Are you scared of buying more IPs? Instead of having ...............

Are you scared of buying more IPs? Instead of having two steady incomes and pre-aproval of 90% of loan.
We pay mortgage for our PPOR and 3 IPs. We still want to buy one more IP. Total taxable income is $150K and mortgage for PPOR is $22000 and topping up $23000 to pay interest/rates etc for 3 IPs (Rent income after PM fees$52400 and interest+rates etc $75600). I did some maths for expenses, We still can afford to buy more IPs, but if one of us loose job and income drops to half or lower, how can we pay mortgage? There was a property next to my IP, but because of this dilemma we could not put offer even though we had pre-aproval of 90% loan. I am thinking ......Why didn’t we put offer? What stopped us buying another IP?

The answer was the FEAR............

The fear of losing income? The fear of not be able to pay mortgage? The fear of raising interest rates? The fear of uncertainties? or..........

I do not know, but we missed an opportunity. Has anybody gone through the same dilemma like this? Is there anybody among us who has stopped buying more IPs because of these FEARs? How can you overcome these fears?

Thanks.............
 
Yes, I could buy IP2 at the moment if I really wanted to, by accessing equity in my PPOR, but I prefer to keep my total LVR under 80% for comfort. It's just me, so I'm already on a single salary and depend solely on myself, so of course it scares me if I lost my job, it'd be pretty uncomfortable. Where I take comfort, is that I have a cash buffer which I am still building up, and I have a job that I believe is secure and I work in an industry where hopefully it wouldn't take long to get another job if I had to. So once I have enough savings to keep some cash aside and a deposit for the next IP, only then will I buy. I'm in my early 30's so believe I still have some time up my sleeve, would rather do it slowly and steadily rather than dive in the deep end and find myself drowning.

I think you need to prepare yourself for the rough times, but not let them put you off entirely. Delay a purchase if you need to, whilst you save more or whatever you need to do to have a strategy in place if things go bad. If one of you lost your job for example, hopefully it'd only be temporary, so you just need a plan in place of how you would see that period through. Remember, the bad times (hopefully) don't last forever.

Just one more point, not sure where you are in your life, but if you are wanting to have children in the near future, I'd probably think very carefully about buying another IP. Chances are you'll be on a single income for at least a period of time and you'd want to make sure you can survive and aren't in over your heads on that single income. Don't put investments ahead of your family (if that's what your future plans include).
 
Fear is good. It lets you know you are alive. It causes you to question things and take active steps toward risk management.

Just don't let the fear overcome you - it has it's place, but there will ALWAYS be some kind of reason why you shouldn't do something; you need to ensure you fear does not override you judgement and stop you acting when you should.

I live in constant 'fear' ;) - It can be very persuasive at times (nearly didn't buy my PPOR 3 times, even when I was signing I nearly backed out). My tip is to look at the absolute worst case senario and ask yourself, can I live with that? Then you will have you answer as to whether you should proceed or not.
 
Just thought I would add that we are essentially a single income family (my income is minimal at best), and we are just about to jump back up to a 93% LVR, provided interest rates don't jump up too much and we are still servicable for the loan and we can get a 95%LVR on this purchase, when our IP is ready for settlement. If we cann't get the fund to complete for whatever reason, we will loose our 10% deposit. Am I scared? Hell YES!!!
But isn't that what make this all so much fun? :D
 
I can see , we all have some sort of fear but Biggles: I like your quote.............the bad times (hopefully) don't last forever. And
Rugrat: Thanks for your tip that is “to look at the absolute worst case scenario and ask yourself, can I live with that? Then you will have you answer as to whether you should proceed or not”.
 
"Tough times don't last, tough people do"!

In your situation as long as you have enough buffer to last say 12 months with no payg income at all then i would be happy to proceed on the next IP.

I believe in buying at highest LVR you can and keep as much in the offset account as possible.

Good luck
 
too true BC

the FEAR may just have been common sense telling you that you were taking on too much risk and that these properties dont add up and you may be better off enjoying life
 
the FEAR may just have been common sense telling you that you were taking on too much risk and that these properties dont add up and you may be better off enjoying life

spot on.

now, if you were willing to live out of the back of your car on a Hume truckstop for a year to fund it, then i guess the fear would dissipate and you would be as keen as mustard to buy....right?

irrational fear means nothing. procrastination means nothing. fear of investing because you think you may not be able to afford it - well, that speaks volumes to me because chances are, you already KNOW you can't afford it.
 
irrational fear means nothing. procrastination means nothing. fear of investing because you think you may not be able to afford it - well, that speaks volumes to me because chances are, you already KNOW you can't afford it.

The problem arises when real fear becomes irrational. Fear may arise because of a legitimate reason, and yet still be out of proportion with reality.

I am afraid servicability will tighten up significantly and I won't get a loan, but that fear is actually a little irrational as it means that interest rates would have to rise around 2% in the next 5-6months. obviously it is a risk, but in reality it is extremely unlikely. There are also steps I can take to mitigate this risk, like increasing my income, which may help my SANF.

I always worry we cannot afford things, when in reality the funds are surplus. Probably has to do with growing up with no money....but I'll leave that for the shrinks' to decide. :D

The question really is "how can you tell if your fear is irrational or not?"
 
lets not get all psych 101 now.

fact is, if you have misgivings about it, then it isn't for you.

like the old saying - "when in doubt, stay out".
 
Total taxable income is $150K and mortgage for PPOR is $22000 and topping up $23000 to pay interest/rates etc for 3 IPs (Rent income after PM fees$52400 and interest+rates etc $75600).
I think you mean $220000, or that mortgage is even smaller than mine ... or is that what you pay per year? I'm so used to small numbers I get confused easily :)
 
FEAR has definitely found me.

I now have 5 mortgages. I’m on a single below average income. I’m supporting a dependant. The company I work for is always on the verge of going under. IR’s are rising. etc etc

I also FEAR growing old and having to live on the pension.

I still think about buying another as I have plenty of equity but have decided I really need to pay down some of my personal debt first, just so i can sleep at night again.

It sounds like you weren’t ready to make that purchase, there will be plenty more opportunities when you are ready. You will know when the time comes, you will feel the FEAR and do it anyway.

Good luck :)
 
I fear missing out on some great income and equity growth from the potential next deal like I did with that one I missed before ....

Fear keeps me motivated!
 
I fear missing out on some great income and equity growth from the potential next deal like I did with that one I missed before ....

Fear keeps me motivated!

I fear one day being swept up bullish mania, and forgeting that its not just a return on my investment that is important, but also a return of my investment.
 
“God, grant me the SERENITY to accept the things I cannot change, the COURAGE to change the things I can, and the WISDOM to know the difference.”

Instead of asking him/her/it to grant you the whatever;

just ask yourself to grant it.

At least you know you are real.
 
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