Hi all,
My wife and I have 90,000 left on our place of residence,with an estimated value of $550,000-$600,000 (valued by real-estate agent who was a friend)as I am a pessimist I say $500,0000 That way if it was valued by a bank for more that would be better than the other way around.
1 point. We have nearly $200,000 in our loan that we could redraw as it is surplus from us smashing it down.( not that I want to use this money just thought it bares mention in case someone has other ideas.
Q:Should we continue to smash our home loan down to $0 before we start investing so we have family security? My answer YesWe are hoping to have this $90,000 paid before the end of next year if all goes well
Q:is it stupid to redraw from family home to put a deposit on a IP or is it smart practice? My answer stupid
Q:Is there any reason why investors buy existing dwellings over building new ones to rent out?
Q:is it best to buy a turn key property or do the finishing touches yourself I.E.flooring,painting,landscaping,curtains (I am a handyman )
Thank you to anyone who replies,I appreciate it very muchHi Lee
Answers as follows
Q:Should we continue to smash our home loan down to $0 before we start investing so we have family security? My answer Yes
Not necessarily. You cannot save your way to glory. You have equity that can be used to get you into another asset that produces income and capital growth. That is a model that out-paces your ability to save.
Q:is it stupid to redraw from family home to put a deposit on a IP or is it smart practice? My answer stupid
True. It is not the most tax-efficient method of accessing equity. Redraw is very different to refinance to release equity. Very different post-taxation outcomes. Don’t assume you know the difference. Be sure you understand the difference and only use brokers/financiers that understand the difference too.
Q:Is there any reason why investors buy existing dwellings over building new ones to rent out?
Yes. One example is the difficulty of financing new-builds when the build takes longer than a bank loan offer document. Another is peoples’ inability to visualize a finished product.
Q:is it best to buy a turn key property or do the finishing touches yourself I.E.flooring,painting,landscaping,curtains (I am a handyman )
Unless you a tradie expert in all these fields I do not think you could finish the product cheaper than the bulk builders could.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thank you very much Jacqui for your answers especially the second Q of mine I certainly need to research this a bit more with your input of advice.Q1my old Boy always said when I was a kid you will never get anywhere unless your in debt,which pretty much aligns with you can’t save your way to glory.Shame it has taken 40 years to realise
Cheers
LeeJust had a very interesting conversation today regarding our situation.I was introduced to a strategy that I have never even seen or heard of.( I’m new to all this but have read a lot so no big surprise to all you guys)
Strategy is to take out two investment loans 1 for the 20% deposit and costs securitised to our Home and a second mortgage for the 80% of the IP securitised to the IP ( so this is a no money down deal).
So the idea was for me to keep smashing our home loan first and move on to the small 20% + costs loan and then onto the 80% loan?This strategy will be the most tax effective as 100% is borrowed and best of all no LMI.
Then the fun begins.
If anyone has any input to this strategy or better strategy I’m all earsHi Lee,
Seems to me you are starting from a good place!! Having that equity means you ahve the capability of “moving on into property investing”. I would caution against doing too much, too quickly. You may be getting an inkling that “There is a lot more to know” and I would agree. Take some time to learn as much as you can from those who have done what you are thinking of doing.This forum is a good place to start – but add in books, seminars, and meetings with people also doing this. And you also might wish to check out this link :-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/As well as that, DO consider just how much knowledge you might glean by attending Steve’s 2-day seminar (just announced – check out the banner on the Home page). For a tiny amount, you will have access to one of Australia’s foremost Property Investors, as he shares his knowledge. Yes, you might get overwhelmed, but you sure will get excited and keep on chasing the knowledge after hearing Steve in action.
I’d say “Plan to take some time (maybe 6 months?) to become schooled on the basics at least, BEFORE getting your feet wet in Property Investing. You have the equity to make it happen, but your knowledge needs to be at a level where you can avoid most early mistakes (at least).
Very soon you will see there are many paths – you need to choose the right one for you and your family.
Welcome aboard – enjoy the journey, ;)
Benny
Hi Lee
Yes it is a strategy both Jacqui and myself spend most of our working days establishing for forum members as cross collateralising securities can cause more problems down the track.
Of course your lender will give you a 101 reasons why they think it is a good idea but trust me in the main the only winner is the lender.
Just make sure your Mortgage Broker is aware of some of the tricks of the trade when implementing this.
Cheers
Yours in Finance
0-40 Properties in a decade. Email me for a copy of my API interview.Richard Taylor | Australia's leading private lender
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