First investment purchase

[007Chip]

I am after some advice regards to purchasing my first rental investment property. I have preapproval for a loan. My own house is mortgage free. Therefore I have the equity in my own property. The Property I am looking at purchasing, is asking $340,000. I am looking at it as a buy and hold. Current tendered at $350 week but rental valuation is $380-400. Also have some cash available, should I be making a deposit to reduce the amount borrowed? Obviously the amount I deposit will affect if the property is cash flow negative or positive.
Some advice for a first time investor would be appreciated.

[donna]

Geez where to start....

Read these forums and at the end of this discussion is the 'similar threads areas start there.

cheers,

Donna

[007Chip]

Thanks Donna. I have done plenty of reading. Including Graeme Fowlers books. I’ve been to plenty of seminars. This forum has been helpful. To answer my question, No deposit, or make a deposit reducing the mortgage, what would be your advice. Thanks heaps.

[Don't believe the Hype]

Borrow as much as the bank will let you against this property. Any remaining funds you should keep in offset account offsetting the mortgage. This gives you more control over the funds.

[Rosco]

Hi,

In general terms you want to put the money in the property to reduce the loan and therefore reduce the interest. Unless you can get a better return somewhere else? For most people saving over 4% in interest is a good place.

As mentioned above, a slightly better option but achieving the same overall goal of reducing interest is to use a revolving credit or offset account.

I would also try to seperate your personal home from your rental in banking terms. ie borrow 122k from ASB secured against your personal house and the remainder from ANZ secured over your rental.

Your cashflow will be average. I would try to look for something where you can add value long term, rather than just a standard rental where you are just hoping for capital gain as your only way to get ahead.

Ross

[007Chip]

Thanks for the advice. Appreciate it.