A seasoned investor hit a snag when attempting to add a fourth property to her collection; her broker said she’d maxed out her borrowing capacity. Despite this, her portfolio was healthy, with a strong 60% LVR. We switched her loans to Interest Only to improve cash flow and connected her with a non-bank lender that recognized her rental income potential, enhancing her borrowing power. Our strategy led to a profitable interstate property purchase and plans for further expansion into her SMSF, underlining her investment acumen.
The Challenge
An ambitious property investor was aiming to add a fourth property to her impressive portfolio. However, she hit a roadblock when her current mortgage broker told her that her borrowing capacity was fully utilized. Upon reviewing her property portfolio, it became apparent that equity was abundant, with a solid 60% Loan to Value Ratio (LVR) in her holdings.
The Solution
After a thorough analysis of her financial situation, we shifted all her loan repayments to Interest Only, significantly enhancing her cash flow. To facilitate her property acquisition, we introduced her to a non-bank lender, known for their flexibility and favorable terms for property investors. This lender acknowledged the full potential of her rental incomes, applied only a minimal loading on her existing Interest Only repayments, and worked with a lower benchmark for living expenses, thereby boosting her borrowing capacity.
The Outcome
The strategic financial restructuring and lender switch facilitated an interstate property acquisition worth $563,000, boasting a robust 7% rental yield. This fifth addition to her portfolio not only solidified her status as a savvy investor but also fueled her confidence and provided clear guidance for future endeavors. Within the next 12 months, she plans to acquire two more properties, and we’ve laid out a strategic plan for her to delve into investment through her Self Managed Super Fund (SMSF), opening doors to even more opportunities and financial growth.
