Hi Guys
Advice needed. Had an offer accepted on a block of land at Mount Colah (first go at investment property). Will build spec home on this to rent out. Expecting capitalisation immediately of at least $50,000.
Meanwhile, dream block of land has come on the market for own dream home. My circumstances: Own home worth $600,000 no debt. Income combined of about $130,000. One dependent. Any ideas of most efficient way to buy dream land as well as go ahead with investment?
Lucky88
Lucky
Do you want to retain the current PPOR as well as any investment or will you be looking to sell this to buy the new property ?
Richard Taylor | Australia's leading private lender
Lucky
Do you want to retain the current PPOR as well as any investment or will you be looking to sell this to buy the new property ?
Richard Taylor | Australia's leading private lender
I would prefer not to sell PPOR as it is fully owned and I am gearing it to by the first investment property. The investment property is a house with land. Got it for a good price and should make at least $50,000 on it when project is complete. Using line of credit to pay deposit, then a regular construction loan to build the house.
I guess I could use the line of credit for a deposit on the land so I can hold it until the investment project is complete. But then what? I suppose I could sell the PPOR (no capital gain) and move into the investment while building, but I somehow think there must be a smarter way than this!
Lucky
Lucky
One issue you will have with the strategy you are looking at is that the interest charged on the new loan will not non tax deductible as the purpose of the loan is to contruct a dwelling for you to reside in.
If you are wanting to retain the property as an IP once the other property is completed you may wish to consider selling your current IP into a Trust structure borrowing 100% of the value and using the entire net funds to buy the land and build your home.
This way you transfer the debt from non deductible to deductible interest.
Unfortunately you will have to pay stamp duty on the Transfer value however if you intend to stay in the new property for a while this will be clawed back through the negative geared benefits.
All costs can be borrowed and structured correctly you will have a good start to your investment portfolio.
A good mortgage broker should be able to advise exactly the way to establish the facility.
Richard Taylor | Australia's leading private lender
Hi Richard
Thank you for your advice, it is much appreciated!
Regards
Lucky88
No problems. Pleasure.
Richard Taylor | Australia's leading private lender
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