Which of the following rule for expansion is more suitable for current economic

Hi everyone,

I have 2 properties with total value of $650k and loan of $260k. So, LVR is currently sitting at 40%. I am trying to decide when to buy another property.

When I started my property journey in 2007, I have the following rule:

Rules for expansion version 1
1. Individual house LVR before expansion should not go above 50%
2. Total house portfolio LVR should be less than 70% (after buying a new one or when considering expansion)
3. Ideally once total house portfolio reach 40% and bellow, then buy another house
4. Repeat process until the desired amount of equity obtained

However, because of concern regarding of high interest rate and GFC, I just recently start thinking of changing the rule to the following:

Rule for expansion version 2
1. Individual house LVR before expansion should not go above 50%
2. Once LVR for the last house purchase is 50%, start saving deposit for new property
3. Buy the new house when deposit reaches 20%, then reduce LVR in the last purchase till 50%
4. Repeat step 2 and 3 until the desired amount of equity obtained.
5. Any income from property should be used to pay those corresponding house. Eg, extra income from property 1 is used to lower the debt in property 1.

I would like to get some feedback regarding of those rules before I start implementing rule of expansion version 2, eg. advantages, disadvantages, some other consideration that I might miss, etc.

Thank you in advance.
Greymare
 
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