Join our investing community

Investing in a 2nd property? advice appreciated.

Discussion in 'General Investing Discussion' started by pulse77, 3rd Apr, 2009.

  1. pulse77

    pulse77 New Member

    Joined:
    3rd Apr, 2009
    Posts:
    2
    Location:
    Melbourne, Vic
    I have a property that is worth approx $260K and the mortgage of $115K. Repayments are $450/ftnight interest and principal. Rates & body corp approx $4K a year. It is rented at $300/wk. I am on a wage of $70K. Am I in a situation to buy another property at approx $350K. What suggestions would people make. I would like to live in the property and minimise outlay/tax. Any advice would be appreciated.
     
  2. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Have you got any savings for a deposit?
    If not, you should be able to access the equity of your IP1 and borrow up to 80% of it's value.
    You then use some of those funds as a deposit for our next property.
    That way you won't need to pay mortgage insurance.
    The equity probably won't be enough for to buy an IP worth $350K but you should be able to buy another property of similar value to your existing 1.
    Are you asking if you are in a position to make a move?
    You are the best person to answer that question.
    From the affordability point of view you should be ok.
    However, as soon as you move into the property you'll lose your tax benefits.
     
  3. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi Pulse,

    How come your doing P&I for an investment property? Eventually you will have paid off the loan and get no tax deductions as no interest will be payable.

    Cheers,

    Dan
     
  4. Billv

    Billv Getting there

    Joined:
    15th Jul, 2007
    Posts:
    1,796
    Location:
    Sydney, NSW
    Dan

    If he doesn't have a PPOR loan then it doesn't matter much because
    he can refinance and access the equity that way.

    But if in the future he wants to buy a PPOR then it could be a problem

    cheers
     
  5. pulse77

    pulse77 New Member

    Joined:
    3rd Apr, 2009
    Posts:
    2
    Location:
    Melbourne, Vic
    The whole investment property game is new to me so any education resources that can be suggested would be great. And what is a PPOR loan?

    I left the property paying the principal and interst as that was the way the loan was set up while i was living in it. I figured that while it was covering its costs I would leave it that way. I realise I will be loosing some of the tax benefits as the loan pays for itself. Would I be better off changing the loan to interest only and using the remaining income to pay off the 2nd property that I am interested in buying? How does that affect my tax situation. I plan on living in the 2nd property and probably renting out a spare room. Then in a few years I would move on and rent the 2nd property out and let it pay for itself how the first property is now.

    Pulse
     
  6. AsxBroker

    AsxBroker Well-Known Member

    Joined:
    8th Sep, 2007
    Posts:
    1,448
    Location:
    Sydney, NSW
    Hi Pulse,

    That makes sense now :)

    PPOR = Principal Place of Residence

    Cheers,

    Dan