Hi Shangrila,

  What an interesting question !!  I will be intrigued to read what those who KNOW can provide.  

  As a layman, I see a problem for the party that owns "half as an IP, yet doesn't draw any rent, and lives in it".   To me, that makes it NOT an IP at all, but a PPOR.  But then, "maybe" they can own the other person's half, and rent their half from the other party.   That would then leave the other party NOT in their PPOR, but "renting" the IP owner's half.

  Wow – it is a minefield, and not one I can easily see a way out of.   But let's hear from others who know….

Benny

Hi dude,

  It is probably a good idea to have a one-on-one chat with someone who can assist you to make the decision.  The sharing of your private information would allow a better discussion – i.e. do you have a large wage to handle a -ve geared property?  

  But then there is :-

   Are you confident that where you buy the market has the signs of adding value over time?  Do you know which demographic you want to rent to (e.g. professional couples with no kids, family groups, seniors, students, etc).  Do you have the $$, skills, time, to buy a -ve geared and add value and raise the rent – making it neutral or +ve geared?   Do you want to buy a house with potential for development down the track?  etc, etc.  There are lots of horses for courses – picking the one to bet on is the first hurdle… 

  See, your skillset and desires may well guide you into possibilities that can be more beneficial once you identify just how you want to proceed.  Keep reading, meet up with other investors (see the Meetup posts that pop up now and then), take ideas from within posts and align them with your thoughts. 

  Of course, some on here can provide advice too, as part of their profession.  Making contact with one of them might focus your thoughts once you can share more of your personal financial situation with them.   Their works are on display – maybe make contact to see if their words can focus you into a more specific area of property investing. 

When starting, we don't know what we don't know, so using others' knowledge is a smart move – your post today was a smart move.  Let's see where it leads,

Benny

Hi David,

  Be sure to check out the "break cost" of your Fixed Loans with your Bank before putting the units up For Sale.   There could be a nasty surprise, depending on where variable rates are sitting.

Benny

Hi TNI,

 When a new development is being planned, this includes mapping where streets will go, but without street numbers allocated, they use the Registered Plan description of (e.g.)  Lot # 11, RP # 123456, Parish of Timbucktu.  

 You will see this on Contracts, Rates notices, etc.   It is what developers use probably right through the process of developing new areas.   Even with street numbers assigned, I think they would continue to use the Lot #.  Your current house would have a similar Lot # even today, even though it has a street number and address.

 Someone else can likely give a more definitive answer, but that will get you around any adverse thinking for now.  it really isn't any kind of issue.

Benny

Hi CH and Hank,

  Hmm, what a shame no-one else has "got up to dance" on this one.  I would be interested to hear from others too.  Here's what I can think of for now :-

  I read in more than one book that Personal Loans are not issued for Deposits on investment property.    So, these authors went to their lenders, saying "I need a Holiday" or "I want to build a garage", etc. 

  Then, having got the Loan(s), they decided "Hmm, I don't really need that holiday, and the old carport will do for now……" and they then <….you fill in the blanks ….> 

  … or, were they just good story-tellers?   I haven't done it personally, so can't add anything more that I can point to specifically.  I hope others can,

Benny

Hi Bish,

  I would think the amount of time you had owned the property would be relevant too.  e.g. If you have rented it out for 10 years, then calling it a repair is probably fine. 

  But if you have just bought in the last 12 months, I wouldn't be too sure of it being classed a repair.

Benny

Hi Vincent,

  Since he makes no mention of a THIRD loan (like Terryw did) this does sound suspiciously like he was going to xcoll the two properties. 

  Note that Terry's idea actually prepares for further borrowings against your PPOR via the LOC up to the 80% mark (still no Mortgage Insurance at that point – that starts at 80.1%.  This could provide Deposit and Costs for a second IP and maybe a third without having to go get another loan.  Of course, you would need to pass the Serviceability test to be able to get extra loans of $440k.  That brings your wage and other loans into play (e.g. credit cards, etc).   But hey, if your wage can handle it, why not? 

  If you can "handle" a big credit-card-type loan without going crazy buying junk that depreciates – overseas trip, new car, etc – then go for it.   It is nice to have extra funds "on tap" especially if a deal of a lifetime comes your way and you need to settle quickly….

  Oh, and be sure that you DON'T mix your personal spending with the IP costs via the LOC.  Keep it PURELY for IPs or other investments that provide tax relief.  And look at setting up an Offset account against your PPOR loan too. 

Benny

PS  I am NOT a registered adviser like some of the others, so my words are merely my opinion, not advice !!!  

PPS  Is your Mortgage Broker aligned with any particular lender????  Could be a good question for him.  He sounds like he might be……

Hi Jate,

  As a "broad brush" approach, anything to do with the having a lender issue you a Mortgage(s) are a Borrowing Cost (which are usually claimed back at 20% per year over 5 years).  So these would include things like (from your example):-

Property / Title Searches   (could be – if the search was requested by your lender)

Stamp Duty                           (if this is Stamp Duty on Mortgage)

Registration of Mortgage  

Registration of Land           (if related to Borrowing)

Discharge of Mortgage       (did this discharge relate to "borrowing the money?")

Clearance Certificate

Loan Approval Letter

Government Search Fees  (could be – was the search related to "borrowing the money?")

  The rest (thinking back now – it has been a while) would be Purchase Costs which I believe are capitalised and only recoup as a deduction on Sale.

Hope that helps – but your Accountant will know for sure….

Benny

Broken link ????

Welcome aboard Tom,

  Hey good for you to be considering these things at an early age.  I can only think your parents have been doing a fine job !! 

  Your question led to a recollection of one of my earlier property investing "self-help" books.   Check out "Real Estate Riches" by Dolf de Roos.  Within the first five pages (I think, but REAL early in the book anyway) he makes mention of himself planning to go to University.   

  His comments re "what happened next" blew me away…..   It is well worth seeking it out and seeing what happened.  I am sure you will get a lot from it !!!

  Re studies, I'd say English and Maths – after that, you choose.   

Benny