Peace of mind – or number crunching

Hi Guys,

HELP NEEDED :)

I am a relatively young investor (32) and own 4 investment properties and my wife and I PPOR.

We started early, sacrificed a lot and all our investments hold relatively good equity.

Guys – I’ll confess… I am NOT a number cruncher, planner, financial type guy… rather than a simple guy who enjoys sleeping comfortably at night (where possible and not stressed) and one who works more with his hands than his brain.

For the properties we acquired so far – a few of them we lived in and rather than just selling – we just had enough to purchase another and move forward. Fast forward from one property to the next – and we’re in our 5th home now and this is our dream home on a bit of land in Melbourne.

We’re self employed and have 2 kids under two. This should explain itself in regards to stress levels.

We think we’re about to come into a large chunk of cash for some work we’ve done over the year.

My financial adviser and accountant are suggesting all these things that sound great in principle, but are complicated and see us being very heavily financed.

If I had lots more liquidity or cash I’d be motivated to do it there way and take the risk – but right now with some family health issues, young family and a business that I don’t know the future – My gut feeling is to go against their advice and do it MY way, opposed to theirs.

In short – Im a simple person who likes to physically drive past my investments, point to them and know that I’ve got 10,20 or 30% equity in there and that worst case scenario – should I need to bail ASAP… I can… and it would free up cash.

It’s old fashioned and probably not as good from a tax perspective – but it makes me know that if things really went sour – off we go and bail.

So how do we feel about things like this.

I might be having around $200k to spend in the remainder of the year and I was roughly going to buy 3 x properties across Melbourne, in need of renovations (my skills), put 20% down (avoid LMI) if their around $300k, do up, lease out, neutrally gear and just sit on them this way.

I’ll pick areas I know, suburbs I’m familiar with – and shop wisely so that they’ll raise in capital with renovations but also lease out well. These properties are few and far between but they do exist.

This is an old fashioned way of getting liquid cash and sinking it in investments and I know I can bail at anytime and get my cash back. My advisers are suggesting a method which I’m sure is better tax purpose wise… but I’ll be fully mortgaged to the teeth and it might worry me.

Sorry for the long post – how do you know to do things your own way- opposed to what is decimal point, number crunching and mathematically perfect what your accountant might suggest?

Thanks for your replies