Hi Everyone,
Love the forums here and really enjoy the advice my PI comrades have (unknowingly!) imparted to me
I'm fairly new to the PI game so please forgive my rookie-esque naivety here, though I'm in a bit of a bind and would love some feedback/advice. You guys are awesome and are literally living the PI dream so would love to here it!
Here's the conundrum;
As most of the industry guru's say, one of the most important elements (if not THE most important) is the finance setup, before you even start doing any actual property research, right?
So, I only have one property; my PPOR which is currently setup as a P&I loan. The property value is $260K and the mortgage left owing is currently $138K.
Whilst this property is currently my PPOR, I intent to convert it to an IP in the next two months (planning to rent-share with friends elsewhere).
I've got a good $70K in equity that I plan to extract to use as a deposit on a second IP (meaning the mortgage on this first property will go up to $208K, still sitting at 80/20 LVR which is good).
Thing is, I met with my bank currently financing my loan. I can draw down this $70K no worries, but I can only do it if I cross collateralise both properties. I've been given a mixed bag of feedback/advice from friends on this; in short, is it bad? I don't like the idea of the loan being split across both IP's, but i do like the fees etc I avoid by keeping it under the one banks' roof outweigh the risks/negative (unless you guys can give me some negatives on doing this?)
My strategy is buy and hold so it's not like i'd be selling one of them off any time soon (and hence needing to refinance that loan at a high admin cost to do so).
I know it's in this bank's interest to advise on cross-collateralise, but is it a good or bad move to stay with this bank for IP #2? I'm getting a quote from a second lender and a statement of fees etc involved in setting them up as two separate loans etc, but it's looking more costly (though perhaps some of these finance costs are tax deductable expenses?)
FYI, my 'grandeur' PI dreams are to uptake 1 IP per year for the next ten years, so will cross-collateralistion come back to bite me on the bum when i get to IP #3, or #4, or #5? Will it make getting finance harder?
It's tough because i'm keen to get into the market for IP #2 but can't even LOOK until I get over this obstacle!
Would love to hear your feedback and even any experiences you can draw on to help me out.
Thanks guys and happy PI-ing
Cam
***Those who say it cannot be done must not interrupt those doing it***
Love the forums here and really enjoy the advice my PI comrades have (unknowingly!) imparted to me
I'm fairly new to the PI game so please forgive my rookie-esque naivety here, though I'm in a bit of a bind and would love some feedback/advice. You guys are awesome and are literally living the PI dream so would love to here it!
Here's the conundrum;
As most of the industry guru's say, one of the most important elements (if not THE most important) is the finance setup, before you even start doing any actual property research, right?
So, I only have one property; my PPOR which is currently setup as a P&I loan. The property value is $260K and the mortgage left owing is currently $138K.
Whilst this property is currently my PPOR, I intent to convert it to an IP in the next two months (planning to rent-share with friends elsewhere).
I've got a good $70K in equity that I plan to extract to use as a deposit on a second IP (meaning the mortgage on this first property will go up to $208K, still sitting at 80/20 LVR which is good).
Thing is, I met with my bank currently financing my loan. I can draw down this $70K no worries, but I can only do it if I cross collateralise both properties. I've been given a mixed bag of feedback/advice from friends on this; in short, is it bad? I don't like the idea of the loan being split across both IP's, but i do like the fees etc I avoid by keeping it under the one banks' roof outweigh the risks/negative (unless you guys can give me some negatives on doing this?)
My strategy is buy and hold so it's not like i'd be selling one of them off any time soon (and hence needing to refinance that loan at a high admin cost to do so).
I know it's in this bank's interest to advise on cross-collateralise, but is it a good or bad move to stay with this bank for IP #2? I'm getting a quote from a second lender and a statement of fees etc involved in setting them up as two separate loans etc, but it's looking more costly (though perhaps some of these finance costs are tax deductable expenses?)
FYI, my 'grandeur' PI dreams are to uptake 1 IP per year for the next ten years, so will cross-collateralistion come back to bite me on the bum when i get to IP #3, or #4, or #5? Will it make getting finance harder?
It's tough because i'm keen to get into the market for IP #2 but can't even LOOK until I get over this obstacle!
Would love to hear your feedback and even any experiences you can draw on to help me out.
Thanks guys and happy PI-ing
Cam
***Those who say it cannot be done must not interrupt those doing it***