These towns, particularly Moranbah look very appealing/tempting, e.g. $450k purchase price with $850/wk rent for example.
That’s a pretty amazing return, but then of course you carry the risk of the $450k property being worth $150k if the mining activities suddenly cease in those areas.

Obviously, the best approach is to have the intel up front…[Read more]

Thanks again Richard..

I too am a fan of just sticking with the variable rate also. I had fixed a rate in once in the past, but it just ended up costing me more fees than the benefit I got from it (a long time ago when rates didn’t rise much after I fixed it). But for example 1 year ago was a perfect time to fix some in, but I missed that boat…[Read more]

Thanks for clarifying Richard. I get what you are saying. So it’s fine to draw funds out of IP1’s equity, but just so long as that’s from a split/separate LOC account, so I don’t screw up the accounting etc.. Got ya – thx for the tip.

My partner is likely to become pregnant etc, but apart from that, she is happy to get a generic 50-60k office job…[Read more]

Ah sorry Richard.

Our first priority was the new PPoR to renovate (I.e. the 250k place in ~400k suburb). Getting an IP in Branxton was the second priority, only if it appears do’able? Do you think this would be stretching my current income and equity too far? I have a feeling so..

Thanks I will make the new loan IO.

So when buying the new $250k…[Read more]

Thanks Richard, I was hoping you would reply. Me: $90k, partner: $0. Pushing it? These are worst case numbers but I’m guessing I’d be pretty stretched?

Thanks number8, I really appreciate your post and think it makes a lot of sense for me. It’s made me have a re-think and not want to be so greedy. I love my sleep at night and don’t want to go…[Read more]

– Don’t blow money on cars. Been there. Sold an IP basically because I was obsessed with spending on a car – *shudder* (years ago).
– Don’t buy for the sake of buying, just because everyone else is speculating. Only buy if it’s “wow what a bargain” etc.
– Don’t buy into new suburbs. They promised us shops and local schools, but of course 5 years…[Read more]

Did you end up doing anything in Branxton?? Curious, I have been eyeing the same area too.

Yeah definitely try to replace your job quick smart first. Don’t panic and sell the property, you may get a job quicker than you think and then regret the sale later etc. Even if you have to use something undesirable such as a short term credit card in the mean time, it could help you holding onto the property etc.

Bob,

Are you handy with some tools and/or reckon you could borrow a bit extra to take on a renovation?

Why not buy one of the more run down-ish kinds of places (there are PLENTY of run down properties in Newcastle). Borrow a bit extra and take on your first renovation Aim to knock it over quickly and set a schedule. Add some serious value by…[Read more]

House values will still rise and go up between here and 2020 for one main reason also that people forget:
– Just because the median price becomes $1mil and suddenly Mr Average John Smith and his family can’t afford to pay you $1mil for your 3 bed house in Sydney any more, guess what, the population will be booming and some developer will offer you…[Read more]

Pay every cent you have towards the one with the highest rate ($6300 owing, variable @ 16.15% – Eeek!!! That’s nasty) and pay the minimum off the others until that first one is gone. Repeat this process swapping to the next highest interest rate until they are all gone. You are putting a reasonable amount of cash flow towards debt reduction, so…[Read more]

Hi Marie, (c9806103 here – renamed myself)

I completed the REWARDS program form this morning actually (having spent all day listening to property related podcasts and reading blogs etc). But no I’ve never done the rewards program before. So yes I listened to the 16 CP+ properties in 4 days podcast. The thing that it didn’t tell you was that it…[Read more]

My impression was that an IO loan will only work for you if you then go and use the increased cash flow towards another property.

If you are just sitting there spinning your wheels and change the loan to IO, but without doing something with your increased cash flow, then it’s really a trap isn’t it, because you are under the impression that…[Read more]

Ok so the general idea is that while accumulating IPs, hopefully your personal and rental incomes are both generally increasing along the way. Then you can use the excess of rental incomes via the offset account(s) to help knock down your PPoR mortgage.Thanks once again for wrapping that up Terry.

Many thanks again Terry. Your advice has been awesome.Also thanks Richard, what you say re: PPoRs having a habit of becoming IPs makes good sense too, and is a path that I would be likely go down for sure.Now a little further down the track… I get the place for $250k, renovate it and wait 3 years, then it's worth maybe $350k. I might have…[Read more]

Thanks once again Terry.  That was again very helpful.The offset vs redraw tax advantages now seem very clear.So to check my understanding, is this correct:The essence of changing to an IO loan, is that the repayments are smaller than for a P&I loan. This means that each month, I will be left over with more spare cash from the rental income. This…[Read more]

Many thanks Terry – greatly appreciated.Can you please just clarify a few further questions?So the tennants' rent goes directly into the offset account. So the result is that I am being charged the same interest, yet I can claim more each tax time because the official "loan" remains higher on paper. Then also, I have better access to the cash for…[Read more]