Purchasing 2 at once.

I own my PPOR The bank value it at $445000 and I also $130000 in the bank.

I have now purchased 2 IP,S to be built.

Investment 1 Paid $175000 for land and $180000 for house to be built on.
Have loan for $337000 I will put in the rest $18000. $355000 Pakaged
Rent should be $350 to $370 At Skye

Investment 2 Paid $342500 spec home of 5% deposit pay the rest at completion Have approval for $300000
Rent should be $335 to $350 I will put in the rest $45000...
at Pakenham Devonia Lakeside

I am very new at this so my question,s are ,

The CBA say I should? Put my PPOR up as security.
Do I really have too.

Between my myself and the wife we earn $75000 per annum.

Have we over committed???

Everyone seem,s to talk about the bubble ...... I believe that there it will slow down or maybe a correction of sort,s.
due to supply and demand??

I am just showing a little bit of concern due to some people are saying I am doing the wrong thing at investing?
Just after some thought,s or advice
cheers
2atonce
 
What does your research tell you about whether you are over committed.

What I mean is your ability to service the loans (not predicting what the market will do).
Your LVR is only 5% but I do understand you will have new build tax deduction advantages.
What happens after 5 years if prices don't go up? Will you be able to afford the negative cash flow? How much equity do you have in your PPOR? I'm hoping you have the $130K in an offset account against the loan.

People will always say you are getting it wrong. There are lots of ways to make (and lose) money in real estate. Everyone's journeys different. Some people only buy in Blue Chip areas. Others buy housing commission and renovate. Neither is "wrong" but you need to do your research and decide what's right for you. I don't know much about buying new builds but I'm sure someone will have more comments.
Good luck on your journey.
 
I give the bank as l little security as possible so i can buy more. No point tying my money up with the bank when I need it.
Just when you dout your self think are the people who say you should not invest spending there money on junk ie instant posessions
Your figures add up to a good start.
 
The people who say your doing the wrong thing ... what's their investment pedigree? How many IP's do they have? What's their net worth?
You are in a very strong position. One which may well bring out some jealousy or envy in others.
There's hardly a housing bubble at the moment. The biggest problem faced at the moment is lack of supply.
You say your new to this, yet you are building 2 IP's. You're a developer, of sorts, now.
Only around 5% of the population have 1 or more IP's. The % gets smaller as you increase the number of IP's. You have 2, so you're already an expert of sorts, compared to the general population.
Follow your own judgement. Sounds like it's done well for you so far. It tends to only go awry when you start doubting yourself based on comments made by others who don't know your goals, circumstances, risk profile and objectives. They speak only from their own.
 
Without knowing the areas you are investing in - it all sound fine to me. EXCEPT for the cross-colaterisation that the CBA are asking for. Avoid it. Go and find yourself a good mortgage broker who has experience with investment properties and loan structuring, they are worth their weight in gold if you don't know much about these things.

There are some on SS who certainly know investment property.
 
I took the the big step for my concern of my 4 adult kid,s 23 years and under.

I am damned if I DO or don,t do
So I guess I am on for the ride.......

But the main question was or is Should my PPOR should be put up
security or in the long term does it not really matter.......
 
2@once check the posts on X col will answer a few questions
I never would have thought of cross colat it seemed a dumb thing to do however if it gets the job done do it
 
Hiya 2AT

Interesting and comon question

You can usually structure these things without your PPOR being used as direct or collateral security. Rarely is what the bank suggests to your advantage......I reckon that might bear thinking about.

Have a chat to a good independent mortgage broker and see what options you have available

Ta
rolf
 
Away from the security question (And Yes i bet the CBA wanted you to put your PPOR is as additional security) the question i would asking is why are you putting any of your own cash into the equasion.

Why would you not structure the deal in a manner where all 3 securities where geared to 100% + costs, you use your own cash to offset the interest and yet have each property standalone.

Doesnt sound to me like the Bank are acting in your best interest maybe in theirs.
 
Doesnt sound to me like the Bank are acting in your best interest maybe in theirs.

So under the NCPP, CBA in this regard could technically be in breach of " the borrower should not be disadvanted by a conflict of interest"

Will be interesting to see many things shake out that havent been sorted.

ta
rolf
 
Hi,

congrate 2atonce. Wife and I in the similar situation (2 at once and 1st time too).

CBA lender advises us to x col as they know nothing much abt tax return. what i have done is to use our PPOR and get a Line of Credit from the PPOR. the LOC will solely be used for IPs only. interest is slightly higher but it is worth it.

just bear in mind not to x col your PPOR and your IPs. it is a mess (i believe for tax return).

cheers.
 
Hi Scott

It is not just the Tax return which will cause you problems down the track but all sorts of issues in regards to security, debt reduction choices etc etc.
 
yes richard,

thanks for that. i am new into IP... :)

i think having a LOC, buying IP, i do not have to be locked to the same bank. my PPOR is with CBA, LOC with CBA too. but i can shop around for better deal... i think that is an advantage too. in the end, i am still with Cba to keep things easy for us.
 
Hello MFG

Did you end up doing 2 at once are they new build,s or established?
I have already signed of on all the contract,s and both houses will be getting done at pretty much the same time frame, I did end up x coll just to make things easy Because at this stage I have no intention of doing any more in the furture

ps i just thought I would read and review my post Russell
 
Only around 5% of the population have 1 or more IP's. The % gets smaller as you increase the number of IP's. You have 2, so you're already an expert of sorts, compared to the general population.
Figures released recently show 1 in 7 taxpayers (15%) own an investment property.

Your claim that owning two investment properties makes one an expert is preposterous.

2ATONCE, curious, if you personally think we are heading into a slowdown/correction, then with what gameplan have you bought these two properties?
 
Only around 5% of the population have 1 or more IP's. The % gets smaller as you increase the number of IP's. You have 2, so you're already an expert of sorts, compared to the general population.

What about those who don't have more an IP, but they may have a family of 7 people, who each own a PPOR. So when they sell their house, they don't pay 50% CGT...

I wonder if people actually worked out how much they are better off in 2 scenarios.. Having 3 IPs vs someone who only holds 1 PPOR in their name. Coz I know I have, and add to that, the new government rules on negative gearing (60%) and rent tax reduction (40%), pulls a huge hole against people who multiple negative geared IPs...

It's a good time to have lots of cash to invest, bad time to hold lots of debt (negative gear).
 
add to that, the new government rules on negative gearing (60%) and rent tax reduction (40%), pulls a huge hole against people who multiple negative geared IPs...
This was only a recommendation of the Henry review, it was not one of the recommendations that were accepted.
 
2ATONCE, curious, if you personally think we are heading into a slowdown/correction, then with what gameplan have you bought these two properties?
Reply With Quote My game plan is to keep the IP,s for at least 7 year,s I believe property will be slow for a period of time....... supply and demand will not let it stall for too long I hope? russell
 
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