Hi all,

On the Home page, about halfway down (use the scroll bars) you will see a brightly coloured box with words like “Do you have some of Steve’s books? Unlock your free gifts!” and a big button to click.

It does bring you to the same place as the link mentioned above. But it is far easier to find on the Home page than on a 3 year-old thread. ;)

Benny

Hi all,

Like you all, I tried the link that Jamie provided. It failed. But then, I deleted the latter part of the URL to leave just the website name – that worked, so I looked down the home page, saw the “Investors” button, and clicked that.

On the Investors page, right down bottom is a list of resources – and one of them was the “Property Analysis tool” – clicked THAT, and up it came.

And guess what? It was the IDENTICAL link to the one Jamie had posted (????) but this time it worked. Go figure !!

Benny

Hi Jaxon,

I really disagree with Benny under most cirumstances,

Hmm, I thought we thought alike….??? Maybe there was a typo there ! :p

Yes, either way can work, Jaxon – but with what I think you are saying, any new mortgage on the old PPOR is not a Tax deduction, thus N2I will be paying full Tax on any Income derived from renting the old PPOR (because the purpose of that new loan against it is for PERSONAL reasons – buying his new PPOR). Only the original $100k mortgage would be deductible.

Is that cause for alarm? Maybe not, but it would be smart for N2I to “run the numbers” prior to making his choice. Of course, if he did go the way you suggest, then there are ways to allow the expenses to grow (slowly) against the new IP by borrowing to pay rates, insurance, etc.

But if he were wanting to capitalise Interest, I’d suggest he get an ATO private ruling before going ahead.

“Careful” Benny ;)

Hi Investor,
Interesting question !!

Because say for example he looks for houses for you and he spots an amazing deal that is available on the market, and the buyers agent job is to tell you of such opportunity. Isn’t there a good chance that they might take that house and take your attention to another house so they can buy that one? Or am I missing something?

I would say there is as much chance of that happening as if you approached a RE agent to find properties to suit your circs. If they find a “hot deal”, wouldn’t they also go the same way and not present it to you? So really, you are “at their mercy”.

The flip side though is this:-
1. No Buyers Agents nor RE agents are able to buy EVERY red-hot deal that comes up. Instead, they build rapport with investors (who they hope will become regular customers of theirs) by offering these little gems to their lists of buyers.

2. They are in the business of FINDING properties for someone who is paying them for doing it. Hand in hand, they are endeavouring to “build their business” – now, if a BA was to stiff you by buying something that would have suited (and you happen to find out about it) how likely is it that you will use their services again? Buckleys comes to mind.

Hope that helps,
Benny

Hi Craig,

As I understand it, taking a mortgage against a house that is an investment property doesn’t necessarily mean the loan will be deductible. This is because the deductibility is based on the REASON for the loan. And, in your case, if the reason is to pay down your PPOR, then that is personal, and thus non-deductible.

HOWEVER, if you borrowed against the IP to purchase another IP, or even shares(?), then it very well could be deductible. There is a whole lot to it, and I would suggest you run your situation by a Mortgage Broker to see where you sit, discuss your goals, and have them look to see the best way forward for you. Lots of good ones on here – check some signatures of those replying to finance questions.

Benny

Hi Simon,
Re the Fixed Rate, be sure that you know just what can impact you if your plans were to change. By this, I mean that if you had any reason to have to “break” that Fixed loan, it would cost you dearly. So, if you are thinking of refinancing soon, or maybe needing to sell, or even have concerns about the security of your job, do think hard about a Fixed Loan. At the very least, before taking it on, check what the cost would be (ballpark) if you needed to break out of it the next month.

The “break costs” of these loans are horrendous. On the one occasion when I had to break, I tried to work out what the Interest costs would be for the time left, and allowed the fees that are tacked on to do it. Even then, I was wrong by a factor of 3 (it cost me 3 times more than I was expecting).

Currently I get portfolio loan with bank of Melbourne (advantage package), even I get 1.35% discount, however, my rate is still at 4.75% which I think it is a bit high.

