expert-q-a

Investors ask: Financial structures for multiple property purchases

By Philippe Brach
Philippe Brach

Q. I am 23 years old. I currently live at home and have $150,000 in the bank. I am looking at buying a place to live and then an investment property. How should I structure my finances if I start to buy more than one property?

A.I will assume your borrowing capacity is not an issue for you when buying these two properties, so the strategy will be dictated by how aggressive you want to be and the amount available to fund the acquisitions – i.e. the $150,000 savings.

Option 1 – the safe option – is to buy your home first with an 80 per cent loan, park the rest of your savings in an offset account and wait until capital growth kicks in. At this point you can release the newly created equity to fund the acquisition of an investment property.

Option 2 is to do the reverse. Buy the investment property first and stay at home. In this case, I would borrow 90 per cent on an interest-only basis and park the rest of the savings in an offset account. When you have enough equity/savings, you then acquire a home (or another investment property!)

Option 3 is the aggressive approach. It consists of acquiring both properties at the same time by borrowing 90 per cent or higher, depending on the purchase price. You will be left with little savings but you would have two properties in your portfolio, which at 23 is a great achievement!

The above options are only the start of your journey. If you end up with non-tax deductible debt (your home) and tax deductible debt (your investment property) as described above, there are a number of ways to optimise the management of your day-to-day finances over time in order to optimise your wealth creation – but this is another subject altogether!

Philippe Brach, CEO, Multifocus Properties & Finance

Thank you.

Your enquiry has been sent to a local Aussie Mortgage Broker.

We will be in contact with you shortly.
Opps.

error occurred.
Unfortunately Aussie cannot attend to your home loan related enquiry at this stage as you must be a citizen or permanent resident.
Do you need help finding the right loan for your investment?
What Aussie do for you:
  • Give expert mortgage advice to help you find great investment loan deals
  • Help you maximise return by lowering financing costs
  • Save you time and effort by helping with the paperwork
First name
Last name
Location
Mobile Number
Are you an Australian Resident?
promoted stories

Top Suburbs

Highest annual price growth - click a suburb below to view full profile data:
1.
BLUE BAY 49.18%
2.
PAMBULA 43.5%
3.
BERKELEY VALE 42.74%
4.
POINT PIPER 40.52%
5.
NORTH TURRAMURRA 38.12%
Investors ask: Financial structures for multiple property purchases
SPI logo