Hi Leswon,

In a round about way interest only could be considered ‘dead money’ as you describe it.

You need to change your mindset about CG – you do not need to sell the property to realise the gain. It is possible to release the equity for other investments and/or cash. Ultimately it depends upon your investment philsophy.

To give you an…[Read more]

Hi Celivia,

Like Mel – I don’t think so either – but it may depend on how many IPs you own.

It may be possible that someone recognised by the ATO as ‘being in the business of investing in property’ may be eligible – but I think not.

Definitely one for your accountant.

Derek

derekjones1@bigpond.com

Hi Ken,

I suggest you do a ‘google’ search on Boggabilla – this will help you determine whether or not the property is right for you.

For me a population of 639 is too risky. The town itself is 769km north west of Sydney and can be found on the Q/NSW border near Goondiwindi.

As I have said in another post – Steve also reinforces the need for…[Read more]

Hi Simon, Russ and PG,

Thank you []

Derek

derekjones1@bigpond.com

Hi Leswon,

Was going to let someone else have a go at this for you but….

Leveraging available equity off your existing property appeals most to me – this way you can (to a certain degree) have your cake and can eat it too.

One of the first issues you will face is how much security a lender will recognise in your property. I am sure it will be…[Read more]

Hi Russ,

You, and the banks, need to include some consideration for vacancies – which is why (I suspect) most banks do not consider 100% of rental income when calculating loan serviceability.

Derek

derekjones1@bigpond.com

Hi Leswon,

Loans can be altered fairly easily from I/O to P & I without any drama. I suspect the ‘bank’ would love you to change to P & I loans as they will reduce their exposure to you, and the loan is being paid off, albeit slowly.

“If so, all money already paid towards the IO will also be taken into consideration and deducted?”

There are no…[Read more]

Hi Leswon,

There are a number of reasons why I use I/O for all of my investment loans.

1) I use I/O only loans so that I can driect all of my spare cash into paying down my own home loan as quickly as possible.

When the home loan is paid off then I’ll consider my options and explore the costs and benefits and options of paying off/down some IP…[Read more]

Hey Lisa,

My brain has an answer.

Assuming all the properties were identical and bought today. A bit simplistic but you get the drift.

you would need 500 properties
you would have put in around $6m for deposits
have total borrowings of $18m

All for $50K/annum.

Assume you held property to the value of $1m and it grew by 5%.

5% of $1m =…[Read more]

Hi Ez-rent,

We shall now all be extremely respectful of you and your comments – just in case Mrs Ez-rent enters the fray []

Derek

derekjones1@bigpond.com

Hi Leswon,

As a quick calculator a lender will recognise (and lend) up to 80% of the value of your PPOR – income restrictions may come into play depending on the various numbers.

Here is a little sum for you[]

Value of home X 80% – existing PPOR loan = equity available.

You will need around 25% of the total price of the investment property for…[Read more]

Originally posted by Inna:

The accountant said that we’re better to sell than to rent it out as you’re better sinking your money into your PPOR than a rental house.

As far as not renting the second one at all – just leaving it idle for 6 months – we had a friend do this – and apparently it worked out very well.
Made more money than if he had…[Read more]

Hi Chan$,

For me earning around $100/year from an asset ‘worth’ $45000 is too little when you have put in equity or cash of up to $12000.

At this rate it is going to take an exceedingly long time to make money out of this investment – and that is without any repairs in excess of $260/annum.

Lending institutions primarily use an equity and…[Read more]

Hi Neney,

I would recommend you do some extensive reading (if you haven’t already) and ask lots of questions so that you start to understand the various aspects of property investing as there are many ways to invest in property – at the end of the day the decision needs to be yours and you need to be comfortable with what you are doing.

You will…[Read more]

Hi Ricksters,

Based on your first post I would have to say the answer to Chan$ question is you would be subsidising the vacant units.

You can’t have it both ways – you get a subsidy when your unit is empty but you don’t subsidise the other owners when their unit is empty.

Derek
derekjones1@bigpond.com

Originally posted by Pisces:
To get a promotion , what counts is seniority, not ability !!

Pisces

Hi Pisces,

Western Australia has been using a full merit based selection process for the past 12 years. Promotion by seniority died a long time ago.

I also believe the other states use a merit based system too.

Derek

derekjones1@bigpond.com

Hi Dan,

An offset savings account enables you to link a savings account with a loan. As a result your monthly interest bill is proportionally reduced.

Eg A loan of $100K would attract an annual interest bill of $7K or $583. If you have the same loan with an offset savings account holding $10K then your interest is calculated on $90K. As such…[Read more]

Hi Lisa,

I am with Redwing on this.

PAy P & I so that you are guaranteed of releasing equity and increasing cashflow at the same time.

The difference on a loan the size you are considering is negligible.

Derek

derekjones1@bigpond.com

Hi Rachel,

A technique we often use at work when exploring options is to analyse each and everyone in a methodical approach.

Sit down with hubby and do some brainstorming (write down all your options without trying to sift the good and the bad ideas) yet!

After you have completed an extensive brainstorm then pick a few (5 or 6) of the more…[Read more]

Hi Inna,

1. For a comprehensive answer to your CGT questions I recommend you have a look at the ATO website and read the documents relating to CGT.

http://www.ato.gov.au/individuals/content.asp?doc=/content/31570.htm

2. I suggest you are better off splitting the loan and having two loans.

One for the half you live in – with this loan being P &…[Read more]