Have you heard of a line of credit loan (LOC) ? (do a search on the forum for heaps more info)

You can borrow up to 80% LVR against your PPOR

So take the value of ppor * 80 / 100 and then subtract from the result what you owe on it.

This final subtract result figure is what you could borrow if you can service the loan.

You may be able to borrow enough for the deposit for the land and then get another loan using the LOC funds as a deposit if you can service both loans.

Best part LOC is for investment purposes and is separate from the PPOR loan for tax return. 

if not renting and claiming expenses against rent  you claim expenses and interest costs as a cost base increase keep records .

So the risk to PPOR can be minimised if you pay off the LOC loan ASAP.

I think I am what you would call a Buy and Hold investor (please help me with identifying what I call myself if this is incorrect). My plan is not to sell for a long time. My goal would be to own several properties (no debt) at early as possible so that I may retire with the passive income of my properties rental income, selling the properties as I age and as required to sustain my lifestyle… IS THIS SILLY? If not what kind of investor am I, whats my label?

You are almost on a good plan however do not bust your guts to pay off all the debt. I have thought about this type of investing and to me it makes more sense to get the investment debt down to a level where the rental income = expenses incurred.

That way you can hold the property and while it is rented out it costs you nothing to hold it. Also the rent increases over time !

Then you can borrow against it as an LOC for a deposit to buy another property if you wish to.

Label – Passive investor – buy and hold – with positive gearing as final goal !

however if you build a house on it you are also a bit of an active investor / developer

(plus if new building and you rent it out see building write off depreciation do a search on this in forum)

I have followed my realestate industry very closely for the past 5 years, I have red a few books and attended seminars however all I have really learned is that you must be careful where you learn as differing teachers values can take you down differing paths. Now I have great conflict within that I need to resolve and I hope that the kind people here may help.

The primarly being the whole concept of lending to invest. For years I was taught you buy and investment property, if you are lucky and claim all tax benefits effectively the new home will only cost you approx $100pw paying a interest only loan.
Soo… I dont return any income on a weekly basis infact I pay, I dont pay off any pricipal so in 25yrs I still dont own it and I am solely relying on capital growth to return my investment of $100pw. Plus I take risk on it not been rented or decreasing in value and potentially risk my PPOR…. Why would I do this?

I must commend you for seeing this fact most new investors do not see this main point.

If you pay for the short fall each week and negative gear you have to make a gain of a certain amount to cover the loss each year.

now with lower tax rates if you are on a marginal rate of 30% then for every
$100 you spend in expenses you get $30 back if you earn income from a job.

So if you make say 7% a year in capital gain at the end you get a 50% discount after 12 mths and then get taxed 30%.

So say you spend 100 a week that is a 3640 a year loss after tax return for say 10 years 36,400 lost so you need a capital gain of $43,000 to break even before CGT tax is paid out. 

What you need to consider is paying off more to get to a cash flow positive position ASAP.

By doing the pay more off it you will be able to borrow and buy another property and do the same thing again.

p.s capital growth in metro areas averages out to 7% p.a over 10 years. I have experienced 9% p/a but 7% is better for guessing the future value of property in 10 years time. !

If it has been leaking for a long time you will have wood rot in the floor boards right near the wall and you might have structural wood in the wall that is rotten also and the bath tub will have to come out to get at the floor boards to either replace them or bog them up depending on the damage
There is a product that is like a liquid that when smeared on the floor it hardens and is water proof
so that floor tiles can go on top. see http://www.constructionchemicals.com.au/PDF/Wet%20Area%20Waterpf%20Sys_web.pdf
http://www.totalwaterproofingsupplies.com.au/templates/content_template.aspx?pageID=34&productID=276
And Bunnings sell Poly shower cavities and bases to have a waterproof shower.

New taxable income = $60,000 gross income + (rental income – $7000 -3500 -4000)
if rental income -$7000 -3500 – 4000 equals a negative figure it is a net property loss that is subtracted from gross wage
if rental income -$7000-3500 – 4000 equals a positive figure is is a net property income that is added to gross wage

on the tax return form there is a place labelled as net property loss / income

First thing – Welcome to the forum
Well what you need to do is get your finances in order.
What I mean is do not go out and buy the most expensive car brand new on finance and after spending five years paying it off you have a car with the value of about one fifth what it originally cost you. Or buy a 3d television, ect

I would recommend buying books and learning as much as you can about property investing.
http://www.businessmall.com.au

One thing to be aware of that is different
 is that you do not have to buy a property where you live if it is investment.
So you could buy a rural investment to get your foot into the property market.
 It may not go up in capital value but you have a toe in the market.
Once you have paid it off
You then have a security you can borrow against or sell to fund the deposit for the next property purchase.

