Help a Noob

[WellnessWarrior]

Hi Everyone, I am relatively new to SS and property investing. I have been lurking around this site for a few months now and reading practically every thread. I have an extensive library of books I am steadily making my way through and I am getting things organised to see a mortgage broker very soon but thought some insight from members on here my help me.

Our situation:

We have no debt, we own our house in Sydney's inner west and although we dont have official valuations it would be estimated at around $1.3-1.5mil for our PPOR. We own this outright. Our income is currently gross $200,000/pa and will rise to somewhere around $250-300,000 when my wife ends maternity leave sometime next year. We have no savings as we just renovated our PPOR.

Is this enough information to assess what we might be able to achieve and how quickly in terms of number of loans/ IPS? We would like to start to purchase as many IP's as possible ( obviously finding them is the hard part). Our strategy is to have a mix of higher yielding positive cashflow properties with a few negatively geared but high capital gains expected IP's as well. I would like to get the +ve cash flow properties first to fuel further purchases but with talk of dropping negative gearing maybe I need to start with those? I guess knowing what we can borrow and how many loans we can get will ultimately determine strategy.

Can anyone assist us?

TIA

 

[j_p]

A mortgage broker will be able to give you specifics.

With your income and equity you could purchase over 5m worth of IPs without even incurring LMI costs.

Servicing should be OK too if you don't buy too negative.

Sky's the limit! Good luck.

 

[Jess Peletier]

Using equity you'll be able to make a good start, for sure - it looks like you're in a great position.

Depending what you want to achieve/how many IP's and how quickly you want to buy, it will be important to structure your lending to make sure you can access deposits when you want without having a big, mostly undrawn loan hindering your borrowing capacity.

A good broker will be able to help you plan it all out.

 

[Jamie M]

Hi TIA

You're in a great spot - both from an equity and servicing point of view.

With some careful structuring - you shouldn't hit a borrowing capacity wall any time soon and your available equity will enable you to accumulate a sizeable portfolio.

Don't rush though - continue to research and learn. When you're ready to go - find yourself a good accountant, finance person, BA (if necessary).

Cheers

Jamie

 

[Redom]

Great position to be in and leaves you with so much choice.

In terms of finance, no dramas. You'll be able to build a pretty significant portfolio (even with the latest changes to serviceability calculators). As others have mentioned, in your case, it may be worth considering the end goal at the very beginning and trying to work backwards from there. A finance person should be able to work with you to try and get you to your end goal and map out a pathway for how its all possible and what you'll need to do to get there. In saying that, things could easily change in terms of market environments between now and then, but that education process should assist in guiding you forward.

In terms of property purchases/investment strategies - fyi, you are right up euro73's client model. He's an NRAS operator that is a particularly useful product for a PAYG on 250k a year with significant amount of equity to play with. Purchase 10 of those and your yearly cash flow will increase by 100-120k and you'll all but wipe out your income tax. Positive cash flow and negative gearing. Have a read of one of his many posts to see how it works. Plenty of cons, but could be worth looking into given your situation.

Cheers,
Redom

 

[Shahin_Afarin]

Hi Everyone, I am relatively new to SS and property investing. I have been lurking around this site for a few months now and reading practically every thread. I have an extensive library of books I am steadily making my way through and I am getting things organised to see a mortgage broker very soon but thought some insight from members on here my help me.

Our situation:

We have no debt, we own our house in Sydney's inner west and although we dont have official valuations it would be estimated at around $1.3-1.5mil for our PPOR. We own this outright. Our income is currently gross $200,000/pa and will rise to somewhere around $250-300,000 when my wife ends maternity leave sometime next year. We have no savings as we just renovated our PPOR.

Is this enough information to assess what we might be able to achieve and how quickly in terms of number of loans/ IPS? We would like to start to purchase as many IP's as possible ( obviously finding them is the hard part). Our strategy is to have a mix of higher yielding positive cashflow properties with a few negatively geared but high capital gains expected IP's as well. I would like to get the +ve cash flow properties first to fuel further purchases but with talk of dropping negative gearing maybe I need to start with those? I guess knowing what we can borrow and how many loans we can get will ultimately determine strategy.

Can anyone assist us?

TIA

Lenders essentially look at 2 things at a high level 1. Equity and 2. Servicing.

Investors usually have one but not the other. You seem to have both which puts you in a strong spot.

I think that you are over thinking the whole cash-flow thing. You need to be grossing somewhere upwards of 10% for a property to have a neutral affect on your portfolio. I would focus on CG particularly since you are asset rich but thats a strategy thing and its very much horses for course.

I would follow these simple strategies throughout my portfolio journey:

1. Do not cross securitise your properties.
2. Draw upon the equity in your properties when and where possible. Don't leave this for tomorrow because you never know when your situation or the lender's lending appetite may change.
3. Keep the equity release loans separate and do no contaminate the tax deductibility of the loans.
4. Lender selection is key so make sure you use the "right" lenders that will support your chosen strategy or circumstances.

Two excellent brokers in Jaime and Redom have already replied and can certainly guide you in the right direction so I think its worth while having a chat to them.