Trying to move forward, advice required!

[Carl84]

Hi Guys, hoping a few people can shed some light and provide their opinion on my situation.

Currently have two IPs; I have 12% equity in one and 14% on the other, based on valuations issued via the bank.

The questions I have is; Should I try to create more equity in my two IPs (potentially taking them to 20%), or with the funds I have, look to purchase no. 3 with a 10% deposit.

 

[Aaron_C]

That is extremely tightly geared...why would you be looking to purchase another IP?

 

[Propertunity]

That is extremely tightly geared...why would you be looking to purchase another IP?

Carl84 might be in the accumulation phase.

Sydney is growing. It is a highly geared strategy to purchase IP #3 now BUT as long as Carl84 has some risk management strategies in place (i.e cash buffer, stable employment, buying well in good locations etc) then I see no issues.

 

[Aaron_C]

Carl84 might be in the accumulation phase.

Sydney is growing. It is a highly geared strategy to purchase IP #3 now BUT as long as Carl84 has some risk management strategies in place (i.e cash buffer, stable employment, buying well in good locations etc) then I see no issues.

Well that's possible. But given the tight LVRs I am guessing he's already paid LMI so to refinance out to access equity would incur additional LMI premiums, thereby negating any equity in the properties...so best idea is to wait

 

[Propertunity]

I don't think he's trying to refi.

He said: "the funds I have, look to purchase no. 3 with a 10% deposit"

 

[Aaron_C]

I was making the assumption that by 'funds I have' he meant the equity in his IPs - which in this case would be insufficient for anywhere near a 10% deposit

 

[evand]

I dont think its the right property environment to be in "accumulation phase".

Maybe your equity will be even less in the next few years. In fact, i'd say more chance of that than equity increasing.

I reckon sit on what you have for a while until the property market shows some direction. Preferably up.

 

[zed_kid]

I’m a big fan of manufacturing equity. Can you do anything to your IPs? Like a reno or convert dinning room into 3rd bedroom etc.

 

[Rolf Latham]

Hard to provide any useful feedback on the data provided really.

Might be up to the gills in debt, might have a mill in the bank ......

ta

rolf

 

[LPP]

I dont think its the right property environment to be in "accumulation phase".

Maybe your equity will be even less in the next few years. In fact, i'd say more chance of that than equity increasing.

I reckon sit on what you have for a while until the property market shows some direction. Preferably up.

A buyers market, not good for accumulation phase?????

 

[Aaron_C]

I dont think its the right property environment to be in "accumulation phase".

Maybe your equity will be even less in the next few years. In fact, i'd say more chance of that than equity increasing.

I reckon sit on what you have for a while until the property market shows some direction. Preferably up.

Depends. In this case it's not a good idea because he doesn't have enough cash to fund additional purchases. If you're cashed up this could be a good environment to buy

 

[Mick C]

Hi Guys, hoping a few people can shed some light and provide their opinion on my situation.

Currently have two IPs; I have 12% equity in one and 14% on the other, based on valuations issued via the bank.

The questions I have is; Should I try to create more equity in my two IPs (potentially taking them to 20%), or with the funds I have, look to purchase no. 3 with a 10% deposit.

You be at the hand of the valuer if you decide to "create" more equity...ie you have no control..
So i say use the 10% and go to purchase number 3 OR get the place re-valued with a different bank and see how much equity you have then...

Regards
Michael

 

[evand]

If he's an investor he should wait til;l the market is trending up, not down.
Maybe if he had more equity he could look for an outright bargain, but a bit risky in the current situation imo.

A buyers market, not good for accumulation phase?????

 

[Player]

Hey Carl,

Now is not the time IMHO to be hyper-leveraging. Your post indicates that you would possibly use cash/funds as a 10 % deposit thereby borrowing the rest (plus closing costs presumably) to add to an already non-conservative portfolio LVR.

Such notions work best in a bull market when the banks are throwing money at people not only for investing but also for "equiteeee maaaate" acquisitions such as holidays and other toys.

Banks want to lend on the one hand, however on loans that involve LMI are sometimes at the mercy of those insurance providers unless they have their own LMI product. They can change the rules as they wish. Wouldn't want to be caught out if looking to re-fi later on (whether by choice or necessity) on a lack of equity if values soften some more.

Sydney may still have some steam left in the engine in some parts, however much of Australia is soft and in a sideways holding pattern.

We know nothing of what you earn, how well you save, nor how secure your employment is. If you want to take advantage of opportunities, keep LVR's skinny and stoke the offsets (or LOC's, etc) to be ready to pounce.

This is not advice, but my opinion based on living and investing through the late 80's and early 90's. We won't see high teen interest rates necessarily however we don't need to. The market is ostensibly sidways with possible surpises around the corner, whether global and/or local.

BTW make sure your income is protected with suitable insurance products.

 

[jaycee]

A buyers market, not good for accumulation phase?????

I'm going to treat it like a non-rhetorical question

Possibily not when someone doesn't know what's going to happen next and they know that they couldn't afford to stay afloat if things went down too...

Personal sitautions and all that seem to alwyas play a role depstie an overall leaning of the market...