All your spare income could be going into your own PPOR to reduce this debt. By all means redraw it via a new split or LOC to fund investments rather than save for deposits. This will see your nondeductible interest become lower and lower. This will make a small but significant difference to your situation.
If you buy properties with little prospect for CG then of course you will run out of money. How can this thing start to snowball unless it actually does grow. You cannot be relying on another once in a lifetime boom as we had recently!
I don't mean to be negative – I am impressed by what you have achieved and admire your boundless energy!
I also reckon you should spend an hour on the phone with Richard Taylor and see what he can suggest for you. He may well come up with some significant improvements to your situation.
All the best,
Mortgage Hunter wrote:All your spare income could be going into your own PPOR to reduce this debt. I also reckon you should spend an hour on the phone with Richard Taylor and see what he can suggest for you. He may well come up with some significant improvements to your situation.I did this – well kind of. I emailed him privately and gave him my precise income and asset/liability position. He made some very helpful suggestions. I went and got my taxation financials done with my accountant because of that email.
My PPoR is still principle & interest. I pay more than I need to off the principal. But I'm putting extra income and the excess from rentals into the LOC. Because I have two incomes (one from business, one from part-time job) they are allocated to different things. One is for investment, the other is to pay off PPoR and living expenses.
matthewc73 wrote:1. What about starting and selling/part selling businesses?
2. What about more development?
3. What about some diversification into shares, collectables, etc?1) I have a small publishing business already, but I don't want to sell it. I also have a fledgling website/e-commerce business that's still new, but I don't think I'd like to sell that yet either. It's still growing and the income isn't anything to write home about. I wish I had enough spare time to build a few more!
2) I could look into more development/construction. I enjoyed that. But it still comes down to not having enough equity to borrow against to start the development going. I'd like to do that for my next project anyway. I made way more capital growth from my last constructions than anyone estimated before I started. It was great (and they're gorgeous)!
3) I have some shares. They suck. Property is way more fun. Income/return is better and it's more tangible. I don't know what collectables to collect!
Still more great ideas, though. Thanks heaps! I'm enjoying this thread immensely!
Lisa (noobie)Hi Lisa
Good to hear that you have done your figures at least that makes lenders take you more seriously.
Couple of quick additional points:
1) I wouldnt worry where the income is derived from but would like Simon suggested deposit all of you income into a 100% offset account linked to your PPOR and not your Investment LOC. You can direct repayments from the offset account and can always contra the income at the end of the year .
2) You may well find that the Vendor is prepared to carry a 2nd mortgage on the property which could be for anything between 10-25% depending on the individual deal. If you have the income to support the loan there are lenders who will not be too concerned where the deposit has come from.
Richard Taylor | Australia's leading private lender
Hey Lisa
This is a great thread and I must congradulate you on not only looking for any alternative to increase equity, find deposit monies and increase cashflow, but actually acting on neally all of the feed back as each of these things even though small will signifiantly enhance your ability to grow your portfolio in the very near future.
I do however have to agree with Handy Andy. If you want to be very agressive in the growing of your portfolio which obviously you have been then selling one or 2 of the properties that you have (and ideally those that you see as having the lowest growth in the next year or so) may result in you getting further ahead.
By selling one or 2 frees up equity which will allow you to go again and if you have a build, rejuvinate, subdivide or like stratadegy (which you have already done) then this could allow you to be further ahead than you would be with a buy and hold stradedgy. In addition the capital gain will flow through your tax return which should go a long way to improving your cashflow.
As I see it you have got to get some cash deals or flips mixed in with your long term by and hold stuff to signifiantly accelerate your stratedgy.
Regards and keep going.
Okka
noobie wrote:Mortgage Hunter wrote:All your spare income could be going into your own PPOR to reduce this debt. I also reckon you should spend an hour on the phone with Richard Taylor and see what he can suggest for you. He may well come up with some significant improvements to your situation.I did this – well kind of. I emailed him privately and gave him my precise income and asset/liability position. He made some very helpful suggestions. I went and got my taxation financials done with my accountant because of that email.
My PPoR is still principle & interest. I pay more than I need to off the principal. But I'm putting extra income and the excess from rentals into the LOC. Because I have two incomes (one from business, one from part-time job) they are allocated to different things. One is for investment, the other is to pay off PPoR and living expenses.
matthewc73 wrote:1. What about starting and selling/part selling businesses?
2. What about more development?
3. What about some diversification into shares, collectables, etc?1) I have a small publishing business already, but I don't want to sell it. I also have a fledgling website/e-commerce business that's still new, but I don't think I'd like to sell that yet either. It's still growing and the income isn't anything to write home about. I wish I had enough spare time to build a few more!
