Ok, thats what i thought. So then, how does one benefit and keep investing by borrowing against equity to fund repayments on other investment debts? I know that this is only safe and works provided your portfolio continues to grow each year (otherwise you eat away your equity..)

I spoke to a couple of buyers agents once, a couple of years ago and they said that is how they service $1mill + debts whilst only making $40-50k income from their jobs.  I dont get it since you would still eventually reach a limit with serviceability wouldn't you? They were neg geared investors.

Or maybe im missing something? i guess they might be using lo doc loans…

Congratulations Kylie, that is amazing!

Im not from Brisbane but i bought in the Armadale area of Perth back in 2003. It was all i could afford at the time and i had an aunt that lived in the area so i had a look around. yes it was and still is considered 'rough' and i think it has similar social stigma or outlook that people have of the Beenleigh area. However i dont regret it one bit, i made excellent gains and the area has so much redevelopment going on it has still got good potential.  I think even other better perceived suburbs have their good areas/streets and bad.

What im trying to say is, these areas are affordable and provided all the growth potential qualities are there they make for good investments. You just have to get past the general perception of low socio-economic areas.

Hi
I have the same dilemma as you Paul, so i  cannot advise although im posting here while we are on the same topic.

Richard, im interested to know whether you believe a LOC iis a good product for investors. Im quite conservative with my investing and very diciplined with our budget so i am on the fence on whether to use a LOC. I can see the benefits of having flexibility to use the funds as a deposit on further investments, as all loans are stand alone. On past occasions i would just refinance one first, then take out new loan for the balance.

However i just hear a lot of people/brokers tell me to increase loan and use redraw facility instead. Which i know is cheaper but it still is not the same thing and not as flexible. Are LOC's really all that bad??

Also from WA here. Another thing is the rezoning can take many years to eventuate. Ive been told of a Perth council that are reveiwing their town planning scheme with proposed zone upgrades. They are yet to implement them and its been 5+ years. The process is lengthy with public advertising and referrals, and WA planning commission submission etc.

So it involves a lot of research unless you dont mind holding for a long time before zone changes. By the time they get closer to implementing the rezone the prices are already quite inflated.

But that said if there is specific strategy anyone has to share i would be interested to know it!