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I was referring to redraw on one split which had its original purpose as Investment, then the client redraws funds out for a personal use. Clearly separate splits for investment and personal loans are best but in this case the client mixed up the transactions in the one loan with no splits.
Just read some of the articles so basically as long as the client clearly identifies the transactions and maintains proof then they should be okay?
Have you got that in writing from the ATO because my client’s discussions with them does not concur with your conclusion.
I have heard stories of redraw being a problem that if it set up on an investment loan and the client redraws money for personal reasons.The ATO then deems the loan purpose to have changed and hence the loan interest becomes non-deductible. Something to definitely check out. I would like to know if anyone else had that problem?
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Looks like you are in a good position. I suggest only buy the new property as after 10 years the older established properties will need heaps of work. How do you know you will get 7% capital growth?
Sometimes it is wiser to be conservative and assume say 5% for capital growth and work the numbers to make the investment stack up after all Capital growth rates are purely opinions…
Hi Steve I am in the investment property game and the best thing you could do is talk to Colin Rice first about the financing of the property. Then go and select the right property and HOLD, HOLD, HOLD….don’t forget that TIME wins always in property. To buy and sell incurs massive transaction costs that reduce your Return on investment. Hold this baby for every and it will be cashflow positive in no time and allow you to build a property portfolio. Makes this number 1 of 10 properties over next 20 years and by 44 mate you can retire and have a great life….
It is not the city you should be looking at although Sydney is overpriced I believe. As this will be an investment property and not a home to live in it would be best to look at numbers for each property and see which is the best investment. Try to keep an open mind as to the location and if the location is out your comfort zone just check out the reasoning of why that location etc. Remember to buy new and get the best returns and save on stamp duty and maintenance costs.
Hi Colin what do you think about this group, is it not a renamed one?
Great points Terry. Rex I think u need to think this one through.
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Steve Keen is right on the money but underestimates the idiots who run central banks and governments today. Property prices may crash at some point in time but more likely not in the next 10 – 20 years. Australian interest rates will go to less than 1% and overseas buyers will continue to look at Australia as a safe haven for their money. The problem is that if you don’t play the property game everyone else will and that is the animal spirits that is missing from the normal economy but well alive in the property game. Don’t buy investment property and look forward to your kids renting for life…..
Rex, I reckon you are just delaying the inevitable being that one day you will get married and have a third wheel in the equation which will stop you in your tracks. I have seen this many a time and it all works out poor in the end. Colin has nailed the issues and obviously knows his finance.
I would suggest you quit the existing property while the market is good and take your share and start your own property portfolio with no disrespect to your partner at the moment. Just remember short term pain for long term gain!
Hi Rob, Love the enthusiasm to build a property portfolio but perhaps you should look at getting the first one and learning from the experience. So my answers would be
1. Buy 1 investment property and reassess in 6-month reviews
2. Diversity is good
3. Look for land content but again assess each property on its own merit not just by asset class
4. At $380k you can buy some stuff but again depends on your risk rating and fear factorI am sure others will give you their opinions so tread carefully and keep your eye on the dream!
