Not sure of your long term plans but paying the equivalent of P & I on your investment loans is generally considered not a great strategy. This is particularly the case if you have other non-deductible debt (home loan, car loan, Harvey Norman special etc) which would better place for your surplus cash.

if you have no non-deductible debt then I strongly recommend an I/O offset account combination. This ensures you are reducing your monthly interest payment and maintaining absolute flexibility of excess payments. As an example if you dipped into your redraw to buy a car then calculation of deductible portion of your loan becomes more complex and the redrawn component is not deductible.

There is no hard and fast rule as there are too many variables. Interest rates are the biggest expense you will encounter and you will move closer/further away from being neutrally/positively geared with rate movements. Other factors coming into play are rental changes, rates, strata fees and so on.

henny wrote:

Maybe that is not 'positive gearing' but neutral gearing?  Sorry if I used the wrong term

If the asset is only paying for itself without surplus income you are basically neutrally geared. Surplus income = positively geared.

Hi Michael,

If you (or your parents) do choose to self-manage make sure you have an intimate knowledge of the relevant legislation in the states in which your parents have property. Legislation does vary from state to state and your parents will need to be on their game.

I ask why are they considering going alone? Is this something they want – or something else?

Key issue for me is self-managed property is not a 'part-time' hobby thing. Your parents will need to be absolutely on the ball with it in a manner much like Jamie and his wife have approached the whole thing. Clearly Jamie's wife is acting as a de-facto property manager and has fully taken the responsibility on board. Can your parents do this?

Has the person responsible for putting the stop sign in been run out of town yet?

Grossing around $1000/week = $52,000/annum less costs.

Amount of tax payable will be reasonably small if properties are owned jointly.

Will still need to seek financial advice as they will probably be over the assets threshold for any reasonable pension. Some selling down in a low/no income year and transferring cash into super fund may be of benefit.

But, like Luke, I am not a financial planner. Some more information may be of use to the forum as they endeavour to throw ideas up for your consideration.

Ditto above – just make sure you slightly underestimate expenses and overestimate income so you never end up with a tax bill at the end of the financial year.

If you are wage earner with steady income and not a contractor, small business owner or someone with widely varying income the process is very easy indeed.

HI Matt,

Usually – very small complexes may have minimal strata costs. This occurs when there is negligible common property. Rule of thumb the more common property and shared facilities there are the higher the strata costs. Big ones to look for are lifts, swimming pools and gyms.

Original poster – all but two of my properties are units/townhouses and villas. As Jamie said much of a muchness and really depends on your personal situation.

Hi Sam,

Sounds like you have thought it through. Make sure you don't get overly excited about negative gearing – the more negatively geared your portfolio the fewer tax deductions (in percentage terms) you get.  This will limit your journey to varying degrees – even if you have a high income the brakes will be applied sooner or later.

Now I must admit I am not a reno type investor – so take what I say with a grain of salt – just make sure you know what you are doing. I have seen some renovation success stories where the story tellers have forgotten to factor in their labour and time along with general market movement into the profit calculations.

The other thing I would say is do not forget to factor a 'family' into your decision making. Dropping down to one wage with a negatively geared portfolio can be problematic depending upon how you have structure things.

A follow-up article in today's SPI Online quotes some 'investment groups' as having stopped recommended Moranbah since middle of 2011.

The article is here

Hi Todd,

'Taking from the community' really relates to the lack of return the community gets from FIFOs.

I understand fully the FIFO nature of rosters etc does have a huge impact on a persons ability to give back to local sporting, social and community groups through involvement in such organisations. On top of this there is ample evidence to show the FIFO dollars earned are not spent in the town in which they are earned thus leading some local business to struggle, especially when this is combined with high costs of operating a business in mining related communities – this was a common point raised in the enquiry.

Some people fondly recall pre-FIFO days when these communities grew as family towns and people happily raised their families in remote and distant localities because of the friendly nature of the towns. 

Know what you say about some of the locals too.

Find out who the PM is and speak with them directly.

They will squeal privacy act and will not release owners name but explain what you want to do, have some quotes/figures to present to the property manager for forwarding onto the owner. Property Manager will need to be sold on the 'improvement' idea so they can explain it to the owners for their approval.