Hi,
I’m new to the board/site/investing and have a few questions….
Recently I was under the impression you buy property, use equity to buy more positivly geared propery and on you go until you have enough property grow for you to retire on the equity. you then redraw the equity and use it. Reading the previous newsletter, due to the tax etc this is not a good solution.
What is recommended ?
Hi Bluebear
That strategy can work. The interest on the money borrowed to live on won’t be claimable, but it can still work. You could withdraw about 80% of the growth of each property per year. eg a $500,000 property grows 10% in year 1, you withdraw $40,000. Year 2, it grows another 10%, you borrow another $40K or so.
It works well if you have a number of properties and draw on one per year, so that gives them time to grow again.
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
G’day Bluebear,
You are correct with the concept of using the equity to buy more properties until you have “enough properties”.
Then, instead of buying more, you either sell one or two to pay off most of your debt, or refinance to again eliminate debt. This process may take a few years if done conservatively.
Once this is all done, you live off the rental income from your remaining ( debt free or almost debt free ) properties, get on a plane, and make it your quest to drink at least one local beer in every country in the world.
And everyone will be happy.
Hope this helps,
BDM
Thanks guys, much appreciate.
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