what lvr would you recomend a newb?

[my03]

Hey guys, new to the game, I'm looking at buying my first property, and maybe in half to one years time, my second.

At the moment i have about 80k in capital.

I'm looking at properties in the 350k range.

I'm just wondering what your thoughts on financing should be.

for 80k, i could put a 20% deposit on one property.

or...

i could put down two 10% deposits for 2 properties.

is paying a lower lvr better since i can use more leverage to buy multiple properties?

As a aspiring property investor, which would you choose and why?

what are the pros and cons?

obviously the lvr gets ridiculously low if the property depreciates, so a 80%lvr would give u more saftey margin, but what are some other considerations?

Thanks

 

[Propertunity]

Leverage can cut both ways.....BUT if you are confident in what you are selecting to invest in, have a backup plan in case the market moves against your position, have a growth mind-set, and an appetite for risk, then you might even consider 5% deposits.

Depending on the area you are choosing, I could not see much downside risk in a $350K property. The costs of producing this type of stock is not going down.

I would generally not be giving this kind of advice to a newbie though.

 

[Rolf Latham]

90 % lend with capped LMI and Interest only with a 100 % offset accoutn for property number one

Good trade off with the cost of the lmi premium vs 95 %.

Allows you to buy another property sooner if u so wish and in the meantime having the spare is a better risk management tool.

In addition, should u change ur mind and want to buy a PPOR next, you havent burnt all your tax paid cash into what was a deductible investment.

Some would argue that a 95 % lend would be even better. On average, if the loan is over 300 k the lmi premium will be very painful

ta
rolf

 

[Bigtone]

Hey guys, new to the game, I'm looking at buying my first property, and maybe in half to one years time, my second.

At the moment i have about 80k in capital.

I'm looking at properties in the 350k range.

I'm just wondering what your thoughts on financing should be.

for 80k, i could put a 20% deposit on one property.

or...

i could put down two 10% deposits for 2 properties.

is paying a lower lvr better since i can use more leverage to buy multiple properties?

As a aspiring property investor, which would you choose and why?

what are the pros and cons?

obviously the lvr gets ridiculously low if the property depreciates, so a 80%lvr would give u more saftey margin, but what are some other considerations?

Thanks

i would borrow at as high an LVR as possible

 

[BV]

i would borrow at as high an LVR as possible

I wouldn't.
It would depend on
what he buys,
on his personal circumstances
what his long term plans are.

Why invest aggressively in this environment?
Property isn't going to grow fast so there is time to save and buy again if the economic circumstances allow and he wishes to do so

 

[Bigtone]

I wouldn't.
It would depend on
what he buys,
on his personal circumstances
what his long term plans are.

Why invest aggressively in this environment?
Property isn't going to grow fast so there is time to save and buy again if the economic circumstances allow and he wishes to do so

buying 1 at 95% is actually conservative, keeps more cash back which makes the investment safer, using all your cash to buy 1 property protects the bank not the investor.

it would be aggressive investing to spend all cash available and borrow at 97% on a few properties, this type of investing has its place at times but not what i was recommending in this case.

he can buy one at 97% and keep cash back in offset and also have the option to invest further when his confidences grows and he is confident in a particularly market or property.

there are opportunities in every market regardless of economic conditions so why not have the extra buffer and the opportunity to pounce when desired?

 

[tobe]

How do you eat an elephant? One bite at a time.

Buy one first, at 90%, hold the extra cash in offset, then if and when you find the right deal, buy again, with either the cash in offset, or refi the first one for the deposit on the second.