Another method is what is called a joint venture this would require you to network with other property investors so as to share the cost of investment for a property.

Another form of method is what is called active investment. (Property development or renovation)
http://www.activepropertynetwork.com.au/

The thing with property is the first one is the hardest and once it either goes up in value or you pay it off you have an easier time buying the next one. As you now have extra income helping you pay for the next one and also the security to borrow against.

I am in a similar situation to you as I am not full time employed so I am currently paying down a HECS debt and doing courses so I am ready when all my debt is paid off and then I will start saving toward my next property investment.

It is very hard to change the structure once you have purchased a property without incurring stamp duty and capital gains tax.

I was in a similar situation and sold my negatively geared property and had to kick a tenant out
as negative gearing also affects centre link and  family office payments as they deem the lose as income to work out your payments.
Even though you can't get a tax refund and they do it on the whole 50% share of the loss you claim
even though you are lucky to get even 25% back as a tax return if you were working.

Was the subdivision already done when you purchased the investment or did you sub divide it.
If you sub divided it you need to work out the vacant land value originally so you can work out the capital gains implications of selling the vacant land.
Also you need to factor in holding costs if no rental income has come from the vacant land as this can be added to the cost base.
You need to factor in sales commission if selling through a real estate agent as a cost of selling.

Residential property doesn't go up in value just because the rent went up.
You need to look at comparative recent sales in your area with similar houses to get an idea of the possible value or look at the council rates notice it gets revalued every two years.
 
Can you afford more debt ?
As you may be able to take a line of credit loan against the investment property  as security or against the property you live in for the extension. The LOC separates the original investment loan from the new private use loan (LOC) for tax purposes and is usually up to 80% LVR
475k + new LOC   = 80 /100
/ 855k
new loc = (855k* . -475k (existing debt)
new loc = 209k
This is not money it is a loan so you need to be able to service the loan to be able to borrow it as a line of credit.

I was told that banks do not like to lend to trusts. However a company owned by a trust can borrow, however the director goes guarantor for the company loan, which you would have to declare to another bank that as a director you have guaranteed a loan for .company XYZ. And with these new credit laws you have to prove you can afford the loans/

What is your goal for property investing.

Is your goal to get a small tax refund through negative gearing ?
Is it to increase your income through positive gearing ? (this might apply if house one has a low loan)

If you rent out your Main residence you need to get it valued or deem it to remain your main residence through applying the six year CGT main residence rule however the new house would lose its main residence exemption for capital gains tax as only one dwelling at a time can be deemed a main residence.
Warning – do not do the following
Borrow against the equity of house number one and then try and claim this equity loan interest as an interest cost against house one's rental income.
Why because you fail the purpose test. The purpose of your extra equity loan was for your new PPOR rather than for investment.
Warning – Do not do this as well
Borrow for your new house and then try and claim the interest on the new loan against house one income.
Why because you fail the purpose test. The purpose of your new loan was for your new PPOR rather than for investment.

Also the ATO looks for these common mistake and starts an audit on the tax payer.

If the bank is telling you you can do this they will most likely tell you to take out a bigger loan secured by both properties. This sounds great but it limits your ability to sell one of these properties and also if you have difficulty paying off the loan you can lose both properties.
I am advising you to do a search in this forum on the following key words

Line of credit
LOC
cross security
cross colaterisation

to get an more knowledge on this area of lending.

You can either get the property valued when you move in and have a record of what the sell price was when you moved in.
As you have moved in you actually create a capital gains event by changing from investment to main residence.
The valuation is one method and gives you a record. THe main thing is to keep records for the life of the asset !

The other is that you can proportion the time you had it as an investment as opposed to the time it was a main residence.
ie
Capital Gain taxable = number of days as investment property * capital gain / (total number of days owned)
As the property market is slowing down the gain should be small and if over 12 months you get a 50% discount on the capital gain.

Amanda,
I suggest you ring a few insurance companies or insurance brokers and state that you need building and contents insurance with no one living full time in the house due to it being renovated.
 A lot of insurers won't insure if no one is living in the house.
 I have used land lords insurance to cover this but it is the building that is insured rather than contents.
Not sure on the contents as well being insured without someone living in the premises.
One of those insurance companies will know who and what does this sort of scenario for insurance.
It could be a specialized insurance policy and that is why I am suggesting a referral from an insurance company.

You might consider needing public liabilty insurance in case a worker gets injured on the reno job.

You could try IMAR as a starting point as they do business insurance and might have a better grip on these scenarios
http://www.imar.com.au/#/contact