929 selling IPs to buy a home, career change vs house, joint investing, cash vs ETFs + more

**Glen James** (0:06)
Today on the show, we're talking new relationships, properties that have equity, and we've now got a partner, and we own it with our parents. We're talking about what do we do with cash? Do we invest it, or do we just live off the interest? Bit of investing as a new couple. It's the day of new couples today.
And getting our priorities set at age 31 I am joined today as per usual, John Pidgeon, welcome.

**John Pidgeon** (0:36)
Thank you.

**Glen James** (0:36)
And Rachelle Kroon, welcome.

**Rachelle Kroon** (0:39)
Hello, thanks for having me.

**Glen James** (0:40)
Hey, let's get straight into this because you two can really answer this. Anonymous said, male 25, female 24 My girlfriend and I have been looking for a house for the past six months. Properties tend to lead towards 800 to 1 million for the areas we are interested in. We currently still live at home with my parents and pay very little rent. I own two investment properties slightly outside of Perth, thirds with my parents. We have spoken to a mortgage broker and they have explained that the two investment properties are holding us back in regard to our current borrowing capacity. These two properties are both doing very well in regard to growth and rental yield which is causing me to be sceptical about selling my portion of the investments. Also, both homes are new builds. If I was to release my portion, could this possibly allow us the borrowing capacity to purchase our home?
If anyone could offer any advice for my situation, that would be greatly appreciated. I actually asked in the Facebook group, what's the total equity? What is your total equity in the two properties? And he said, 125K.
So, while both of you are having a bit of a think, we can assume Perth, the things that stand out to me, and this is total off-label discussion, it's when you are potentially younger, and we'll say under 25 is younger, we'll say that. We want you to buy investment properties, but we want you to think of the practicalities of when you meet someone and you might want to do something else. What does it look like? Because this is where I am now, like our plans have changed. Was a house with someone special to you in the mix ever? I don't know, we're all going to go through this stuff, but that's kind of just what I want people listening to think. Yes, I want you to get invested, but if you're going to buy two properties with your parents, you'll need to know at some point we have to undo this.
Go on, don't buy it, you guys.

**John Pidgeon** (3:03)
So Rach, I'm interested to get your take on this in respect to borrowing capacity and how banks look at investment properties and generally the cash flow of those and the yield and how important that is, along with the debt that they hold on those properties. Because that would be the two things holding them back, I would assume.

**Rachelle Kroon** (3:26)
Yeah. So obviously, if you can hold your interest in those properties, you'd want to. But if it's going to stop you achieving your goal of buying a home with your partner, you're not going to let that stop you. And maybe selling your interest would be the better thing to do if you have to. But before you did that, I'd really want to know if you have explored Common Debt Reducer, which is a policy that some banks have and some don't, that says if you own property with other people, they'll... and it's a really niche policy. And I would say, I would actually say some mortgage brokers might not even be fully across it. So I'd just ask your broker, have you explored Common Debt Reducer? And I'd actually say there's a niche policy with one of the very big major banks, the biggest one, that will actually allow you to state how much of the investment property you're paying back.
So this could be one of those very few cases where if your parents are covering most of the shortfall and they're happy to say that they are, there might be a bank that allows you to keep your hold and increase your entire mortgage.

**Glen James** (4:29)
Oh, so waive the servicing through.

**Rachelle Kroon** (4:31)
There is a niche policy that I think you could actually, so just ask your broker, are they a Cross-Common Debt Reducer? And have they looked at the niche policy with the biggest bank that will allow you to actually get a stat deck to say what the other parties are paying? Because your parents might actually be paying most of the shortfall, you're not paying the shortfall, so it wouldn't impact your borrowing capacity at all.