Where to now ?? Help!!

WOW, your financial position is fantastic! What a nice place to be, on face value you have plenty of room to be more aggressive – but manage your risk.

Important:

1. Have you taken the equity out of your property in case the market trends backwards? Financially you are in a very good position to have some fun with property, but consider some of the questions below to reach your goals.

2. You need to stop paying off your property and place this money into your offset account.

3. Yes, you can and should invest more (from the numbers you have provided and without taking into consideration your personal needs and circumstances).

The following gives you an idea of the complexities of Financial Advice. 

 1.         Plans in relation to health, income insurance, Trauma, Life/TPD (term or whole of life)?2.         Asset protection-general insurance (house, contents, Liability, Indemnity etc)?3.         Tax Deductible Debt v Non Tax Deductible Debt4.         Fee’s and charges charged by banks and other related industries?5.         Your own home and tax benefits- Owner occupied exemption, CGT exemptions 6.         State and Federal Grants for homeowners.7.         Mortgage Broking concerns- interest rates, variable, low doc, LOC, fixed (short v long-15 years), 100% offset, investor loans- tax deductible set up, Records to keep for tax deductions, Consumer credit code, LMI, Capacity to loan.8.         Purchasing costs of a home- government search, conveyancing, P&B9.         What is capitalising interest? Sub accounts?10.       Are you in the property business? 11.       Business structures, Sole trader, Partnership, Company and Trust ( Bare,  Discretionary, Unit, and Hybrid).12.       How does A= L+OE apply to a property business?13.       Why would you buy a house in a trust? This is often not good contrary to the latest hype.14.       Investment property seminar, travel –interstate, bank charges etc are they tax deductible? 15.       The benefits of Holiday homes.16.       In who’s name for taxation and capital gains purposes?17.       Is interest payment tax deductible prior to a house being rented out? What about repairs after the property has been tenanted for income purposes?18.       Land tax- name on title, joint tenants, tenants in common, % effect v taxable income v Capital gains tax19.       Joint ventures?20.       Expected rate of return v inflation (opportunity cost)21.       Commercial v Residential v Public Trusts v Syndicates v Trust22.       Do you want to retain your present home/ what are your house plans or areyou planning to move within several years?23.       Rent v Buy, Shares v Property24.       Employment situation and taxable income?25.       Non -Tax deductible debt: credit cards, hire purchase and leases of domestic nature. What effect do these have on your mortgage or loans available?26.       Depreciating assets v appreciating assets – What are these?27.       Free cash flow- How can I improve this situation? How do you structure yourself to afford more property.28.       Income Tax Brackets and Capital gains Tax.29.       Age profile and the ability or risk that may be taken?30.       Should I pay off my home?31.       Mortgage repayment calculator? What can I afford to repay?32.       How can paying off my home be accelerated?33.       Negative v positive geared, The upside and downside to both of these?34.       What is OPM, leveraging, equity, and collateral?35.       Where to buy, unit/house, rental yield, new/old, price range, pool etc36.       Management issues with properties. How to avoid these? 37.       Can someone house share with me to help pay the mortgage?38.       Strategies and tricks?39.       Co-owners with friends is this a bad idea?40.       Depreciation v Repairs v Capital Improvement41.       Loan cost write off42.       What is the Cost base for CGT and the trigger date?43.       How a line of credit can be so wrong?44.       Pre-paid interest and variation to PAYG ( form 1515).45.       How Lenders Mortgage Insurance (LMI) is of no financial concern.

Sorry, but there is a lot to think about when answering a question you have posted. A question such as the above will get a response that may cover only one of the above topics – If you went away to make a decision based on one, two, or even three of the facts above then you are short changing yourself and the ability to make a valid decision for your future.

Summary: Protect your assets with all the cash that is available and then invest the excess.

http://www.birchcorp.com.au

@ Stocko – You are definately in a great position to invest. Investing in negatively geared property will limit you, because at $60k/yr you can only afford so much negative gearing before you can’t afford any more.

Plus isn’t the point of owning property to increase your wealth so you can enjoy a better life? Have you thought about investing in positively geared property throughout NSW?

You could use the equity from your properties to use as a deposit on a positive cashflow property. You could maybe buy a couple for around the $100k-$200k mark. As you know rents go up each year, so your properties will become more positive each year. The more positive they become the more income you can use to smash your PPOR debt or to fund your lifestyle…or to reinvest.

I understand finding positive cashflow properties is hard. You could use a property broker…but they cost around $500 up front and about 2% on the purchase price. If you buy 3 properties for $200,000 each you will be paying $12,000 in broker fees. That is money out of your pocket.

Because you seemed to be a seasoned investor I recommend trying a property finding service. The link is in my signature.

Good luck with everything and I wish you all the best

@ Lukey30 – You should be able to draw out $80,000 in equity from property A, and use that for a 20% deposit on property B.

Ryan McLean
http://CashFlowInvestor.com.au
Positive Cashflow Properties Are Just A Click Away

Nope!

You would have two mortgages to purchase the IP:

The main mortgage of $320k
A second mortgage of $80k (an equity mortgage from your first home – but the interest will be tax deductable because the PURPOSE of the loan is for investment).

The $80k can't be borrowed for free – you have to pay interest on it, and eventually pay back the principal ($80k)

Hi Stocko

Yes structure the loans correctly and maybe switch both loans to Interest only.

Link an offset account to the PPOR loan and put all of your income into this account.

Dont whatever you do cross collateralise the 2 securities otherwise you will have issues in the future.

Use the equity in your IP rather than PPOR to acess for further deposits.

With a wee bit of debt recycling you should be able to carry on acquiring good quality properties.