Hey tukchen,

I personally have not used or have not even researched anything about any of these groups. From memory though, Bhatla has a really bad reputation and was talked about before. I have not heard anything anymore since then from this group.

Are you looking at OTP properties? Or newly established properties? Make sure you do your due diligence when considering OTP properties. Its generally a bad investment but there are a few stories stating that they are happy with OTP purchase as it suited their strategy at the time.

Hi Walk,

I apologise for the rather generalised response.
Increasing income streams could be one or a combination of these things, I just don’t know if you can consider this creative though:

*Focus on cashflow positive properties, lenders take rental income into consideration when determining your borrowing power.
*Connected to point 1, avoid heavily negative geared properties, the short fall for each negatively geared prop affects your serviceability.
*Balance your portfolio, some people get two positively geared IP for every 1 negatively geared IP. this will sort of balance the portfolio.
*As mentioned above, if at all possible, focus on +cashflow IPs for now so you will have a few income streams helping you paydown your PPOR.

Hitting the financial brick wall can be and should be avoided by planning ahead. make sure you discuss this with your finance person as what you have mentioned already, this will put heavy brakes on your accumulation phase early on in the game.

@simondema – are you looking at new houses?

@wiwin – if its an internal refinance, most lenders don’t charge any fee. There really is not much benefit holding on to x-coll loans for a long period. he’s actually in a dangerous position now, if all goes south all of a sudden, he could potentially lose one if now all of the crossed properties.

• This reply was modified 10 years, 1 month ago by  PHP.

Hey Walkingtorun,

First, welcome to the forums!! Im sure you will learn a lot from here. :D

Regarding your situation, it is best to talk to your mortgage broker first regarding the borrowing capacity. They can tell you exactly how much you can afford, and how to structure your loans correctly that will suit your goals. This should be your first stop before looking at properties, no point searching around re.com.au for properties around $600k if you can only afford $400k. With your income alone and no other debt, serviceability won’t be an issue.

Cheers!

Hey Knox,

*What the pros/cons are of interest only and offset accounts are
If for an investment loan:
– con = you will only be paying the interest portion of the loan and after the loan term, you still owe the bank the same amount.
– pros = you will only be paying the interest portion of the loan and effectively maximizing your tax deductible debt. having an offset account link to the loan will reduce the interest paid depending on the amount in the offset account that is offsetting the loan. In I/O, the interest is calculated daily and charged monthly. With this setup, you have the flexibility of paying the principal loan (via parking in offset) in any amount you want and is not dictated by the bank, you have control over this. You also have the freedom to pull it out anytime you need it for succeeding purchases.

*Why I would pay only the interest off of the mortgage?
If for investment:
– you are maximising the tax deductible debt by just paying the interest therefore you will get max tax benefit. This also free up cashflow as you will be paying less each time as oppose to P&I. So you can save up much quicker.

*Is combining an interest only loan with an offset account more beneficial than a principal and interest loan with an offset, for investing?
Yes. It is more beneficial to have IO + 100% offset OR IO for IP loan and Offset link to non tax deductible loan (PPOR, your home loan)

Cheers!

Benny wrote:

He is wanting to know if something like a Lease-option, wrap, or something else can work in his situation.

Sorry Benny. I meant to ask about this. Is the landlord keen to sell with these conditions? e.g. Vendor finance/rent to own, do wraps or lease options etc. I mean its not a bad i guess to try and negotiate with the landlord with these options if he really wants that property.

This group has been mentioned and discussed here before. Do a search and you will see. In case you can’t find it, here’s a start.

https://www.propertyinvesting.com/topic/4995222-new-investors-yale-property-solutions/

“Caveat Emptor”

Cheers!

I agree with Benny. The numbers doesn’t add up properly. If you give us more details, we can surely show you how its calculated.

Regarding a 1 bedder unit for 320k? Don’t you think its a bit overpriced? Your target market is very limited with 1 bedder.
What’s your due diligence telling you about this property? Have you confirmed the rent at $320k a week?

In a nutshell, its basically setting it up as having the following:

Loan 1 for Property A (Property A as security to Loan 1)

Loan 2 for Property B (Property B as security to Loan 2)

Linking an offset account to the non tax deductible debt is a must. Regarding the costings for these, it depends on a few things so best to give us more details so we can help you out even further.

They will probably set you up with two online banking login but if its with the same lender, you can probably ask them to get them all under one login account for ease of access.

Hey Bobby,

You’ve got the basic set up down really well.
Do you plan to buy more properties after this purchase?
Or are you just buying this PPOR now and then 8 years later get another as PPOR and convert this to IP so in 8 years time you are only looking at two properties is this correct? What is your goal? Why do you want to invest in properties?

As each person’s circumstances is different, so as their goal. Some would like to acquire 20+ properties and some would only focus on 3 or less. Determine your goal and work backwards from there.