Hi all,
I'm new to the forum and just purchased my first IP two months ago in Elizabeth Bay (Sydney). I borrowed at a 95% LVR with LMI capitalised, with net yield of 4.75% and an interest rate of 5%, it will most likely be positively geared after depreciation and tax. I also used my FHBG to reduce my deposit/equity and avoid stamp duty. With the left over money i have, i am looking into to buy another IP around the inner city. I would only be able to fund my next purchase if i can get another loan with an LVR of 95% and LMI capitalised.
Despite the banks reducing their max LVRs for new customers to 90%, my broker says he can get the 95% lend for me from my exisiting bank.
Do people think i'm overgearing? Is it common for investors to continually accumulate property on high LVRs without getting into too much trouble.
I'm only 22 and would expect my income to grow strongly over the next few years to cover interest costs for an expanding portfolio. Does anyone have any overgearing experiences or advice for me? I understand that gearing multiplies profits and losses, but im confident i can get enough capital growth in the assets i buy to make the numbers stack up.
Fuzz.
I'm new to the forum and just purchased my first IP two months ago in Elizabeth Bay (Sydney). I borrowed at a 95% LVR with LMI capitalised, with net yield of 4.75% and an interest rate of 5%, it will most likely be positively geared after depreciation and tax. I also used my FHBG to reduce my deposit/equity and avoid stamp duty. With the left over money i have, i am looking into to buy another IP around the inner city. I would only be able to fund my next purchase if i can get another loan with an LVR of 95% and LMI capitalised.
Despite the banks reducing their max LVRs for new customers to 90%, my broker says he can get the 95% lend for me from my exisiting bank.
Do people think i'm overgearing? Is it common for investors to continually accumulate property on high LVRs without getting into too much trouble.
I'm only 22 and would expect my income to grow strongly over the next few years to cover interest costs for an expanding portfolio. Does anyone have any overgearing experiences or advice for me? I understand that gearing multiplies profits and losses, but im confident i can get enough capital growth in the assets i buy to make the numbers stack up.
Fuzz.