LVR Start Up %

[Coota9]

Need some advise on what LVR to fund my first investment property at as I have approx 200k in equity I have drawn out of my PPOR into a LOC loan.
As I see it I am paying interest on entire borrowings as I only have equity as a deposit and not cash,will it make sense to gear to 90% and pay the LMI as my plan is to buy and hold.
Will the loan limit me moving forward,I understand it will slow me down as far as equity release on properties I purchase.

Regards
Michael

 

[Rolf Latham]

Hi Coota

Not enough data..........

getting the right LVR and lender mix out of the starting blocks is important ifyou want to build a big portfolio.

If you want to have a couple of Ips, then it doesnt really matter too much, but maximising your resources requires a fair bit of thought on where you want to be in Xyears time


ta
rolf

 

[Shahin_Afarin]

1. Whats the purchase price range?
2. How many properties do you plan to buy in the next 5-7 years and how much will you need in development/building/construction costs (if any)?
3. What is your risk tolerance?

Lot of questions in order to narrow down a strategy/answer.

The last thing you want is to be highly geared for your liking or to run out of cash (different ends of the spectrum).

 

[Coota9]

Detail below

Looking at investment purchases below

*Purchase 3 properties within the next 12 months 320-350k
*After 12 months purchase 1 property per year
*Purchase in growth area with new properties to maximise depreciation

Regards
Coota

 

[Rolf Latham]

and your approx gross income would be pls?

ta
rolf

 

[Shahin_Afarin]

I would also look at your age, personal risk tolerance, etc but purely on those numbers I personally would be looking 90% LVR's and keep the excess cash in the offset in case I want to develop or construct at a later stage.

 

[Coota9]

Rolf,

Sent you pm

Michael

 

[Peter_Tersteeg]

Detail below

Looking at investment purchases below

*Purchase 3 properties within the next 12 months 320-350k
*After 12 months purchase 1 property per year
*Purchase in growth area with new properties to maximise depreciation

Regards
Coota

Assuming your borrowing capacity is high enough to make these purchases, the funds you've got probably aren't quite enough to make these purchase with 80% loans. It's close, but you may fall a little short and you certainly wouldn't have enough funds to buy a 4th property within the next 12 months (excluding capital gains in the first 3 properties prior to purchase 4).

You probably want to look to stretch your funds to meet your goals for at least the next 18 months, which probably means you'll need to borrow at 90% for each purchase.

 

[Aaron_C]

Given the lowish price ranges going for LMI loans may be advisable. Need to check servicing etc.