn more
from experienced investors!
Play conservatively for a while…
If not already, convert all loans to interest only with an offset account. As much as possible use offset account to save into. Save like mad and sit tight while learning more about property investing. You do not want to be a forced seller !! While you maybe ok at the moment, with interest rates at an all time low, think about how you will cope if
1) bread winner loses job
2) interest rates rise by 2%
3) you have a major vacancy…4+ months
Depending on how much equity you have, your current cash flow situation will not be positive by that much, if at all.
If you over commit now, and one of the above three events occurs how will you fare? No one is predicting that interest rates will rise at the moment, but in only two to three years time i am sure that the pundits will be telling us a different story.
What do you think will happen to the housing market when interest rates go up by 2%?
Put yourself in a position of strength, so that you can choose what to buy at a good price, rather than be a forced seller.
In the interim think about how you can increase the income from your current IP…granny flat / rent by the room / holiday accommodation etc.
Hi Bel
Welcome aboard
What are the estimate values and loan amounts against each property?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Bel2013 wrote:So far from reading posts i feel like we made a mistake of not going with a broker but only working with a loan manager at one of the major banks. It sounds like our borrowing power maybe increased if we go with a broker?You have taken the first steps which is more than most can claim, so well done.
Its possible the loans officer may have done the right thing buy you. To be certain get a broker experienced and knowledgeable with investment property finance to check for you.
If the structure isn't ideal it is possible to correct it before your next property purchase.
You are correct in saying that your borrowing power can be increased depending on the banks you have available to choose from as the borrowing capacity can vary considerably from bank to bank.
All the best.
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone MePerth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
Hi Bell,
-Firstly get in touch with a broker, Jamie is a really good operator and I highly recommend him.
– Doing some figures, correct me if I am wrong, be time you pay your loans, property management fees, council rates and other charges both IP would be cash flow negative every month?
If this is the case, do you think taking more debt on one income is the way to go? How about build your foundations on what you have already!????
From my point of view precession is the key to investing successfully, Sit down create a strong foundation and then build on from there!!!!
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
I’d recommend Jamie as well. currently assisting me with my loan and certainly knows his stuff and best way to structure the loans.
Thank you so much for all your thoughtful feedbacks!
We currently owe 218k on the 260k one
206k on the 215k one.
My husband deals with the property management fees + paying council rates and etc so I wont be be able to comment just yet how that affects us each month.
We are 1 income at present as I am on maternity leave, but hopefully next year I will be going back to either part time or full time work.
As suggested by most of you we will have a chat to Jamie also. Jamie are you based in Melbourne?
Bel2013 wrote:As suggested by most of you we will have a chat to Jamie also. Jamie are you based in Melbourne?
Hello again
Nope – not based in Melbourne but that doesn't matter providing you're ok with email/phone contact. In fact, most of my clients are based interstate – including many from this forum.
My only initial concern here is that there's not a lot of equity available. If your current lender allows you to borrow up to 90% of each properties value you'd be looking at a possible equity release of $16k against the first property and $0 against the second -which is probably not going to be enough to do anything with in terms of another IP purchase.
I also wouldn't look to use any savings right now – best to keep that $12k for a rainy day.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I am in agreeance with what most people have said. If you are a one income family you are going to put yourself in a lot of danger by buying a $700k house in Melbourne. My guesses are your mortgage would be much more than you are currently paying in rent.
Speaking with a broker like Jamie and see what your options are. You might want to look at trying to get into a cash flow neutral zone where the properties aren't costing you any money.
As someone has already said "you don't want to be a forced seller".
ps. There is always the option later down the line to sell off some of the smaller properties to buy the big house in Melbourne if that is what you really want
Ryan McLean | On Property
http://onproperty.com.au
Email Me
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