Given you have paid off your home then Terry's comment has some merit to it.

But the above is far more telling than any tweaking what you do with an offset (or not) account.

If you are now in the 'setting up for retirement' phase then it MAY be more appropriate for you to continue with an offset account and look at adding other property, or other assets, to your portfolio.

Now I don't know enough about your situation to really comment further but it may be appropriate for you to step back a little and look at the bigger picture before going much further.

Hope this helps.

Hi Doug,

Buying at the bottom of the market is a nice theory and it is relatively easy to say. The trouble is the bottom and top of a market are only really revealed after the event when statistics can be analysed in some detail. Sure there are some 'experts'' who claim that they can tell where the market is at any given time – trouble is seen their commentary wrong as often as I have seen it right. No-one rings a bell for the investors.

If you are looking at a shorter term buy and sell strategy then getting your timing more right, than wrong, is important. If you are looking at strategy that transcends more than one cycle then the issue of timing becomes less important.

If the funds come from your offset you can withdraw them and use them as you see fit without affecting the deductibility of your core loan.

If you pay down your core loan and then REDRAW funds from the surplus you do compromise deductibility.

From a flexibility point of view an offset account is far better. I would also add an offset account is much more effective then funds in a term deposit strategy like the one you are using at the moment. 

Why? 'half' of the interest earned in your term deposit is lost to tax.

I don't know the group so what I am about to say is more of a general nature.

Whenever I see 'negative gearing' in bright lights I get nervous. In my opinion any negative gearing tax benefits you gain should be seen as a by-product of any investment decisions you make.

Clearly the goal of a property investor is to make money either through capital growth or cashflow or, if you hit the sweet spot, a combination of both. Negative gearing is a strategy which makes short term losses in expectation of future capital growth profits.

Typically marketing groups with a 'negative gearing' message are trying to make a one size fit all approach to property. This does not work as each and everyone of us comes to the investment table with different resources; income levels, equity levels, mindset, risk tolerance and so on. If you do follow up with McCarthy make sure you determine whether or not their suggestions really do match you.

Further to this the 'recommended' investment product is often off the plan, new or house and land packages. Each of these properties have their own limitations. Once again you will need to work out whether or not the recommendations are based on sound advice and recommendations.

While some people prefer the simplicity of a one stop shop – which often comes at a cost to you – there are many others who prefer a 'do-it-yourself' approach.

What was it that attracted you to MG?

Hi Neil,

After have a quick look at their website it would appear is if your description "property management group" is not quite accurate. For me I read your original comment as asking about a property management company which manages the rental of an existing property.

McCarthy seems more like a marketing group to me.

I don't know this group in particular. In some respects using a group like this or choosing a property yourself are not that dissimilar – you'll need to do a lot of research to make sure you make a good decision.

Be interested to know how you stumbled upon these guys.

Hi TheBigO,

OTP valuations are often problematical.

Certainly explore the possibility of seeking out and using a different bank in conjunction with a broker who can work the pre-val process. Success on this pathway will solve the 'problem'

If I now come back to the current low valuation issue.

1. Reading your posts and comments it appears as if you think the property is worth $486K. Do you really think this or has psychology come into play?

2. If you do believe the property is worth $485K before you walk away factor the loss of $9K (FHOG reduction) and probable  increase in stamp duty costs you would incur if you bought a finished product which seem easier to value. Sure you could go OTP again but you would, again, be at the mercy of the valuers.

3. The difference between purchase and valuation (net $16K with FHOG allowance) is a small percentage of the overall cost of the unit. Generally speaking this minor discrepancy will wash through over time – like a pimple on a pumpkin is a phrase that comes to mind – and if the market performs 'well'

At the end of the day you need to make this decision – think it through, give careful consideration and make the decision that suits you.

Just some thoughts for you to consider.

PS Your first post indicates you are entitled to walk away from this contract. Has this been confirmed by your soilicitor?

Being built in 1986 there isn't, in general terms, much left to depreciate.

Properties built between July 18 1985 & Sept 15 1987 attracted a 4%/annum rate of building depreciation over 25 years. As we have now entered the 27th year of this property your capital allowance will probably be zero.

Having said that any renovations may have kicked your capital allowance depreciation on a little longer.

At the same time you should still be eligible for plant and equipment depreciation claims – but given the age of the property these, too, may be negligible.

Recommend you phone a QS who is also a member of the Australian Institute of Quantity Surveyors. From memory Institute members will refund your fee if they cannot identify claims higher in value than your fee.

Hi Bella,

Don't know the area and have tried to get a picture of what is considered 'normal' from the otherside of the country.

But reading between the lines it would seems as if a slightly larger shed with, maybe 3 phase power & water might be the go. 

I now look at normal sized shed and think, "Is that it?"

Now I must admit I don't know whether or not you would get a return for your buck doing something along the lines of my suggestion might be worth investigating further.

Agree with Jamie – sort the equity release first then look forward.

While this may take a little time to get sorted properly you'll be grateful you did over the long term.

A question on an entirely different tack – do you really want to live next door to your IP?

For me this is toooooo close.

I would also wonder about the logic of having your two properties in the one location. The performance of your whole portfolio's will be driven by the performance of the housing market in your home suburb. If your suburb really does stack up then maybe well and good – if not, then I would counsel against this strategy.

Don't let comfort and familiarity cloud your investment decision.

Hope this helps.

Hi Homemade,

If you do a search on Buyers Agents in WA you'll see names like Momentum, Property Wizards and Hegneys. While I haven't used any of their services they all seem to receive positive feedback.

If you are seriously looking at Perth I would start conversations with those three companies and see how you go.

As an aside I noticed Saturday's edition of  "The West Australian" indicated there are currently less than 9000 properties listed for sale across Perth. This is will below what is considered market equilibrium at 12,000 properties. It has been suggested that increasing rent returns (investors hanging on) combined with a growing population has seen the number of listed properties drop sharply. 

Hope this helps.