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The numbers above are not really accurate. If your using equity to fund the deposit your effectively borrowing 100% plus costs. So work out your return taking this into account.
What do people usually do when they have 2 (or more) properties in different parts of the city. Do they stick with PMs in the local area or try and use one to manage all to get a discounted rate?
I would have thought local knowledge of the market would be better than a small multi property discount.
Option 1 sounds feasible. We have more equity that the limit of the LOC so that work. Cheers Terry.
OK. Do you have any examples of what that would be?
Terryw wrote:At the best you would only want to pay the interest on the LOC. Even better is talking to your accountant about not paying the interest at all and letting it capitalise – must be careful though.If you can do this you can pay off your PPOR faster (although the ATO doesn't see this as a legitimate reason to capitalise interest)
How can you get away with this? My accountant told me you cant.
Thanks Terry
Problem is I probably cant borrow enough to retain the existing PPOR and purchase a new one. I would then need to buy subject to sale which is painful.
Only bought our IP a few months ago so not enough equity yet.
Would a better option be convert PPOR into IP then suck out some equity to use for the next PPOR?
Thanks Scott
Do you know if this type of decision normally requires unanimous agreement by all or will a majority vote be all that’s needed?
Thanks all for the replies.
What are the key drivers people use when choosing to invest in new OTP properties versus older property and renos?
I mean at the end of the day we’re all out to make some money doing this, what personal circumstances suit each of these options?
cheers Darren
Thanks again. That’s what I was asking. On the LOC the bank tells me she has to be included. Does it make any difference if she is co-applicant or guarantor?
Terryw wrote:Deductions?will depend on what the money is used for and who is the owner of the asset being purchased.eg if you buy a property in your name only you will claim the deductions. If you use a wife as guarantor it won:t matter for the claiming of deductions, you will still g et all the deductions and profits/losses.
Thanks Terry. All borrowings will be used for the IP and IP expenses. Does it make any difference if she is a co-applicant rather than just a guarantor?
Hi All
In the process of setting up finance for my first IP.
We have PPOR in joint names. Have made an application for a LOC loan against this property. Tried to put this loan in my name only but the bank wants my wife as co-applicant or guarantor ( for a $200 fee). Does it make any difference which option I take on this loan? My wife only earns about $5k as year so will not receive any tax benefit. I wish to be able to claim the full deduction.
The second loan depending on the IP purchase price may also need my wife as co-applicant or guarantor. Will a bank accept having both our names on a loan and only my name on the property title so I can again claim all of the tax deductions?
Hi All,
Another question around loan structures.
I want to borrow $150K LOC against my PPOR (equity no problem) and $256K with another lender. My broker says I’m marginal on serviceability without including my wife’s income (about $5k pa part time)
My question is does this affect my tax benefit if we have joint names on the loan and only my name on the IP title?
Terry, you’ve mentioned many times that this needs to be setup properly. What is properly?
Qlds007 wrote:Suggested structure would be:1) Line of credit or interest only loan secured against your PPOR to cover 20% of the new purchase price & acqusition costs.
2) Separate standalone loan for 80% of the purchase on the IP.
When value of the IP increases draw the loan upto 80% of the increased valuation and pay back the LOC.
Repeat.
Thanks Richard I should have quoted.
acquisition costs are covered by the LOC loan. Is that better than adding them to the second loan?
Great comments. Whats the benefit of using the LOC loan to fund purchasing costs for the IP instead of adding them to the second loan that used to purchase the IP?
