We have been in our house for 15 years. Bought young in Northern suburbs of Vic. Both of us have no emotional attachment to house or area. Have been averagely successfully self-employed for 8 years and actually doing agents rep course for possible property manager career change(at least good knowledge). Good self discipline and in past 3/4 years got financially responsible. Have 1 investment apt past 18 months. We’re thinking of selling our house in which we will be left with over $300,000. We’d like to rent for 3/4 years and use cash for say 5/6 positive cash flow properties. Who thinks that’s good and who thinks that’s bad?
Hi there…
I think you are on the right track here.
If you’re not to fussy about which property you live in etc…
there are some great advantages…For eg. if you are to place some good deposits on say 5 investment properties and rent… Perhaps you can then claim your rent as a deduction with your business (plus utilities etc)…
You’re in a great position where you can purchase over a million dollars worth of cash flow positive properties… which can in the future provide $1000+ passive income per week.
Choose well and see this as your retirement package…
Think of properties that you will be comfortable with in 20 years time…. ie. good location, good return, good demand.Your home is the only CGT free asset you can have so giving this up is going to be costly. If you do decide to do it, maybe you could move into another property and then out again to take advantage of the 6 year rule for absences from your main residence – or maybe just rent out your current home?
Terryw
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Thanks for your thoughts. It’s where I’m leaning but what of terryw’s comment?
Originally posted by The Contrarian:Hi there…
I think you are on the right track here.
If you’re not to fussy about which property you live in etc…
there are some great advantages…For eg. if you are to place some good deposits on say 5 investment properties and rent… Perhaps you can then claim your rent as a deduction with your business (plus utilities etc)…
You’re in a great position where you can purchase over a million dollars worth of cash flow positive properties… which can in the future provide $1000+ passive income per week.
Choose well and see this as your retirement package…
Think of properties that you will be comfortable with in 20 years time…. ie. good location, good return, good demand.Thanks for a comment that stops and makes me think. Especially one from a loan professional. Curious. If we don’t sell we have our house last valued @ $380000 with $105000 mortgage. We have our investment property that’s worth $180,000 leased @ $969pcm, which we bought using equity in our house. Our loan people say we have around $24000 equity left in the house and then the security in the investment property. I’d like to get 5/6 positive cash flow properties in the next 12 months, so with strong deposits don’t i still ahve good equity created as well? Are you as a lender worried I’m putting myself in a precarious situation, thinking conservatively? Interested…TapFam
Originally posted by Terryw:Your home is the only CGT free asset you can have so giving this up is going to be costly. If you do decide to do it, maybe you could move into another property and then out again to take advantage of the 6 year rule for absences from your main residence – or maybe just rent out your current home?
Terryw
Discover Home Loans
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Send an email to get my newsletter.Hi Tap
I wasn’t thinking about your borrowings, just you possibly incurring selling costs and losing tax free benefits. By selling your house you are only freeing up about 10% more equity. or to put it another way, you could keep your house and gear it up to 90% and still borrow to buy postive cashflow property – depending on your borrowing capacity.
Terryw
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Hi terryw- Thanks again for the perspective. Very useful and interesting forum.
I agree with Terry but think his figures maybe a little generous.
You could go to 95% on a refinance so only have 5% equity left in the property. If you sell the property you will loose that 5% in agents fees, advertising, legal fees etc etc.
Also make sure that your IP loan is not X collaralised with your PPOR as otherwise income maybe an issue on increasing your debt level.
Cheers
Richard Taylor
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Thanks for your input Qlds007- Is not selling the house a slower way acquiring the 5/6 IPs? The reason I’m questioning yours and terryw’s response is I’m sure I read in Steve McKnights new book, that selling the ppor could be the way to go about investing. Anyway the comments are great and are helping.
Good point Richard. Going to 95% LVR would be the same as selling after fees etc. But by selling you are killing the goose that lays the golden eggs – one less property growing in your portfolio.
Terryw
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Tap
I agree selling your PPOR (and i would do it if my wife would ever agree) may release some equity for you but using the equity in it and investing is exactly the same.
If you sold every time you need to free up capital then you would never get anywhere. Hence the Tax payable in the way of CGT is paid on the realised gain and not the unrealised portion.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
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Great explanations qlds007 and terryw. Our brain cogs are turning now. Will be talking to my lender with your info in hand.
Good discussion there people. If I can add my 2c worth:-
I agree with Terry – selling your PPoR to free up equity doesn’t really improve your equity position much;
– selling costs eat into some of the profit; you can access almost the same amount of equity through refinancing.
– loss of future cap growth on the property if you sell.
– move out of your PPoR and rent it; it automatically becomes another I.P and you still have access to the available equity and the ongoing cap growth it will provide.We have always used the equity from our PPoR to fund the deposits for our I.P’s.
Now that we have moved to the USA we are renting out our PPoR while here. It has become another I.P for us and has been a good move – good tenants etc. We have a loan set up which allows us to always access the available equity.There is no thought of ever selling it and this will save us considerable thousands in selling costs. We plan to continue to rent on our return and keep the PPoR as an I.P forever. Too easy!
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Goodonya LA Aussie. The picture is coming more into focus as the discussion expands. I’m hoping my lender will let me leverage to 90-95% without mortgage insurance. How many IPs should we have with the same lender???
Originally posted by TapFam:Goodonya LA Aussie. The picture is coming more into focus as the discussion expands. I’m hoping my lender will let me leverage to 90-95% without mortgage insurance. How many IPs should we have with the same lender???
Good question; we have all ours with the same lender (St.G), but I know that many people run out of borrowing power with one crowd and have to approach other lenders and use different products (loans) in order to continue investing.
Don’t get too loyal to any one lender; do whatever is necessary to achieve your goal.
I don’t know that any lender will lend over 90% without LMI – I’ve never had to use it (thankfully) – maybe some of our learned forum M.B’s can answer that more accurately.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
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