Because the loan was intended for an investment property then I would say yes it should be deductible.

Did you know the higher the number of bedrooms the better the capital growth? Mainly because of the scarcity factor. There are heaps of 1 and 2 bedroom units on the market but not many 3 bedrooms. The rental return is abit less than 1 or 2 bedroom apartments but better capital appreciation.

What makes you think 3 bedrooms are no good for investing?

Unfortunately we havent got any penthouses from my knowlege.  Would be alot of commission though.

Everyone has been saying buy 2 cheap ones but why not go for a well located penthouse maybe in the CBD. Usually they have much better growth than 1 or 2 beddas and your depreciation will be high aswell.

Going for tax benenifit only is sucide. So make sure you invest in something that will appreciate in value as well.

I did an Investment Analysis for you by using a penthouse as an example. Now remember if you buy a brand new penthouse you'll be paying atleast $1mill. If you buy one OTP in Melbourne then you can get away with the building stamp duty. That's savings of atleast $30k. 3beddas in a higher level is also a good option.

I had a look at Melbourne Docklands Penthouses and they are renting atleast $1200/week so I'm using that as a guide.

I think your tax payable should be $35k something but it says $37,500 so we'll just go with that.

If you multiply $358/week by 52 weeks then you'll have to pay $18,616 out of your pocket. That might seem alot but if you add that up with the NEW TAX PAYABLE it adds up to (18,616 + 13,246 = $31,862 ).

(Old Tax Payable) $37,500 – $31,862 (New Tax Payable + Repayments) = $5,638

So you’re actually better off by $5,638 by investing than if you don’t. But if you do invest then the guys at the tax office definitely wont be happy since you’re gonna rob them of precious tax money.

Also if we calculate the growth of your property at 10% p/a then in 10 years time your $1mill property will be worth $2,593,742. That’s a cool $1.5mill by doing nothing.

If we break that $1,593,742 in to 10 years then on average you would have made yourself $1,593,74. Let’s say your property also works 52 week every year so we’ll divide it by 52 week which comes up at $3,064/week.

Now lets say your property works only 5 days a week like yourself I’m assuming. $3,064/5 = $613 per day. Even though your property is working 24/7 to make you money but lets say it also works 8 hours a day from 9-5. $613/8 = $76.6 per hour. Your property is actually making more money than you are by earning $76.6/hour.

Now imagine if you have 5 of these over the next 20years. $76.6 x 5 = $383/hour. If you buy one every 2.5 years and nothing after the 10th year.



Obviously the analysis below is just an example. If you want me to make any changes to it then let me know.

Free NLP? Who's running it? I know Tad James will cost you a fortune. 3000 or 4000. There is also run by George Faddoul. Forgot his company. They charge $300.

It sounds interesting. Might give it a try.

Astrawan wrote:

Great advice there Paul – certainly help to expand my blinkered vision of investments.. btw, any advice on commercial property thrown into the mix here anyone?
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Astra

Only if you can handle the risks involved. Commercial property is very much dependant on the economic and business growth of that particular area, state or country. If those two are down then there will be less demand for commecial properties meaning: lower rents, longer vacancies (upto a year), low capital growth. Usually with commecial you have to give free rent periods such as 3months or 6months and maybe 1year depending how long the lease is for.

And certainly not for newbie investors. If if you have atleast 3 or 4 residentials with a good income to be able to make interest repayments without getting any rent for those long vacancies then you can give it a try.

I reckon Semerda and Jackie work for them. I've seen quite a few companies use this "what you guys think of this company or deal, etc" tactic to get you interested in their product. I'm not surprised they both have one post each.

1 – Buy Quality NOT Quantity.
2 – If you wanna create wealth then go for High Capital Growth properties.
3 – If you wanna be able to replace your income then go for Positive Cashflow properties.
4 – Stay away from Defence Housing
5 – Remember Law of 14. If the capital growth is 10% then rent will be 4%. If rent is 10% then capital growth will be 4%.
6 – Higher property price = High growth, low rent
7 – Cheap property = High rent, low growth
8- It's the Return on your Investments that matters not how cheap the property is.
9 – There is Cheap and then there is Cheap. First cheap = Property is cheap because there is no demand for it or something       wrong with it. Second cheap = Property is undervalued. If market price is 350k and you buy it for 300k then that is CHEAP!

Tip: New investors should always aim for capital growth over positive cashflow as the extra equity will help you build up your portfolio quicker….that's if you can afford the negative cashflow as is the case with mostly high growth properties.

 
I'm not sure if they still give deposit bonds based on income. Usually people use deposit bonds if they have a certain amount of equity in their property….atleast 5 times I think.

Yes you need to be very sure that you will be able to settle the property. If you're income isnt high enough then you could be in abit of trouble. I believe the banks are willing to lend you up to 5 or 6 times your income. Add and minus the rent and your other debts, expenses etc.

You're right OTP does get bad publicity. Most often from people who have never dealt with OTP properties. One of my teachers used to say that "humans are like sheep". They follow the crowd. If one says OTP is bad then the rest will too. That's not to say that OTP doesnt have any risks but it's important who you take your advice from. All types of investment strategies have their own risks and benefits. It's up to you what clicks with you.

All those people who you've been talking to, telling you risks are too high; are they investors themselves? Do they have experience working in the property industry? If they do then maybe they are right. Otherwise everyone like to give free advise.