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Young couple buys first investment property 2 years after buying their own home

Here’s their story:
You bought your own home in September 2016 – how was that experience?

Painfully slow..  There was a big difference between what we liked and what we could afford!  We had a lack of understanding of the market at the time and we made 4 or 5 offers on properties that didn’t go anywhere. Agents were seriously underquoting to get people through the doors so we were caught in that web and were precluded from buying for a time.
The property we ended up buying was originally listed as a Private sale at around $460K and we put in a couple of offers on it (plus had Building & Pest inspection done), but doubt the offers made it to the vendor as next we know it’s going to auction!  Auction day was scary and bids were being made in $100K increments which was nuts but it eventually slowed down between us and another bidder and I had in my mind not to ever finish on a round number so we nailed it at $531K.

Did you have help from your parents?

Yes we did. We had 5% deposit so were able to get a parental guarantee* which eliminated the need for LMI.
You bought at a great time – what is your place worth now?
We have done well as it is currently valued at $700K.  We probably spent about $50K on renovations and I am an electrician so can do a lot myself.  We haven’t done anything too major like kitchen or bathrooms but we did floors, fences, repainted, garden and outdoor paved area, roof extension, LED & switches, split system, fire place, storm water, replaced carpet and dishwasher and handles on kitchen cabinetry.  So we were pretty impressed with the valuation showing a capital gain of $170K in over 2 years.  We have also been able to release my father’s parental guarantee and then release equity for a deposit to buy an investment property.

Some “before” and “after” photos of the Kennington property

Where did you start with the investment property search?
We first looked at Geelong and decided it wasn’t for us. Ballarat was a maybe but Bendigo seemed to have a lot of potential so we decided to look for a property that we could buy and rent $ for $ – so rent would cover the loan…we worked with $300K purchase price, would rent for $300 pw and we would be happy.  Growth and cash flow are critical.  We bought a place in Kennington (Bendigo) and we are confident it will do well.
How did you go about investment borrowing?
We really didn’t understand how that worked but if you have a good broker like Louise, you ask her and discuss what you want to achieve!  You can make progress in the property market if you’re smart about it – you just need to start!  I do watch my money and I am probably a bit tight but we still have a life!
So we Refinanced our OO property with a 2nd tier lender to release equity for our Investment deposit and then got an investment loan for the Bendigo property as a separate loan.
Did you spend money on the property before renting it out?  If so, how much?
We ended up doing a near full renovation, spending $15K and we did all the work.  We put in a new kitchen with stainless steel appliances, refinished timber hardwood floors, new vanity & tap ware in bathroom, new mirror and shaving cabinet, painted throughout, LED lighting throughout, new robes in the bedrooms, new gutters, facia cover & downpipes, and general garden tidy up.

Have you rented it out easily?  How long did it take to secure a tenant?
It has taken 3 weeks (since we completed the renovation) to secure a tenant but we had a lot of interest and applications.  We just wanted to be satisfied with the quality of applicant.  We are renting it for $340 per week.
Have you had issues with your property journey that you’d like to share?
We had nearly finished all our renovations on our home and we had a major flood! Seriously heavy rain and we had water coming in everywhere. Our block is on a slope and we never checked the gutters and storm water drains to see if they were clear and unblocked. Even though we had a building and pest inspection, this is not something that is checked and unbeknown to us, needs regular maintenance if you are in a heavily treed area.  It was a hard lesson to learn but we were able to dry out and repair what was required via insurance.  Always check your gutters and storm water drainage twice a year for build up of leaves and debris!
What’s your advice?

Do your research, see a broker (Louise) to help and educate you and maybe watch a few YouTube videos on buying a property.
We hope to buy another investment in a couple of years 🙂
*Parental Guarantees are a way for younger people to get into property without paying LMI or Lenders Mortgage Insurance, which is paid when you borrow over 80% of the value of the property. As a possible option, a parent can offer a second security – preferably an investment property – and the preference is the property offered by the parent does not have any debt against it and can be used to reduce the loan to value ratio of the purchase to 80% or under.
The key is with writing the new loans so the parents are only held responsible for the shortfall – not the entire debt of both properties. This means writing two different loans for the same purchase. If you would like further explanation of this and how it might work in your own circumstances, please make an appointment at
With thanks,