Due to a stroke of luck, and nothing to do with my investing prowess I now own what was my primary place of residence and which is now a rental. The house has now almost tripled in value but rental return is about 3% of the asset value, I still have about 4 years before capital gains tax comes in to effect.
I originally thought of selling the place and investing in two cheaper properties that each returned the same rent = cash flow but less capital growth and capital gains tax later.
Another option that has been put to me is to me is that I can get a loan that will cover the cost of my dreamhouse plus provide a little extra to be put into an offset account to cover loan repayments for the first two years. As I live overseas this does give me the option of either using the ofset account or transfering money when the exchange rate is good. The idea behind this I believe is that the house I own will increase in value and eventually cover the purchase price of the house I want (which has also gone up in value ). Meanwhile I rent out my dream home and as it's gone up in value I've saved myself some future dollars. Downside is paying the loan repayments on 1m (which as mentioned can come from the ofset account or my savings as I see fit)
As life is now positively geared properties are hard to come by which makes this seem like a good idea. Does anyone know much about it and what the pitfalls are?
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