OK, that explains it. They can be quite volatile – in both yield and property values.

Is the PM confident that they can secure another tenant if this one decides to walk? 

Cheers

Jamie

OK – sounds like a bit of a mess. First thing I'd do is split the loan out so you can distinguish the original loan (the 67% LVR) and the new loan that you've set up (the equity release) which has been used for personal expenses. 

I'm not an accountant but at this point it seems to me that you really need to be able to identify what's deductible and what isn't.

Cheers

Jamie

If the current agent isn't performing than I wouldn't have an issue with switching up.

Have you raised the issue with them?

Cheers

Jamie

No worries.

The main thing they want to see is that you can service the debt, have a deposit, don't have a heap of bad debt and no defaults on your credit file.

Your overall asset/liability position relative to your age comes into play – particularly for credit scoring. However, I haven't had too many issues in the past where I'm arranging finance for a client who has existing properties at high LVRs. It probably helps to have existing properties lower than 80% LVR from a credit scoring perspective – but no one really knows how credit scoring works across the numerous lenders (not even the credit assessors themselves).

If you're worried about the next loan being knocked back – it might be worthwhile getting a decent broker to look at your options and sort it out for you.

Cheers

Jamie

Hi Jon

Given that your current PPOR is going to become an IP – I wouldn't pay down any of the debt. I'd continue to do what you're currently doing – park money in the offset – and then move these funds onto your next PPOR when it's time to purchase.

Equity is calculated by taking the value of your property and multiplying it by the lenders max LVR for equity releases which is generally 90% – then subtract your loan amount.

For instance, if you had a property worth $100k and a loan amount of $70k – you could access $20k in equity ($100k * 90% LVR = $90k and $90k minus $70k = $20k).

Cheers

Jamie

Hi and welcome aboard.

If I had to choose either, I'd go for an apartment in a smaller complex over the larger one. With large complexes, you can find yourself competing for tenants and potential buyers if you decide to sell up. A few quick fire sales in the big complex can also cause the value of your property to decline.

Cheers

Jamie

My thoughts are that cashflow is great – if a property is putting more money in your pocket than it's taking, that's fantastic. However, if the property isn't likely to go up in value – then it can be difficult to reach your goals.

Unless your investing in a mining area with high yeilds (but come with their own risk) or properties that are generating more than one source of cashflow (such as multiple dwellings – granny flats, etc) then it's going to be difficult in this day and age to accumulate enough CF+ properties to live off. It's not impossible – but it's not easy.

Lenders are also starting to cap the yields that can be used from IP rents – which presents another hurdle for some investors.

Cheers

Jamie

If you can afford it – then why not. Sometimes we just need to treat ourselves – it might not be the best return on investment financially – but if your jungle shack is going to bring joy than who cares. It sounds like an amazing place BTW!

Cheers

Jamie

Hi Nathan

Your plan of attack sounds pretty good – looks like you've done your research into correct structuring. My only comment is to leave enough of the loan variable so as you're not in a position where you have a surplus of funds that could be offsetting the loan sitting somewhere else.

Cheers

Jamie

Yep – I'm with Tom. Could be state specific terminology – in Canberra it's body corporate and across the boarder in NSW it's strata.

Cheers

Jamie