Advice on property

Viewing 10 posts - 1 through 10 (of 10 total)

bla0018
Participant
@bla0018
Join Date: 2014
Post Count: 42
February 4, 2014 - 7:04 am
Hi im 21 years old and have bought my first PPOR for 290k.
I was just wanting advice from some of the more experienced people on this site about how i should structure my portfolio. My end game is to eventually retire on passive income off property and retire hopefully in 10 years. Im willing to work my butt of to get there,I work 2 jobs along with my partners income and also rent out one of my rooms in my PPOR . Now my loan is P&I with a linked offset account, should i pay off the debt and look to invest in a IP in say 3-4 years using equity from my PPOR, Or should i save as much as i can in a offset account and invest that in a positive IP in say a year and keep trying to invest every year in positive investments using a high LVR. And end game sell half to pay debt off and live of the remaining passive income.
Please any advice will be good advice
Mick C
Participant
@shape
Join Date: 2010
Post Count: 1,099
February 4, 2014 - 12:05 pm
1. Change your loan to I/O …..why would you want to pay down the loan and then ACCESS THE equity back up in 3-4 years?? might as well have access to the equity now and not pay down the loan…and STILL access any equity increase in 3-4 years time.
2. ^ Cash is king…equity is worthless if it can't be converted to cash, or in this case "re-borrowed"
3. There's a diff btw good and bad debt…IP is a Good debt, so don't be scared to be in a bit of debt, especially if your looking at "retiring" in 10 years time on a passive rental income ….acurmmmuate the wealth and IP in the shortest period of time and once you get to the stage where your comfortable to pay down your debt, do so only than…Not now. As you need more cash for deposits etc…
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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Same Banks. Better Rates. Served With a Passion.
bla0018
Participant
@bla0018
Join Date: 2014
Post Count: 42
February 5, 2014 - 6:59 am
What about when the banks want a lump sum principle payment do I just leverage that by selling IP. Also is it worth trying to add value to our PPOR eg, pergola decking adding toilet.
So save as much into an offset account and use that as a deposit for the next home?
Sorry for all the questions just want to get a good grasp of how I should set up my portfolio
thanks
Colin Rice
Participant
@fms
Join Date: 2011
Post Count: 338
February 5, 2014 - 1:50 pm
bla0018 wrote:
So save as much into an offset account and use that as a deposit for the next home? Sorry for all the questions just want to get a good grasp of how I should set up my portfolio thanks
Use the available equity in the PPOR for the deposit on the IP. If not enough available then pay down some of the PPOR loan and reborrow.
Based on your post it would be ok to go to 90% LVR on both properties.
As it is borrowed funds it is tax deductible where using cash is not.
Questions are great, don't be sorry, its how we all learn and there is no such thing a a stupid question (almost).
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone Me
Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
bla0018
Participant
@bla0018
Join Date: 2014
Post Count: 42
February 6, 2014 - 9:04 am
Thanks for the response
so your saying to continue paying P&I and use equity to purchase future purchase?
Colin Rice
Participant
@fms
Join Date: 2011
Post Count: 338
February 6, 2014 - 9:09 am
bla0018 wrote:
Thanks for the response
so your saying to continue paying P&I and use equity to purchase future purchase?
P&I is ok but better to go interest only with offset.
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone Me
Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
bla0018
Participant
@bla0018
Join Date: 2014
Post Count: 42
February 6, 2014 - 9:19 am
Sorry little confused I don't want to sound stupid but I purchase ip by using equity from my ppor but if I'm paying intrest only and saving in an offset I won't have much or any equity in the ppor
Colin Rice
Participant
@fms
Join Date: 2011
Post Count: 338
February 6, 2014 - 9:30 am
bla0018 wrote:
Sorry little confused I don't want to sound stupid but I purchase ip by using equity from my ppor but if I'm paying intrest only and saving in an offset I won't have much or any equity in the ppor
Can pay down the PPOR loan from offset savings if required but will depend on the valuation on PPOR at the time of the IP purchase how much etc.
Colin Rice | CDR Finance
http://cdrfinance.com.au/
Email Me | Phone Me
Perth Based Mortgage Broker - Investment Property Finance Specialist | E: [email protected]
bla0018
Participant
@bla0018
Join Date: 2014
Post Count: 42
February 6, 2014 - 9:37 am
Ah thanks so much for the advice so many different strategies out there I know I'm young but I just want to set myself up for down the track
jate
Participant
@jate
Join Date: 2013
Post Count: 26
February 10, 2014 - 5:30 am
FMS wrote:
If not enough available then pay down some of the PPOR loan and reborrow.
I also did this about a month ago based on advice from my mortgage broker.
I had all my savings in my offset account against my PPOR but since an opportunity came up and I hadn't had the time yet to restructure my PPOR loan with a LOC to draw on the equity, I moved the funds from Offset –> PPOR Home Loan then performed a redraw immediately to pay for the deposit….this had a $0 balance difference by day's end (when I presume they calculate interest)
….but then now I'm thinking, hang on… the debit interest charged against my PPOR Home Loan account, still only represents 100% my personal PPOR loan debt. Where is the benefit of performing all this where I can tax deduct also the deposit interest?
Now that I have my LOC setup, am I supposed to reimburse my Offset account with the funds available from the new LOC? and therefore now the LOC Debit Interest is deductible?