Theoretically the loan will never be reduced unless you make the additional repayments – in practice the Io period is usually from 5-10 years so the loan reduces after that.

I don't have any chart you can use but the IO loan will always cost you less each week than the P&I loan.  Money which can be used for additional investments.

Besides dividends?  Dividends are important.

That is like claiming that, besides rent, how does an IP help you?

Don't dismiss dividends.  Some shares pay more than the rent on a Sydney property.  Dividends can be fully franked to which makes the value jump.

Some managed funds paid in excess of 50% in distributions last year alone!

Besides – shares don't have additional costs and the buying and selling costs are much lower.  Much more liquid too.

So using your example – a $500K house will probably get you 4% before management fees, insurance, rates, repairs, vacancies etc.

$500K worth of a stock yielding 4% will see more in your pocket plus the franking saves you considerable tax.

Do you have any more specific questions?

Are you positive about your borrowing capacity?

Give Richard a call and ask him to run your figures.  A good broker like him will have access to all sorts of products and might well have something up his sleeve to get you into a two bedder.

Worth a call anyway.

Yep – there are student houses like that too.  I would have lived in one of them if I had been a student !!

Cheers.

Ask here.

Talk to a broker.

Talk to a lender.

Yes I do. I have a terrific relationship with my students and I like the good ones to come back.

I do allow them to lock their room and leave it over the summer for half price, the ones that wish to move out I relet their room.

On the odd occasion when I haven't really wanted one back I have simply told them so. Think this has happened twice in four years?

I market to a niche market and it works great for me. I don't really like overseas students during the year. I find that I have more trouble with them than with the Australian students. Well my Australian students are a mixed bunch and look like international students. With my students it isn't just all about money and leases. They treat me in a friendly respectful manner and I do the same. I mow the lawns so am over their often and I go in for a drink every time and say hello – we usually end up chatting for 30 minutes. I chivvy them to tidy up and leave the odd $4 cake on the bench. I help them move in with my stationwagon and they invite me to their parties – the one I went to was amazing. They had laid cardboard over all the carpets – 20 yr carpets too.

Sometimes I take my dog and they all have fun with her.

Usually have them over for a BBQ in Feb each year. Sometimes some of them crew for me in my boat … which I sold recently.

Mine probably isn't a good business model but I love it, have a lot of friends and very little grief. I also believe that I get a higher return than most similar setups here and 60% of my kids want to return. Usually they leave over third year as they need to go rural for placements.

When things get back to normal here (building a new PPOR) I plan on replicating the whole thing. I reckon it will be 20% more effort for double the return.

Cheers,

No need to go on.  I understand what you feel and I believe that it is true for you.

I have never had a Fund Manager switch investments – not even sure what you mean?

Also – if your property drops in value how is that different?

Control – I control plenty of my money.  I also pay experts to control a good chunk of it.  It works for me.

All the best with your goals.

I saw a presentation last night about a 100% loan for managed funds. Supplied by Macquarie Bank at a reasonable rate. The portfolio is capital protected too so that at the end of the term your funds can be cashed in for current value or original purchase price – whichever is higher.

As for funds which have historically returned a high amount see:

http://investsmart.com.au/funds/

or

http://investsmart.com.au/funds/find.asp?5StarMS=1&4StarMS=1&3StarMS=1&FundLegalTypeID=1&OrderBy=Return1Year&OrderByDesc=1

There is no argument over which is better. Just like arguing over whether a Mack Truck is better than a Volvo Bus. Pointless as the parameters are different.

For those who fervently believe one avenue of investing is superior you should open your eyes as you are doing yourself out of a whole investing industry.

Cheers

If your spouse has had the FHOG or owned a home before or owned any IPs prior to July 2000 then you do not get the FHOG regardless of guarantor.

yes.

As long as he doesn't own another home in the meantime.

At the end of 6 years he can resume living there then move out for a further 6 years.

Good eh…