2) I could look into more development/construction. I enjoyed that. But it still comes down to not having enough equity to borrow against to start the development going. I'd like to do that for my next project anyway. I made way more capital growth from my last constructions than anyone estimated before I started. It was great (and they're gorgeous)!
3) I have some shares. They suck. Property is way more fun. Income/return is better and it's more tangible. I don't know what collectables to collect!
Still more great ideas, though. Thanks heaps! I'm enjoying this thread immensely!
Lisa (noobie)could you please tell me what LOC means?
i too am in a similar situation Noobie. I currently have 5 IP's and my PPOR and am eager to invest in more property. I have found numerous CF+ properties in northern WA however, my equity is such that my bank won't lend on this, even though i have guaranteed cash flow positive rent for 5 years through GEHA. All my properties are IO. My bank currently has security over all 5 of my properties, however I am yet to use equity in my PPOR. When I do, thought, i will be all cashed up and then……….I work fulltime in a government department, so it's not likely that I can increase my income that way.
One thing I have considered however, is putting my IP's into a trust, thereby not affecting my income……….any ideas?
I am really in need of some advice………there are so many opportunities out there that i am afraid i will have to miss due to lack of equity (only).
just out of curiousity noobie – what state are you in and are you investing in property with a partner (boyfriend/husband). I am a single parent of 2 teenage children and am enthusiastic to know that there are other like minded women out there
I'm in Adelaide, emmajames. I'm not married and I have no kids. Just a single girl having fun. I live alone with my dog and my cat, which is how I have the spare time to work a business and a part time job.
My boyfriend invests now as well, but our projects stay completely separate. He's just got the investing bug from me (it's contagious). He's building two new courtyard homes where there used to be one daggy old timberframe thing. He's enjoying himself.
Oh – and LOC is my line of credit. I pulled some equity out of my ppor using a line of credit for investment use.
Lisa (noobie)Hi Noobie,
You are remarkable! You have taken so much action since the first post late last month I'm in awe. Well done on the portfolio and your attitude is second to none.
My philosophy when the chips are down and the glass ceiling is reached on the loan department, is use other people's money. Sounds callous, but not if you team up with a like-minded investor who has the cash but not the time, it's a perfect match, so you might like to investigate this option. They provide the funds, you provide the deal, the time, the expertise amd the project management.
Another angle using the money partner / joint venture scenario is invest in deals that can be turned over relatively quickly to realise the profit so you can buy again personally. In the next 12 months, how much can you achieve? Even a small profit of $30k done 3 times and then split 50/50 gives you almost $50k you would never get through rent increases etc.
Hope this opens a new area of possibilitles for you.
Best Wishes
IanHi Lisa
I was going to suggest something similar to Richard and Simon. Using IO for all loans, even PPOR, and put all spare cash, including rents, into a 100% offset account against the PPOR, not into a LOC. You can have a LOC attached to the PPOR, but this should only be used for deposits and investment costs. As the funds in the offset increase, you can pay this off the home loan and increase the LOC. You probably should not just use this cash to directly pay deposits as this will result in higher interest on your home loan without it be deductible. If you were to pay all cash into a LOC it can get messy at tax time and result in lower deductions. You are also saving interest on the investment loans which means less deductions and end up paying higher interest on the home loan which is not deductible. Also consider paying all IP expenses such as insurance and rates etc from the LOC (get accountant's advice).
Buying cashflow positive property that is low growth will slow you down in the long run. Deposits need to come from somewhere – cash or equity, so the only way forward without growth is saving.
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
Oh good point!!
I do have an offset account set up against the loan on my PPoR. I can arrange to have all income and all rents going into this and I see the point of reducing the payments on this property first as there's no tax advantage to me having this one high.
I will ring the bank now (and the rental agent) and switch the payments around. They're used to me now anyway, so they won't mind another change so soon
One really fun thing I have learned in the past two days – I went to a new bank and offered them the refinance one of the loans on one unit to use as security on the new CF+ purchase I'm making now. The valuation on this unit came in $30,000 HIGHER than the one Westpac did only a month ago.
I asked the lending girlie at the branch why this happened and she shrugged and said some banks/valuers are more conservative than others. I just found some missing equity!!! Woo hoo!!!
I also asked her – just out of curiousity – what would the estimated values be on some others. She wouldn't tell me that without me refinancing all of them. I'm not going there. Yet.
From another comment on this forum, I learned that I can ask the vendor if I can have early access to the property so I can do some minor works to the building before I get new tenants (the place is currently vacant). They said SURE! WOO HOO!!
So I went back to the lending girlie at the branch and showed her quotes for work I'm completing prior to settlement date (late next month) and she said I can have the place revalued AFTER settlement based on those quotes. WOO HOO!!
This forum is brilliant. I'm going to give my brother a huge hug for introducing me to you all. (I'd even run around and give you all big hugs too for all the wonderful comments you've given me!)
Lisa (noobie)
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