James from House of Wealth is in Melbourne – not sure how far away from Frankston he is but I'm sure the short trip will be worth it.

Cheers

Jamie

Hi Nardz

Welcome aboard

Long story short – IO on all loans with an offset against the PPOR can be a great structure.

If you're bad with money, then P&I on the PPOR with IO against all IPs might be better.

P&I on all properties is rarely a good structure.

I wrote an article on this – I've pasted it below.

Cheers

Jamie

A question we’re always asked is “should I be paying interest only or principle and interest on my loans?”

When it comes to claiming an investment loan as a deduction – only the interest portion of the loan is tax deductible. The principle portion is not. Therefore, if you have an investment loan, and you decide to pay off some of the principle each repayment, you’re effectively reducing this tax deductible debt – meaning there is less tax you can claim back.

This can be a costly mistake for those who also have non-deductible debt (which most of us do). This includes a home loan on your Principle Place of Residency (PPOR), car loans, personal loans, credit cards, etc.

If you want to pay down any debt – it is this non-deductible debt that you should try and knock on the head first. It simply doesn’t make financial sense to pay down your deductible investment debt when you also have non-deductible debt.

So what’s the ideal structure?

Generally speaking, it’s ideal to have all of your investment loans set up as interest only.

With your PPOR debt, there are two choices to consider. If you are a disciplined saver and feel that your PPOR will one day be turned into an investment property, then it's best to also set this loan up as interest only. However, it's important that an offset account is set up against this loan so you can continue to make the equivalent principle repayments regularly into the offset account. The offset account is also a very handy place for parking any spare savings.

Why is it best to have my PPOR loan as interest only if I think it’s going to become an investment property? Because this debt will become deductible in the future – so you shouldn’t reduce it now.

Instead, you can place your money into the offset account which will reduce your PPOR interest repayments whilst the funds are sitting in the account. When this property becomes an investment property in the future, you can move the funds from your offset account on to your next PPOR. This way, you've increased your tax deductible debt and reduced your non tax deductible debt.

The interest only with an offset account doesn’t work very well for someone who isn't a disciplined saver and will be tempted to simply make the minimum interest repayments.

If you're not a disciplined saver and have no desire to convert your PPOR into an investment property at some point, then it's best to have a principle and interest loan on your PPOR. Once you've paid off your PPOR loan and any other non-deductible debt, you may wish to start paying down your investment loans.

So in a nutshell, interest only for all loans with an offset account set-up against your PPOR loan can be a great overall structure – particularly if you think you might turn your PPOR into an investment property at some point. On the flipside, if you have no desire to turn your PPOR into an investment property down the track and you are not disciplined with money- then it’s best to have interest only against all investment loans and principle and interest against your PPOR.

Agree with the others – while the PM should be proactive, the landlord still needs to be clued up on what their property is currently being rented for.

Like Joe said – an $80 increase is massive.

Cheers

Jamie

No, it varies quite a lot amongst banks – there's no 2% buffer rule that applies across the board. Most banks treat OFI liabilities differently.

Use these with caution – you don't want to incorrectly input information into a 6 year old spreadsheet and then have the lender knock the deal back.

It's about what you can afford as well – not what the the bank is willing to lend.

Cheers

Jamie

Hi Waz

The number of properties someone has doesn't necessarily correlate with their level of expertise. It might also be something that they don't like to publicly announce.

I'd call a couple and start off with an informal chat about their service offering and experience and go from there.

Cheers

Jamie

What Scott said.

The data that's pulled from desktop reports doesn't take into account certain factors – including renovated properties and additional dwellings on the title.

The only way you're going to get an accurate valuation is via a full  inspection.

Cheers

Jamie

Is there supposed to be a question here?

Cheers

Jamie

Hi Christine

Scope out ebay – you'll find heaps of goodies on there. Sometimes you'll find a collection of IP books that an investor is trying to off load.

Cheers

Jamie

Have fun – sounds a bit more exotic than my south coast getaway!

Cheers

Jamie