Only a couple of weeks back, one of our resident gurus warned about Portfolio Loans, and that they shouldn’t be used except in special situations (short term, was it?). I can’t recall the circs – but essentially, they are a Loan that is fully favouring the lender. As such, the rates are not likely to be beneficial to you. Maybe check to see if you can opt out of the Portfolio onto a straight IO loan with them, and check the rates and/or repayments if you were to do that. You may get a pleasant surprise.

Benny

Hi Simon,
Your reference to the other post reminded me of “all those extra little jobs” that were crushing you…
https://www.propertyinvesting.com/topic/5037056-all-the-little-jobs-loose-ends-at-the-end-of-a-reno/
is the link for any others interested.

So how did you go with all those little jobs? Was the above list detailing them all, or were there other small jobs “yet to be done” after those mentioned above?

Sounds to me like you have done very well, and not over-capitalised at all – lemme see if I have this right now (estimates I make will have .est. alongside the item):-

Purchase price ………………………. $320k
.est. Closing costs at 3% of $320k – call it $10k
Renovation/paint/etc ……………………$25k so all up, $355k to get into a 4/1/2 house in that area.

I don’t know which burb of Logan you bought in, but I took a punt at the kind of area with a $375k median for a 3 bedder, and found a suburb that is close (had median of $369k). Then, I looked for a 4 bedder in the same area, and it told me $430k !!!

That tells me, that it is odds on that your (now) 4 bedroom house is in an area with a median around that same figure. Well done !! A sweet little equity gain there. Of course, your place might not be quite median for several reasons (you bought it below the median – was that great buying, or does that reflect location, condition, or desperation on the part of the seller?)

Suffice to say, I reckon you have done well. Oh, and a rent of $425 weekly fits with a median value of $430k as well, according to re.com

Nice work, Simon ! Spend a week or two coming to grips with what you just achieved. Then sit down and think hard whether that is something you want to repeat (perhaps again and again) or whether you might try a different tack.

If it is true that you just generated $75k ($430k less $355k) in a few months, what if you did two per year? Of course, that is an Equity jump – it doesn’t translate immediately to Income, but hey…. I’d take it !! ;)

Benny

Hi Matt,

Check Jamie’s signature !! :p He is one of several very knowledgeable MB’s who give their time on here. Others can be found by keeping your eye on all sigs of posters, or perhaps check here:-

https://www.propertyinvesting.com/topic/5031421-to-all-mortgage-brokers-and-other-advisers-too/

And no, that is not all of the MB’s on here, so keep your eyes peeled for more.

Benny

Hi Brett,

Question for everyone else though – if you eventually move into the property you purchased as an investment, can you theoretically never pay the capital gains tax, or do you have to claim a taxable event when you switch it over to an owner-occupier residence? Maybe someone here might know the answer to that. It might be a decent way to get into a property while renting – set it up as an IP, get the tax deductions for a few years while sharing your rent and living expenses are minimal, and then switch over to a owner occupier loan and not pay the CGT until you sell it (which may be never if it becomes the family home).

AFAIK, this can only work if you move into the house FIRST to make it your PPOR. THEN, you can move out (and go renting – just don’t take on another PPOR) and the house can then be made an IP for up to 6 years with no penalty (and no CGT on sale).

If you set it up as an IP before making it your PPOR, then any gains will trigger a CGT event, but any CG is only for the period from purchase until you moved in (e.g. buy in 2017, move in as PPOR in 2021 – first 4 years of growth is a Capital Gain – then it is your PPOR until it is sold).

There “might” be more to this (and I am not an accredited adviser, so the above is my opinion only) so DO check the above with your adviser. Like, WHEN exactly is that CGT owed? Is it only after you sell the PPOR (could be 40 years in the future), or does the “trigger” bring on the CGT action and you must pay it at the time you move into it as your PPOR? I don’t know this level of detail…..

Benny

PS I rather like that idea of living in a “shared house” if can work in your situation. Certainly it can be a neat way to save money while you get your investing “up and running”.