Hi there,
Really need some opinions from some of you lovely people re my portfolio which I am about to refinance. I am relatively new to property (15 months) and already made a few mistakes but want to learn from these.My current situation is I rent a company house in a mining town ($100/month) and have 3 loans for 3 houses in a coastal town experiencing continued growth. Loans are as such.
1. P+I owe $98K value $225K (equity $127K)- Rent $180
2. P+I 0we $173K value $200K (equity $27K) – Rent $170
3. In only owe $167 value $195K (equity $28K) – Rent $160
$15K in cash
$82K income (gross)
Currently living on $1K per month and can continue to do so.
I have to pay an ex $20K in the near term and have another unsecured debt of $22K to family. The 22K can stay in an offset account as I am essientally baby sitting it.
Want to buy an additional property or two at approx $200K each.
Was thinking of interest only loans on property 1 and 3. Dropping all the equity (140K after payment of debts – ex, family) into property 2 with a full offset or line of credit loan of $82K and 22K offsetting this with the view of paying off the remaining debt fairly quickly thus freeeing up cash flow. Picked 2 as I may one day move to this town and would reside in this house.
Then use equity in this property to purchase additional two properties.
What do you think of this strategy?
Would I be better off trying to get two of the properties close to cash neutral instead?
How long is a piece of string?
Should all my investment houses be within one loan?
Is there a product where I can use a future increase in value (equity) in the two houses to increase the loan on these and pay down the small loan on the third house.
Apologise for the length and breadth of this post but really need to get it right this time round. Thanks in advance and have a nice day.
Sometimes lost in the forest, needing guidance.
Wanting to be wealthy, not rich.
Hi Pete
If it were me, I would change all of my loans to IO, and save all of the extra money into a 100% offset account rather than pay off Principle – this gives you the option of paying extra when you like, or if you like.
If your properties are not cross securitised, then you could probably take the first one, and borrow up to 80% of the value as a LOC which would give you about $78,000 extra.
You could then use this money as deposits for the next one or two properties.
if you may reside in no. 2. that changes things. I would then put all my spare cash into an offset account linked to this loan. That way if you do not end up moving intothe proeprty, you can just take your money out of the offset account and still claim the whole itnerest on the loan.
I also think it is better to keep all of your loans as separate accounts and to not have all of your loans with the same bank. This gives you much more flexibility with increasing loans and accessing equity etc.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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