Forum Replies Created
Hi
Excuse my ignorance but how do you invest in the index fund. What sort of returns can one expect med to long term.
How much is a minimum investment.
Would investing in the index fund be a good retirement strategy.
Cheers
StargazerHi Andrew
Yes i would definitely get a second opinion. From what you have indicated you are capitalizing interest. You are not paying (the interest only) on the LOC account.
To my undertanding the rent can go to your PPOR account and sit there till the interest is due in your IP LOC. This reduces the amount of interest on the PPOR for the month due to the lesser balance.
When you work it out it amy save you a few hundred dollars over the financial year.
If you have the rent paid into your LOC (IP) and there is a shortfall then the LOC can pay the shortfall.
With tax deductions etc this shortfall is generally covered at some stage.
cheers
stargazerHi all
John you still got the FTO and why are you selling it. Was that a bad buy.
cheers
stargazerHi
Thanks for the replies.
So to follow on
the 150000 loan interest would become deductibleand if the 90000 used to buy IPs then this interest would be deductible.
If used to buy PPOR then interest would not be deductible.
So if a person has alot of equity in PPOR and refinances makes PPOR into an IP and buys IPs with money left over and rents a property for themself this then makes a non deductible debt into a deductible debt.
Am i correct in this.
Cheers
SGHi all
Byronent have you actually bought through the Investors Club or have you just been able to source there research into areas.
regards
alfJack is a network marketer excited about his product and trying to attract people to his product and business opportunity.
cheers
Hi Rob
I would imagine the screening is fairly tight are you able to tell me or direct me to the checklist of what they are after for one to qualify for a loan.
cheers
Hi all
Derivex is very new and i think people are still cautious of this.
If one goes with derivex what does the fine print say.What if you wnat to refinance
What if you want to increase borrowingsThese are thing people are now comfortable with, dealing with banks etc.
People putting the PPOR and major IPs with an unknown seems risky to most.
I guess it comes down to what is the worst thing that can happen to the person taking the loan from derivex if things go wrong.
cheers
alfHi all
Derivex is very new and i think people are still cautious of this.
If one goes with derivex what does the fine print say.What if you wnat to refinance
What if you want to increase borrowingsThese are thing people are now comfortable with, dealing with banks etc.
People putting the PPOR and major IPs with an unknown seems risky to most.
I guess it comes down to what is the worst thing that can happen to the person taking the loan from derivex if things go wrong.
cheers
alfHi all
Like all areas of life there is good and not so good. I am sure a good broker would have to have some value.
Most of the brokers which frequent this forum and perhaps others are in a class of there own. Giving there honest opinion from experience without the self interest tag. I very much much respect that and in no way was taking a swipe at anyone here.
Cyncial? no but it is a perception that a person that has there own interests at heart would lean to the better paying commissions and recommend accordingly.
I know there are companies now that receive the same commission irrespective of the lender they recommend. They wouldn’t do this for no reason i wouldn’t think.
Again the forum brokers are in a class of there own.
Cheers
AlfHi lucifer
Thanks for your reply i was curious on some peoples thoughts.
From looking at a multitude of products and recommending this or that one i can understand that a broker has alot more of a eagles view so to speak.
I would say that if one was looking for fairness it would be that the Broker got paid the same Commission and trailer from whichever institution he/she recommended that way a bias would appear to be less likely.
cheers
alfHi Again
Excellent responses Rob. Clear Concise and understandable.
Thnakyou again and a Happy New year.
Happy New year to Everyone
cheers
AlfHi
Thanks Steve and Rob. I get a little bit lost with this as i have mainly had LOC so lets see if if follow correctly.
Steven
Loan 140000(PPOR)non deductible
100000 (Inv)deductible
100% offset attached to PPOR Does this require two offset accounts as shown by Rob. One attached to PPOR and one to INV.If that is the case i understand as they are seperate.
Am i exposing the full interest of 240000 or only 140000 i am a bit lost here. as you say use these funds the 100000 to go in offset acount.
