No Equity, No Cash....How can I get my first IP...

Hi,

I just recently purchased my first PPOR. :D

But unfortunatley i have no equity atm and have no extra cash, but am just wondering if people purchase more properties in this situation. It seems like you would have to wait for ages before getting into another one.

I was looking at trying to purchase a cheap C+ property, but am not sure how to get finance as I have just purchased my house.

I was thinking of possibly doing one of these following options....

1. Just sit and pay off as much as i can in my mortgage until i get to that 20% level and do some basic renovation work to bring up the value, so will take me the longest. (Landscaping/plastering of internal walls/cleanup)

2. Borrow some cash (personal loan) to do my renovations and then (fingers crossed) get the place re-valued so i can purchase another property.

3. Borrow (say 20%) some cash for a deposit/lmi/stamp duty etc and loan from another lender, but only give them 5%-10% (minimum) and put the rest back into my home for rainy day.......

4. Learn more about this SMSF loan thing, as my super is so crap and doing nothing.


ALso, i am looking at moving out after the FHOG time limit finishes and renting a place, so i was hoping by this time next year to have 2 x IPs. :)

Is it achievable with no equity and no cash at this time and has anyone done anything like this?


Thanks in advance.
 
nowork, the fact you probably also used the FHOG to purchase your first home, and have no cash, shows that you have a very poor savings record. I would just concentrate on paying off some of your current loan before you start thinking about getting another property.

i have no equity atm - Just sit and pay off as much as i can in my mortgage until i get to that 20% level
Sounds like you almost got a 100% loan as it is.
 
Yep.

revisit the whole thing in another 12 months when you've saved some cash and whittled down the home loan a bit.

To go into some exotic or high risk enterprise to borrow 100% for the first IP right now would be very dangerous in my opinion.

Borrowing money to do some renos in the hope of a higher reval is good in a boom market, but we are not in one.
 
nowork
have you got a clean cra and have you got a reasonable job or income.
if yes to the above then there are other ways that are not for a board.
 
1. Just sit and pay off as much as i can in my mortgage until i get to that 20% level
If you have any intention of making this place an IP in the future - DO NOT do this! Save by all means, but don't use it to pay down a mortgage on a place that will become an IP. Use an offset account.

Learn more about this SMSF loan thing, as my super is so crap and doing nothing.
It is always good to learn more. Depending on the balance of your SMSF it may be either a good or not so good thing to do.

Cheers,
 
Thanks for your comments. I think for now, i will build up my offset.

I have a clean credit rating, and a good job with my income growing.

I do plan to turn my current home into an IP as i plan to work overseas in a couple of years.
 
I agree with the comments in this thread. It is wise to use an offset account, get some cash behind you. Don't loose sight that even though people call some debt "good" (e.g. tax deductible) it still does involve risk. Having seen the stock market "de-leverage" and wipe off 50% in value it is a clear reminder of how dangerous debt can be. Anyone with a margin loan over the past year will agree...

In regards to having an SMSF, my view is that you need north of $200k in the fund for this to stack up (this can be accross 4 members). Once you have some cash behind you and accumulated a resonable balance in your SMSF you can do some interesting stuff with your super.

Good luck with your investing!

_________________
Ryan Love
Director
Apex Partners
 
Hi,

I just recently purchased my first PPOR. :D

But unfortunatley i have no equity atm and have no extra cash, but am just wondering if people purchase more properties in this situation. It seems like you would have to wait for ages before getting into another one.

I was looking at trying to purchase a cheap C+ property, but am not sure how to get finance as I have just purchased my house.

I was thinking of possibly doing one of these following options....

1. Just sit and pay off as much as i can in my mortgage until i get to that 20% level and do some basic renovation work to bring up the value, so will take me the longest. (Landscaping/plastering of internal walls/cleanup)

2. Borrow some cash (personal loan) to do my renovations and then (fingers crossed) get the place re-valued so i can purchase another property.

3. Borrow (say 20%) some cash for a deposit/lmi/stamp duty etc and loan from another lender, but only give them 5%-10% (minimum) and put the rest back into my home for rainy day.......

4. Learn more about this SMSF loan thing, as my super is so crap and doing nothing.


ALso, i am looking at moving out after the FHOG time limit finishes and renting a place, so i was hoping by this time next year to have 2 x IPs. :)

Is it achievable with no equity and no cash at this time and has anyone done anything like this?


Thanks in advance.



Yeah settle down crikey , be greatful that you now have your very own place and enjoy that for awhile.
Give it a yr or two ' atleast ' and get on your feet.

Cheers
 
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