Getting equity to buy Property 4

It doesn't matter if its interest only or not. Most banks offer free upfront valuations. Speak to your banker or broker and order an upfront valuations first to see how much equity you have. Its quick and its free.

Equity is calculated on the between 80% to 90% of the value. So lets say the property is worth $500,000 and your current loan against the property is $300,000. At 80% lend (which is $400,000) you will have $100,000 in equity ($400,000 minus current loan limit of $300,000). At 90% lend you have $150,000 in equity ($450,000 minus $300,000) but because the LVR is above 80% – you will be paying LMI which can be added to the loan (capitalised). 

In summary – start with the upfront valuation against all the properties to see what sort of equity you have. You may need to tap into a little equity from each property.

Being fixed doesn't mean you cannot set up a new loan with the same bank – and Benny's suggestion is good too.

Hi Christine

Who is the lender ?

Cheers

Yours in Finance

Hard to say what you've done at this point with the information provided.  What's the 3rd investment property?  what's the cashflow on each of these units?  You might want to inquire with each of your current lenders what kind of deals they can offer you to consolidate all of the loans with one lender.  You can sometimes do that in the states with minimal costs.  You have some excellent brokers responding here who can probably help you directly so its worth contacting them.  I hate debt and hate bankers even more.  These are all short term loans and what if the market tanks when they mature?  Then, you are stuck with no way to refinance.  Too my way of thinking, you are already too highly leveraged and shouldn't even be thinking of taking on a 4th property….especially with not much in cash reserves.  Doing so usually leads to trouble.

You might also want to consider raising private money for future investing.  That's what I do.  We pay our front-end partners 10% and half the profits on properties we purchase which we then renovate and rent as shared housing…before selling them off to passive investors.  The model works well and our front-end partners are secure and averaging 20% to 30% per deal.  We created a referral network to attract new investors by which we split our profits with referral partners 50/50.  It's a win-win model and while we don't make a ton of money per deal, it brings us a steady supply of funds.  The referral partners are able to monetize their social network and the investors can't earn these kinds of returns anywhere else.  Granted the properties we purchase in  the state are a ton cheaper than what you are looking at but the principles are the same.  Just be very careful that you have your bases fully covered on the properties you already own before you bite off more.  Have you thought about consolidating the other loans and paying off the $164k loan?  Happy New Year and happy investing!  Andy