Wrong
@Kimu, deposit is only one aspect of lending. The most important for all lenders is the ability of servicing the loan and could add what security you can provide in the event that an unexpected event occurs during finance term.
You can have a 50% deposit on a 1.3Million property and insufficient income to service a loan. Also what security one can offer can also have an impact on finance approval and interest rate on loan.
The argument to use rental income to service for an investor will also be subject to limitations. Not all the expected rent will be used in the banks serviceability calculations.
General rule of thumb is a maximum of 80% of the expected rental income and that's if you can provide security so that the bank can come after your other assets in the event you lose a tenant or job. Is your primary source of income from employment income vs business sole trader, partnership. If form trust distributions or company dividends, is the income business or passive income? The impact of the above considerations will differ from bank to bank or alternate lenders. The higher the risk the less they will attribute to the rental income resulting in a reduction in capacity to borrow. In addition the higher the risk the higher the interest rate will be especially if your only source of finance will come from an alternative to the banks and a traditional loan.
Investment Performance
Anyone can run a simple spreadsheet or review a loan calculator online with any of the banks and realise that in the initial years your loan balance hardly moves and typically by year 20+ you get to a point where the loan principal being repaid finally outweighs the interest. Therefore the majority of a loan is paid off in the last 9 years. OUCH!!! Run the analysis through your inflation adjusted return Skol/Kimu and provide some true analysis rather than statements and I believe you will be surprised with the outcome and will need to run with your tails between your legs.
I would also highlight Kimu rent paid by a tenant produces rental income for the landlord not dividends. I believe you don't understand what a dividend is and who pays them?
Now the majority of property investors are not buying investment properties in the best value zones of major cities (10km radius from city center) they are purchasing in the outer suburbs because they can barely afford to get into this zone for primary residence let alone investment purposes. Therefore capital growth is likely to be on the lower end of the spectrum when reviewing the median house price performance.
I have seen plenty make money and some lose money on property over the years. Nothing is certain, all asset classes have risk and every investor is plagued by their own unique circumstances which can limit or prevent achieving a desired outcome.
