Hi Dilmah,

Congratulations on doing some research and trying to educate yourself before receiving your inheritance money. Something you didn’t mention in your post is what you current living conditions are and if you have any existing debt on your house where you live (referred on here as PPOR – principal property of residence).

A priority could be for you to pay down any non-deductible personal debt, such as car loan, home loan, personal loans or credit card. The $230k on your IP would be tax deductible and can be offset against any rental income. While its a great idea to pay back debt, depending on the stage in life where you’re at you may be better off to leverage this money to purchase additional properties.

Pay close attention to Terry’s advice, he’s a regular giver of excellent advice on here and his advice should be considered. You don’t want to receive this generous inheritance and then lose a stack of it to the taxman or down the road in legal issues.

If your own home is fully paid off, then if I was in your situation I would use the money to reduce but not eliminate the debt on the IP (say a 50% LVR rather than 80%, or even lower) and use remaining to purchase additional property at a low LVR, thus making them cashflow positive. But I’m no expert!

Go and speak with a financial planner and solicitor or accountant knowledgable in property.

Good luck!
Emma

from how you described the house, it sounds as if the lower level room would be either a guest room or perhaps a teenager’s retreat. I doubt either of these categories would be needing a bath… roomy shower + toilet makes more sense.

I've heard from a few graduates of her course that it is very worthwhile, and as mentioned I was impressed by all other aspects of her presentation. Don't feel nervous, I'm sure you have not made a bad decision in her programme. She is well regarded and her course inclusions do seem very thorough.

I guess I just sympathise with an earlier poster, to work hard, spend less, save hard and do it that way. If what Cherie suggests can actually happen, then that's great. I can imagine I could approach a few limited people I have met through work, or family/friends with some possible deals, but in reality if a deal is that good I'd be keen to find a way to finance it myself or JV. Her suggestion of spotters fees just concerns me in terms of legality and practicality.

In her Perth presentation, she mentioned she has a graduate in Sydney or Melbourne who is currently earning $4000-6000 per week with spotters fees and using this to build up a cash base. If she makes a claim such as this, perhaps she is prepare to back it up and give you the contact details of her graduate? You never know if you don't ask!

Do make sure you post the reply on her pls, very interested to read more on this topic from cherie.

what am i doing wrong?! can’t open your blog… get this msg:

You’re about to be redirected

The blog that used to be here is now at http://www.propertyinvestinginaustralia.net.au/.
Do you wish to be redirected?

then if i get redirected it says it doesn’t exist. but looks like Elea managed to open it just today so why can’t I get there?

I find it interested you commented “delayed settlement” of 30 days. I would say 30 days would be a standard settlement time, but delayed could be 3-4 months. If you put offer on both, you can settle one in 30 days and the other in four months, gives you time to seek additional funding… is the second property leased? could it be easier dealing with the vacant one first and renovating that and getting a revalue done?

i believe banks also vary with how soon they will allow a revaluation done on a property, particularly if it is only minor cosmetic renos. So ask when speaking to your broker or direct to the bank what their policy is on second valuations done after renos. you don’t want to get stuck and find they will refuse a revaluation until 6 months has passed.

Just to give you some more info Wade… What Richard said is entirely correct, but to put it into an example to simplify matters for you:

Let's say hypothetically you own a house worth $400,000 and currently have a mortgage owing on it of $200,000.

This means at this point in time you have equity of $200k in this house.

Let's say you decide to access that equity, and withdraw $100,000 as a line of credit to purchase another property.

Now you owe $300k on a $400k property.

Fast-forward 3 years down the track, and let's say for argument's sake your house is now worth $500,000, and because you've made a few additional repayments your mortgage is $280,000. Now you have a further $220,000 equity in this house you may decide to access.

The banks will have a limit as to how much equity you can withdraw, perhaps up to 80% of the value of the house, or maybe more – depends on many factors. However with time, your property value should continue to rise and as it does you can continue to release the equity which has been growing.

Hope that makes it crystal clear for you

Cheers,
Emma