Im not sure about your question but dont forget cgt, may look sus if done in a way they dont like

Its a piece of cake, i did it and told my old guys to eat the sh.t theyd been giving me themselves. You dont need to do much, the new agent will take care of it for you. My new guys were better and cheaper, wish i did it earlier.

Sounds like you know a fair amount. Keep talking and learning but ask people who have commercial property not just residential. Good luck.

I agree with bangers.
Sure you have manoeuvred well with min payment on 0% and 3% interest on saving. Look into UBank highest interest.

Anyway, you’re fighting well, but after that credit card you owe tax money. They’ll let you pay in instalments but it won’t be free.

I know you want to invest but the skills you will gain paying off the debt will help you to buy later. Continuing this money shuffling is a bit smoke and mirrors. It’s a lot of activity without necessarily doing much. You’d have to bang out the calculations to be sure but the safe money is on paying down debt.

*not able to borrow too much for loans.

Hello Calderan,

Don’t be embarrassed.

To make it really really simple. Imagine you have a business.

Calderan properties. Think of your mortgage interest and other costs like insurance, management fees as your costs. Think of rent as your income. When your business is making money it’s positively geared. If you are not earning as much rent as your costs that’s negatively geared. Thats a simple explanation n

The thing is there is so much everyone now will want to tell you.

I’ll try to be logical. So pos geared wahoo you make money (often as low as $50 a week). Neg geared you don’t even make that $50 income cashflow. So, why would anyone bother saving $50,000 or more for a deposit to make $50 a week or even lose money?

Capital growth. If That $500,000 house goes up by 4% (like in a savings account) that’s $20,000 growth. So, why buy a house instead of just putting it in a savings account? 5% on $50,000 is only $2,000. This is why gearing (borrowing) is so powerful. Even if shares pay higher yields, you can’t borrow 95% of the share price.

So why the fuss on pos geared?

2 reasons, and they’re sort of related.

1. You can afford to pay the interest on your loan. If a property is too negatively geared it can cost you any amount of money to hold on to. Watch country house rescue. Those guys need like £100,000 a year more income to run their mansions, estates etc. That’s why they’re on tv hoping to be saved. If you are positively geared by just $1 a year you are holding on to that house easily.

2. The more pos cash flow you have, the more total income you have. Back to the $50 a week example. If you had just one property earning you that, you’d have $2,6000 more a year. It’s good but it’s nothing to be very excited about. What you can do with that though is interesting. Go and find and online calculator with your income and find out how much you can currently borrow. Now add $2,600 to your income. You’ll be able to borrow a lot more than $2,6000 more. So, ok, now you can get a bigger loan, so what? What if you used each loan to buy 10 more pos cash flow properties. Even a modest $50 each a week.

You can do your own research on pos vs neg, people will jump up and down about it. But, there are some facts.

Negatively geared property is easier to find.
Negatively geared property on new builds offers considerable tax deductions reducing the tax you pay. (My property due to the tax depreciation basically pays for itself. Either the money is depreciated on my house or if I sold it I’d have to pay the same in tax. I’d prefer to have my own house). In this example it’s not unlike health insurance. I earn enough to make it worthwhile having it. At least I can claim medical costs with it. Otherwise I’d pay the same in tax and be less well off.

Positively geared is harder to find.
Positively geared normally involves some kind of work, adding a granny flat, finding a far flung house in a small town. Stuff like that. It takes effort and time to make a house pos geared.

A normal portfolio will often need a balance of pos and meg geared to enable growth. Maybe a house is a great buy but it’s negatively geared. If buying a house will make me money in the first year I’d be happy to pay a bit more to hold it. Maybe a house is pos geared but it’s super risky, a business shop in a town that people have left.

The big picture is important.

read steves books. I just borrowed them at the library.

Terryw on this forum will probably have the answer for this but it sounds like an issue for future loans

Let’s say it’s $400,000 loan. You’ll be seen to be responsible for $400,000 with only $200,000 equity. Sounds to me like you’ll have more trouble getting future loans. You can get an agreement where the loan doesn’t show it but you both own and owe 50/50 through a solicitor I believe but using the guarantor idea doesn’t seem to me to have much benefit than a normal joint loan.

Guzee,

On this forum people will always say

“It depends. We need more detail.”

Your post will get this kind of response if any. That’s ok it’s your first go.

I don’t know SA so I can’t tell you much but why SA? You can invest anywhere you can afford. If it’s SA then what is it you want? Don’t say maximum growth and maximum rental income. Everyone wants that most of the time but you have to give us an idea of your plans.

For me, my next property I want lots of land so I can subdivide and develop. So that narrows the field a little, it has to be big land and somewhere where it’s profitable to develop.

What are you looking for?

Irrespective, try to buy somewhere where there is demand and growth or likely growth. Realestate.com.au will accurately summarise all of those suburbs for you. Find out what a price ought to be. Try to buy cheaper than the house is worth. Look for low vacancy rate, somewhere people can afford, somewhere people want to rent.

They are just a few normal points to cover.

Good luck.