Options to get in to Brisbane

After buying my PPOR a few months back and since speaking with a broker, my borrowing capacity is not very high. I could maybe stretch another 90k to 150k on top of where I am now. In hindsight I should have continued renting and bought IP's instead, but I have made my bed. My problem is that having done extensive reading and learning these past couple of years I'm now pretty eager to get an IP in Brisbane. The fear of missing the boat is definitely there but I'm willing to do something about it.

So I'm here to crowdsource ideas on what I can do do expedite my savings rate/get investing ready sooner. Without having done any real due diligence I anticipate that the property alone is going to be in the vicinity of 300k to 350k (to acquire something that is worthwhile).

Here are the ideas floating around in my my head at the moment:
  • Add value to existing PPOR (in progress via renovations). Tap into any extra equity that results from this.
  • Put a tenant in the second bedroom but remain as my PPOR (aiming to do this in 2 months time).
  • Get a depreciation report done once a tenant is in to minimise my tax bill.
  • Alternatively, convert the property into an IP and rent somewhere else.
  • Cancel the 16k credit card capacity I have before applying for more finance.
  • Get a second job (not an ideal scenario but something I would consider)

Other things worth mentioning:
  • I'm sitting at around 86%ish LVR on PPOR (from memory)
  • I'm impatient
  • If I put a tenant in the spare room my mortgage out of pockets would then become approx $16k p/a. - $1k of tax benefits from depreciation report (complete and utter guess) = net out of pocket $15k
  • If I move out and fully lease the property my mortgage out of pockets would then become approx $7k (negatively geared) + $10k to pay my rent (assume 200pw) + $1k worth of disruption (guess) - $4,500 annual tax benefits = net $13.5k out of pocket. These are guesstimations.
  • Ideally would like to follow a yardney approach to investing (buy into markets at the right time (i.e. Brisbane), buy below market value, buy something that I can add value to, in an area with consistent demand, limits to supply + infrastructure drivers). Capital gain being the objective.

So to the collective Somersoft hive-mind - what else can/should I be doing?
 
You haven't mentioned your current loan, but changing to IO repayments will allow you to save the principal part toward your IP and will help a little with serviceability if you haven't done that already.
 
Alright so going from your comment your issue is capacity, so thats what you need to focus on.

my borrowing capacity is not very high. I could maybe stretch another 90k to 150k on top of where I am now.

[*]Add value to existing PPOR (in progress via renovations). Tap into any extra equity that results from this.

This will give you extra equity, but do you have an issue with equity and servicing/capacity or just capacity. Be cautious of overcapitalising on renovations. Dollars spent doens't always equal same amount of equity gain.

[*]Put a tenant in the second bedroom but remain as my PPOR (aiming to do this in 2 months time)

This will help your personal finances, but speak with your broker to ensure that this income will be able to be used. Some banks wont use it, some will, some will want a tax return completed showing this income is declared.

[*]Get a depreciation report done once a tenant is in to minimise my tax bill.

Will increase personal finances but not capacity for the bank. (only can be done if IP)

[*]Alternatively, convert the property into an IP and rent somewhere else.

This is senario you should be running through with your broker. No point moving out if it still doesn't get you to where you would like to be.

[*]Cancel the 16k credit card capacity I have before applying for more finance.

This is a no brainer, doesn't usually need to be done prior a lot of the time can be done within the application itself. Remembering bank takes into account the limit not balance. Some banks with strong applications will overlook the limit if you have good repayment history (not paying interest etc)

[*]Get a second job (not an ideal scenario but something I would consider)

This is going to increase your capacity the most. I would strong recommend if you're having troubles with your capacity, increasing your income is the best thing you can do.
 
According to your broker............are you servicing ( ie income dependent ) or equity ( deposit dependent).

What is your personal budget position vs what a lender says ?

no point borrowing a motza more and not being able to repay

ta
rolf
 
You haven't mentioned your current loan, but changing to IO repayments will allow you to save the principal part toward your IP and will help a little with serviceability if you haven't done that already.

Yep good point, my broker did actually mention that idea. I'll most likely do this closer to when I'm ready to buy (as it comes with a fee, I'm still renovating and really I've only just taken out the loan a few months ago).
 
This is going to increase your capacity the most. I would strong recommend if you're having troubles with your capacity, increasing your income is the best thing you can do.

Thanks for the insight. I was afraid that might be the answer. More income it is. I think the issue is my 406k mortgage on 465k property on less than 6 figure income.
 
are you servicing ( ie income dependent ) or equity ( deposit dependent).

Not entirely sure what you mean here sorry?

Personal position I would comfortably sustain a negatively geared property (<$8k) assuming tenant income from my spare room. Still doable without the tenant income though. But even a $350k property with 4% yield is only a couple of grand in the red on a 90% loan at 5%.
 
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