Hi there,[biggrin]
I am new to this site and IP in general. My husband and I want to invest but don’t know where to start or in which state to start! We live in the ACT but my in laws are investing in Bris. At 28 with a young family (2yr old)I don’t want to over invest if there is such a thing. We currently have our own home and have about $100,000 in equity. Our current lender offers IO loans, but I want to do as much research as poss. To cut a long winded intro short, I want to find out the following:
1. If we want to use the equity in our current home to finance an IP, can I use the equiy as a deposit and borrow enough to cover all legal and other fees?
2. Keeping in mind I have a young family, and will be adding to this, are there tax benefits available to reduce my weekly tax if we invest this way?
3. If I read correctly, it is better to think long term (5 or more years), pay the interest (try to get rent to cover most if not all costs) then refinance for another term at IO, and add to the property collection?If anyone can suggest any other sites, I would love to hear from you. Also am interested in those who have read Steve McKnight’s book “From 9 to 130 properties…” and if they found it valuable.
Thanks for taking the time to read and help.[laughing]
Hi Donles,
regarding tax breaks, my suggestions would be to start a fmaily trust if you don’t already have one. This will allow you to divert any income stream from property among family members in the most tax effective way. If you buy the property under the trust it also affords you some protection of the assest if anyone ever tries to sue you personally for anything. Re: the $100K equity I would also encourage you to consider inveting in a fund or LPT for 12 months and see how the property market is going then and what iterest rates have risen to. hope this is useful
[biggrin]
I found 0 to 130 properties very valuable. I left my husband at home with the kids and spent a night in a hotel just to read it in peace. Very worthwhile in my opinion.
Cheers
Sonja1. If we want to use the equity in our current home to finance an IP, can I use the equiy as a deposit and borrow enough to cover all legal and other fees?Yes. there are two ways to do this. either use the same lender, and cross collateralise your properties (not recommended by most), or set up a second loan against your PPOR to use for the deposit and costs, and borrow 80% against the IP with any lender you like.
2. Keeping in mind I have a young family, and will be adding to this, are there tax benefits available to reduce my weekly tax if we invest this way?Only if you make a ‘loss’ which can be achieved by a physical loss of cash, or by using depreciation benefits to turn a positive to a negative.
3. If I read correctly, it is better to think long term (5 or more years), pay the interest (try to get rent to cover most if not all costs) then refinance for another term at IO, and add to the property collection?Long term is definitely the best thought process, and finding properties that don’t cost you much but have good growth, or finding CF+ places is a good way to go. IO versus P&I is a personal choice, and depends on your risk/comfort level. I like to stay IO so that I can buy as many props as I like with the cashflow I have, but need growth to make it worthwhile (which it has been[biggrin]). Others like the security of knowing that they are actually paying their debts off…
Cheers
MelPS I too am in ACT – Belconnen area
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