Just wondering why the 2nd thoughts ?
You obviously thought it was a good idea, what changed ?

Another thing to bear in mind re. Tax deductibility is that it’s the use of the funds that determines deductibility NOT what the loan uses for security.
Ie. if you borrow against equity in your PPOR and use it to purchase and IP then it IS Tax deductible.
whereas if you took a loan against equity in an IP and used it for renovating your PPOR then it wouldn’t be deductible.

Sue, might I suggest going along to Steves 2 day workshop this coming weekend. It will definitely open you up to ways of investing that will challenge your preconceived ideas.
Just a thought

Cheers
Laurie

The GFC is still not completely done with, the U.S. is still in recovery phase. As people who defaulted and were foreclosed upon slowly regain the ability to borrow again then I can only see the market going upwards. Look at the Florida market, it has gained strength year upon year since the GFC.
Yes the aussie dollar has slumped against the greenback, so you can buy less house now than a year ago, but the yields are still the same (or perhaps slightly lower in growth areas).

Hi Amie,

I’m sure with the attitude you’ve got that an early retirement will be a given.

Here’s a few thoughts for you to contemplate

A car will depreciate and take quite a bit of your weekly cashflow to keep on the road. If you can come up with other alternatives you’ll be much better off.

Definately do not think that all the opportunities have passed, because that’s untrue. Investing in the past is impossible, as is investing in the future, the only time you CAN invest is NOW. There are opportunities everywhere, you just need to find them.

Because of your age you’ll be able to take full advantage of the 8th wonder of the civilised world – Compound Interest.
In short if you spend less than you earn and invest the difference you’ll get ahead. The greater the difference between earning and expenditure and the higher rate of return you achieve the quicker it’ll happen.

The alternative is doing what many other young people do and live week to week using credit cards and expensive loans eventually just digging themselves in deeper and deeper. Try and stay out of that camp.

For taxation purposes it is the use of the money not where it comes from that determines tax deductibility. Don’t contaminate your IP loans by using some of the money for personal use.

A line of credit with sub accounts for each property is a decent way of structuring. You can then use “Debt recycling” to pay down non deductible debt whilst maximising deductions of non deductible debt.
When your equity goes up all that is required is a revaluation and upping your “master balance” to be able to purchase additional IP’s, without the need to refinance each property, that is one of the big advantages of cross collateralising. The disadvantage is the old “all your eggs in one basket” and the bank know much more about you than you may wish them to know.

Banks are getting much stricter on servicing (and caring less about your assets, other than the security they hold), so perhaps it may be prudent to consider high cashflow investments (at least until your servicability is stronger). I’ve personally gone for U.S. based IP’s.

Like everything, there are positives and negatives to cross collateralising loans.
On the downside a particular lending institution knows far too much about you and if they decide to wind in the reigns by reducing LVR’s etc. can possibly make life difficult.
On the upside having all the loans together with a master limit can take advantage of multiple smallish equity increases being lumped together to enable the purchase of an additional property without the headache of refinancing each individual property with multiple lenders.

It sounds like you’re in the “Asset rich, cashflow poor” situation. Lenders are increasingly focusing on serviceability nowadays.
Have a chat to a good mortgage broker and get a feel for exactly where you stand as far as borrowing ability goes.
If you can access some equity you may want to consider high cashflow options such as U.S. Property, or granny flats, etc.

I’ve listened to him on the podcast called “Real Estate Talk” He appears to know his stuff.