How much can we borrow for 1st IP?

[auror]

We have spotted a pretty decent IP, should be able to buy for around $750k, being rented out at $900 per week. That's pretty rare, isn't it? I believe normally a $750k property can only be rented out around $650 pw.

This would be our 1st IP.

We have 20% deposit for this IP, plus a buffer of $30K, so how hard is it to obtain an 80% LVR loan for this property? (ie. borrow $600k)?

Hubby and I both earn 65k pa including super but before tax, but we owe $500k already on our house which is sitting at 80% LVR as well. I thought the banks were tightening their belts since the credit crunch?

Cheers all

 

[ok180]

You should be able to borrow that amount no problem with a 20% deposit. Where is this located anyway and have you made sure you can rent it for that amount or is this what the RE agent told you?

 

[Rolf Latham]

Hiya

Make sure though you structure the PPOR loan so that you get max advanatge.

That is split it so you can put back the 20 % cash deposit inot your non deductible debt, and then redraw it.

if you have the 20 % as cash do NOT simply use this as deposit .

ta
rolf

 

[auror]

Hmmmmmmm, our PPOR loan is IO and the 20% cash deposit is sitting in the offset attached to the PPOR loan. So it is in cash right now. You're saying not to use it as a deposit on the IP loan? I guess this is because once it's committed as a deposit, it's locked away.

 

[Rolf Latham]

Hiya

The 20 % tax paid cash ( assumption ?) should stay working against the non ded debt. If you use it for the deposit straight up without the "recycle" and flush you will lose tax dedutability on that 20 %.

if you first reduce your PPOR loan by that 20 % and then re borrow with a new loan split, you will have reduced your non ded by 20, increased your de debt by 20, and your overall debt burden hasnt changed.

Shouldnt be hard to get that done with the lender/broker.

ta
rolf

 

[auror]

thanks Rolf for explaining it so clearly. Will get our broker onto it

ok180, the property is in Sydney, will post more about it if the deal goes ahead!

 

[auror]

After some conclusion - it's way too much work for hubby and I. Reselling this IP might not be that easy as it's 2 houses on 1 block, either.

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007600632

Probably should look for a more "standard" IP considering this is our 1st one.

Cheers

 

[Joe C]

After some conclusion - it's way too much work for hubby and I. Reselling this IP might not be that easy as it's 2 houses on 1 block, either.

http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007600632

Probably should look for a more "standard" IP considering this is our 1st one.

Cheers

Not many pictures, but looks like its just one big house?

Couldn't subdivide or something?

 

[Propertunity]

Probably should look for a more "standard" IP considering this is our 1st one.Cheers

auror, IMO you might do well with your first IP to look for something cash flow +ve like this one:
http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2007964804

$400K purchase for rental of $350 house + $210 flat. These kinds of deals are just so good as IPs because they cost you nothing to hold.