All Topics / Help Needed! / Two investment strategies. Which is best?

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  • Profile photo of anacuzzaanacuzza
    Participant
    @anacuzza
    Join Date: 2010
    Post Count: 1
    May 25, 2010 - 12:41 pm
    My partner (40 yrs) and I (36 yrs) each own a residential property. My property is a unit valued at approx $500K which I owe $237K on. I occupied the unit for the first 18 months of ownership and have been renting it out for the last 4 years.
    We live in my partner's property which has been valued at $700k and has a mortgage of $260K. We are keen to put the equity in our properties to good use but are unsure what the best option would be.
    We are considering selling my unit and using the equity to clear the mortgage on my partner's house. Then using the $700K equity to purchase a couple of investments properties and use a mortgage repayment strategy which would see our contribution being only 2%.  We like this idea of being basically mortgage free as it would see our living expenses greatly decrease and allow us to work part time rather than full time.
    Another option would be to hold onto my unit and use the equity in this and the equity in my partner's home to purchase 2 investment properties. This strategy would allow us to own 4 properties but wouldn't allow us to clear the mortgage on my partner's current property and decrease our living expenses.
    What would you advise? Any help would be really appreciated.

    Thanks!

    Profile photo of Paul DobsonPaul Dobson
    Participant
    @pauldobson
    Join Date: 2003
    Post Count: 1,196
    May 25, 2010 - 11:07 pm

    Hi Ana

    I leave others to comment on the best way to go regarding disposing of one or keeping both properties.  However it seems likely that you will end up with a Line of Credit on one or two properties.

    One point to watch out for is your mention of working"part time rather than full time."  As you are looking at buying more IP's I don't think it would be a good idea to reduce your work to part time at this point.  This is because of the effect it will have on your serviceability.  Sure you could get low doc loans but I'd suggest you keep your serviceability (salary) intact until you've purchased these two extra investment properties.

    Cheers,  Paul

    Paul Dobson | Vendor Finance Institute
    http://www.vendorfinanceinstitute.com.au
    Email Me | Phone Me

    An alternative way to finance your home.

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