You are a broker at XYZ Brokers and have received a referral from a local solicitor to talk to two brothers, Calvin and John Young who wish to jointly purchase two apartments in the same building. Theywant to purchase them as rental properties. The building has 12apartments. The units have 75% permanent tenants in place and the remaining 25% are used for holiday rentals. The location is in a highly sought-after area and all holiday periods are fully booked.

The brothershave invested together before and have experience in buying and selling property. They have sold all their other investment properties and the apartments will be their only investment until they can identify another opportunity. They have never had any formal agreement drawn up between them in the past. The cash at bank is mostly from the sales of other investments.

these brothers have financed investment properties in the past but their level of financial literacy, in relation to legislative obligations of a lender, is limited.

They would like you to put together two loan structure options:

a joint investment loan with an 80% LVR with the balance of contribution to come from their savings

a joint investment loan but also using the equity in their existing homes to permit borrowing 100% of purchase price plus costs.