What would you do with 100,000 in bank

Hi I am new to forum and have been thinking of buying IP for ages now.
Situation, I have my PPR paid for, worth about 450000 outer melbourne. I have 100000 in bank from inheritence. Have bought some shares.
I would like to buy a small unit in the city and also another investment property but not sure where. The problem is that the bank will only let me buy a property worth 350000 as I am on very little income.
It is better to buy one IP and put as much down as I can on it or buy 2 cheaper places and put say 50000 on each one? We are looking to retire in 10 years so can see ourselves downsizing and living in the city. Thanks for your opinions
 
thats a great position.

imo buy 2 x 250 k units/townhouses in your outer suburb. Put down 50 k on each.

The rent should just about cover the repayments. If you get an interest only loan it will be fine.

so it will be like nothing has changed in your life

Then sit back and wathc for 10 years.

cheers
aussie
 
Hi I am new to forum and have been thinking of buying IP for ages now.
Situation, I have my PPR paid for, worth about 450000 outer melbourne. I have 100000 in bank from inheritence. Have bought some shares.
I would like to buy a small unit in the city and also another investment property but not sure where. The problem is that the bank will only let me buy a property worth 350000 as I am on very little income.
It is better to buy one IP and put as much down as I can on it or buy 2 cheaper places and put say 50000 on each one? We are looking to retire in 10 years so can see ourselves downsizing and living in the city. Thanks for your opinions

I'd do what I did last November when I was in this position. Buy a block of 3 2br units with 100% finance (I have other properties with the bank), spend 30k on reno's to add value and increase rents, and pay the rest off my PPOR.
 
What would I do with $100k in the bank? Get it out of there quick smart and put it on the mortgage, then arrange a redraw (in a separate facility) to use for investment.
 
$100,000 is a power of (potential) leverage, for me, my circumstances only, it would possibly hasten my constructions (potentially on my 10 landblocks), get me a nice little set of cashflow +ve units, and possibly a couple of cashflow +ve houses as well...on my rough head figures.

It possibly would go further..but this is my initial gut reaction to the scenario.

There are a couple of people I would run this by first, too.
 
Buy the vacant lots down the road, and build three houses on them one at a time and sell two, keep one. Too easy.

Considering I'm actually going to have $100k in the bank at some point in the next year that land had better still be there for sale :mad:
 
I think the advice has to match the persons experience and abvious lack of risk leading up to this point.

No one in this persons situation is all of a sudden gonna go out and do a large development. My 2 cents.
 
You don't actually have to spend any of the cash.

If you want to buy property you can draw down on the equity in your PPOR for the deposit (plus costs). The purchase of the new property with an interest only loan with 100% offset account will allow you to park the 100k in the offset to lower your interest bill. You can pull out the 100k whenever you wish.
 
Did the bank know you have $100k cash when they did the assessment to see how much you could borrow? $350k seems kinda low considering you own your PPOR as well.
 
I'd do what I did last November when I was in this position. Buy a block of 3 2br units with 100% finance (I have other properties with the bank), spend 30k on reno's to add value and increase rents, and pay the rest off my PPOR.

Off topic, but how did you manage to get a 100% lend on a block of units?
 
Why not?

I have a block of 4 on 100% lend. Not a recent purchase, but if you have the equity you can do it.

I guess I've mistakenly been under the impression that blocks of units get treated almost like commercial when it comes to LVR. Do you need enough equity to cover a large chunk of the 100% lend?
 
Equity maaaate.

Agree with Skater and VY. If you've got the equity, borrow the lot. My last major purchase was four in a line on about a 107 % lend. I borrow closing costs as well.

Having said this, I must also point out that my leverage position was nowhere near LMI territory. Entire portfolio was around 60 % LVR at that time.

Maybe slightly different right now with credit challenges if one were seeking such funds on a portfolio LVR of circa 90 % or greater.

In times like these, I like to fly under the bank(s) radar and stay conservative on my overall position.

Regroy, I echo what Bene313 said above post # 8

IMO I would be looking at a couple of doors at least. Should yield better cashflow for you and diworsify reliance on single IP rent.
 
In response to the questions about how to borrow 100%, my bank did some trickery whereby I used my PPOR to provide some extra equity, but put the units on a separate, IO loan. Then, I put the extra $70K off my PPOR loan to reduce the LVR of my PPOR back down, thus reducing my non-deductible debt, and making sure as much of the overall debt as possible was deductible.

And so far, the plan has worked really well. There's another thread in this part of the forum where I documented the journey of finding, buying and then renovating the units.
 
Its not exactly hard, we bought our current house with a 100% lend (equity in other property used as 40% deposit) and will be doing much the same with the new one depending entirely on valuations.
 
Thanks guys lots of great info here you all make it sound so easy..
I guess the hardest part is making the first purchase, driving myself nuts deciding on the location. I guess I have lots of reading left to do!
 
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