Have 14 props (ex residence) with current LVR of about 60% – plenty of equity left. Cost about 7K pa to own before tax – positive after tax. 1st one approx 10yrs ago, next couple over a few years, then got into it. Could have done a lot faster but was very conservative back then.
Target positive geared when possible, but always cash positive after tax. Always borrow atleast 100% of purchase price.
Few off the plans on the go – for cash flow not capital growth, and some development.
Looking to bust the rat race 2010.
Get into it – look for properties and opportunities maybe little different for +cf these days.
Good luck – the first 2 or 3 are the hardest.
RonnyIf you have a PPOR that you own & have enough equity to buy 2 IP’s one to keep as rental, the other to renovate then sell to lower mortgage over PPOR. Would this be a good way to get started? Does your rental income just go off your PPOR mortgage until you can transfer the security to your IP?
scokarHi Scokar,
No each loan would be separate and any rent you would more than likely use to pay the interest on the IP property.
The best way I can explain what security is – is that basically if you are unable to fund the interest repayments on your IP over a period of time then the bank or lending institution have the right to take possession of your house to sell and then use proceeds to meet the IP obligations – If this sounds scary – thats because it is, Thats why it is extremely important to ensure that you have the financial means to meet your debt obligations, because if you cant – then you could lose the lot.
You wont be able to transfer the security to the IP until the IP increases in value to meet the banks LVR.
Does that make sense? Happy to explain it further.
Cheers
Hi Don
Can you please explain to me how you buy tree’s to offset capital gains tax?
Is this something you do at the time of building for the property you are selling??
Thanks
Tara
[eh]I feel uncomfortable saying how many but we have more than 6 which I mentioned in another post.
We started in 1999 and have purchased 1 and sometimes 2 most years since then. We are by no means rich but we have set a goal of purchasing 20 IP’s within 12 years. The biggest challenge for us is not the equity because values in Qld and Perth have given us plenty of that but the cash flow to keep them serviced. Will be looking at wraps and LO to give extra cash flow and of course increasing rent where possible.
Our DSR is currently at around 47% which statistically is tough (most banks lend on 35% or below and some up to 45%) but we are starting to budget.
Keep positive and manage the risk. I just love some of these posts and great to see others with multiple IP’s doing well also.
Cheers
James[suave2]Hi Tara,
ATO has had a ruling on investing in tree farms, all I know is it is 100% tax deductable. We have invested in Great Southern in Western Australia, I believe others are around and the next time I will go for olive farm to diversify. You can contact Great Southern in Perth for the nearest financial advicer in your area.Don
djr
I don’t own a PPOR, yet, as I am currently living in Sydney.
Purchase first IP last year with an investment partner when I was 22 and the 2nd 6 months later. Both in southwest WA. LVR currrently approx 55% with about $350k in equity between the 2 of us.
Itching to make the next move, definately into positive cashflow this time.
we started with an IP that is now our PPOR and then used equity after 2 years to buy an IP. We have then subdivided that and now have land that we’re in the process of building on which will become our 2nd IP.
From there we will use the equity of IP’s only to buy another development site.
You don’t have to put your PPOR as security against the IP. since we still had a mortgage on our PPOR we just applied for more cash out of the house at a new valuation. This gave us the 20% deposit we needed to put down on the IP. But those funds could’ve been used to take a holiday, buy a car, whatever. The PPOR title is security to the bank over the house we live in, not the IP’s. as long as you can service what you’ve borrowed then you never have to worry about any of it.
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