ROB
Thanks it looks workable. My only question would be about the rents etc going into the Loan 1 account as this is coming from the income producing asset.Shouldn’t i be placing the rents in Loan 2 as this is used for deposits and shortfalls etc.
I have this concern of own salary and investment rents and payments going into the same account.
I would think any payments for say painting the investment property would come from whats in loan 2.
cheers
alfHi all
Thanks for your responses. After speaking and posting and from replies i have seen i agree with the opinion that if one is going to change there PPOR to IP then the OFFSET ACCOUNT I/O is more appropriate over a LOC.
ROB
It is very easy to split the LOC into the personal portion and the Investment portion
BYRONENT
What i am suggesting is to have a LOC to make available funds for IP eg deposit.So PPOR Val 300000 owe 140000 equity 100000
PPOR Loan 140000/with OFFSET a/c I/O
LOC 100000 For deposits/shortfall/etc anything to do with investment use.If theres a better way then please feel free to share. This appears to give all the tax benefits also for when changing the PPOR to IP.
cheers
alfHi Rob
I respect your input and you deal with this stuff everyday.
So in your expert opinion what would be the correct structure for the example i opened with in this thread.
Apart from a LOC how else do you keep perosnal money and investment money seperate and ready for furhter investment. If theres a better way as i suggested thats what i am seeking clarification on.
At the same time keeping the integrity of the tax benefit.
cheers
alfHi Rob
Thats interesting you say that. Alot of investors on this forum have good things to say in regards to LOC. Having them for Deposits etc
I am not quite clear what you are saying Rob but LOC do offer Flexibility don’t they?
cheers
Hi all
Yes it appears there are many thoughts on this. However i would have thought as a risk management tool a LOC dedicated to investment wouldact as a buffer to any shortfall due to vacancies etc.
This interest would be tax deductible as the reason for use is towards an income producing asset.
cheers
alfLucifer
Yes that is correct all properties one should use the 40 week calc.
Rob
This guy was the wrong accountant for me. He genuinely was conservative and his calcs were always conservative. Even for a straight tax return he would not stretch anything. I think i changed also so he didn’t suit my needs. At the time though there were not Forums to discuss and raise issues as it is now. If there were i wasn’t as yet involved. Perhaps i expected too much from him i was looking for answers in one direction and he was taking me in another.
Byronent
Yes i have had two accountants since the one in question and have stopped using them both. Both told me property was a loser. I currently use an accountant in the CBD who had quite a few properties. He did sell them all though so i am thinking whether i should change or not.cheers
alfBoom Boom Rob yes experience is a wonderful thing
Byronent yes i know what you are saying but i never like to see people get burnt does’t matter how naive they may be.
It goes to show though that figures can make a compelling argument for
Reasons to buy
Reasons not to buyIt depends who is telling the story to the uninitiated.
Cheers
Hi
Well i just had to show you how the accountant did the calculations to convince me the property market was bad deal.
House price 55000
costs……..5000
all up……60000Rent 130pwX52..6760
[email protected]%i/o=3900
maintenance…1000
lawn/garden… 250
coun rates…..400
water rates….300
ESL………… 40
Total……….5890In 6760
out5890
=870pa (Positive) To my mind in my naivity i thought this was a good deal.He insisted that it was not and said the following
always
underestimate your income and overestimate your expenses.So he proceeded to show me that one must only calculate 40 weeks rent.
rent 130pw @ 40 weeks=5200
outgoings………….5890
result ………minus 690He said you are losing money for some else to live in the property and there is little chance of capital growth.
With this formula nothing was positive cashflow that is 40 weeks rental calc.I thought the 12 weeks vacancy was a bit excessive but he would not hear of it. I had known him for quite a few years and i guess respected his intentions.
He went on about vacancy rates/research etc and convinced me not to buy in those areas and anywhere else as it would lose me money and get no where. Voila Managed Funds thats the answer.
Well there are times when i wish i had just done my own thing and not listened to him. He was also a financial advisor.
regards
Alf
