Les
Reply: 1
From: Mike .
Re: SHOULD I BUY MORE !!!???
From: Les
Date: 11/11/99
Time: 11:53:54 PM
Remote Name: 205.180.243.66
G'day PLL,
They look like a very cheerful set of figures to me. It certainly looks like another property or two is quite a possibility. As for "how much?" - that is harder to gauge - you would need to consider what percentage of the Home Loan is actually for Investment property. What we really need to know is "Are the current properties cashflow positive, or negative?" And, with your income, I would seriously consider bringing them back to negative (I "assume" they may well be positive right now).
There are too many unknowns to determine your cashflow (based on %age of investment component in your own home loan) so let me simply suggest that your overall LVR% is around 55% - which is very healthy. Your second Inv. property has LVR around 30% which allows (probably) a substantial redraw of funds to purchase one (or two) more. And a "knee jerk" quick and dirty guess would be to say "Borrow that one back up to 70% - giving $100,000 as deposit and costs on another property worth $350 - $400k (75% LVR, so no LMI).
Even that may not get you back to a negative cashflow (depending on the Investment component in your Home Loan) so you could conceivably borrow/buy another.
And, of course, negative cashflows are handy when you are on a high income, but so are nights when you sleep well - it's a trade-off, and a very individual thing.
Re IO loans, you've virtually got that with the Credit Card loans you already have (with a SLIGHTLY higher Interest rate). Re Fixed, I've personally NOT fixed mine ..... Yet! I keep seeing words that say the economy is NOT ready to head for the stratosphere, and neither are Interest Rates, so I'm on 6.35% - but to go Fixed would cost 7.9% (that's a BIG hike, and I believe an unjustifiably big hike).
But, there are others that say "Fix anyway" and plenty of them - so go the way YOU feel happiest with.
Come back with a little more info if you wish - it would allow a more detailed answer.
Regards, Les