[Mortgage HunterParticipant@mortgage-hunterJoin Date: 2003Post Count: 3,781]

August 6, 2007 - 9:41 pm

One idea might be to purchase some income based managed funds using a LOC and/or margin loan.  The excess funds can be used to support the property shortfall.

If you need more info please email me.

I am not selling anything here or providing financial advice.

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August 6, 2007 - 8:47 am

Rodeo 98 wrote:

Hi Greenjoy ,
Have you tried ASAP Financial Services ? I have used them and found them ok

Rolf Latham at ASAP is one of the best brokers I know.  If you contact him tell him I said G'day.

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August 6, 2007 - 4:27 am

birddog01 wrote:

Anyone know any good share market forums?

I use http://www.invested.com.au

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August 6, 2007 - 4:27 am

twyfordcc wrote:

Hi Guys,
Do you think it's better to buy a first home now (Sydney), save rent, & use the FHOG now given the current flat (buyers) market or purchase positively geared investment property first and miss out on FHOG? My gut feeling is too hold off , till election , see if FHOG is doubled, and in the meantime explore how to build asset column, and continue to build business (could take 18 months) to assist with servicing own home loan debt down the track.
Do you see house prices falling in Sydney?Interested to get an outside view on this.
Kind Regards,
Chris

You don't lose the FHOG if you first buy an IP.  Stamp Duty exemption is another issue.

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August 4, 2007 - 11:10 am

kenzel wrote:

"One of my properties has a $260K loan IO – I have parked $260K in an offset account and make no monthly repayments whilst it is in there." – In this case why wouldn't you by the property outright instead of taking out the loan?

I think I'm getting a head spin from all this – think I'll lay off posting again for a couple of weeks to do more research

Thanks for all your info guys, much appreciated
Ken

I could pay it off.  But I have no fear of debt.  I have plans for that money to build a home later this year.  If I pay it into the loan I will need to reborrow it and then it wont be deductible.

By keeping it in my offset I can use it and preserve the tax deductibility.

Keep posting – you learn more by being actively involved than by just visiting.  You learn even more by doing – so go and get yourself in debt.  When you realise the sun keeps coming up you will wont to do it again and again.

Next boom, what would you rather have paid off??  I fully owned home or 5 properties all 20% paid off???

Cheers,

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August 4, 2007 - 9:23 am

They sell with a higher yield for a reason. 

Because they are not attractive investments and they need to sweeten the deal somewhat.

I wouldn't buy one.  Look for a house and land deal or a unit with something special.  View, location etc.

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August 4, 2007 - 9:21 am

You should be using the $15000 on the PPOR.  It will reduce your LMI considerably.

Then you can do the 100% borrowing on the IP and deduct all those ugly fees.

If you don't have enough equity yet then there is no problem with holding off a little while.

The rule of thumb is that you don't use any of your own cash for investing whilst you have consumer loans (PPOR) left.  Thats where cash belongs!

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August 4, 2007 - 6:33 am

1.  Goal setting.  What do you need to own/control to get to where you want to be.

2.  A financial snapshot of where you are now.  What can you borrow now to get started?

3.  Short term goals – what do you want to have done by end this year??  By end 2008??  By end 2012??

Remember the goal is not to just buy IPs and see where you end up….  Many people want financial independence and might decide they need $2M worth of asset returning 5% pa + capital growth to achieve this independence.  Then work out what you need to do to get the ball rolling TODAY.

Just my opinions – seek independent advice.

Cheers,

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August 4, 2007 - 6:29 am

kenzel wrote:

Thanks Guys

Opportunity…- I think you're right about only being able to claim back interest that you paid only if the proprty is rented out (income producing). Either way I'm leaning towards a PI loan so that I'll own a property outright in a shorter period and once I have that I'll use the equity and IO loan for purchase of a IP. How does that sound?

Ken

Sounds like an ill-conceived and naive plan to me.

Lets say it takes you 10 years hard saving to pay off your PPOR.

Had you bought two more IPs in that time you could make more money and have not saved so hard to do so.

Would you rather buy IPs at today's prices or 2017 prices? 

With a mortgage the interest you owe is calculated daily and added monthly.  Each day you have funds in your offset account means less interest is added.  eg.  Your loan is $200K.  This is the amount that you pay interest on.

Your granddad lends you $50K for 6 months.  Each day that is in your offset account you are only being charged interest on $150K.  But you are making the set repayment that was calculated on a $200K loan (assuming a P&I loan).  So you are actually getting ahead on your principal.  When you repay him your interest bill goes up again.  But your weekly repayment never changes.  Unless you go IO then each month you just pay interest.

One of my properties has a $260K loan IO – I have parked $260K in an offset account and make no monthly repayments whilst it is in there.

Hope this helps.

Sounds to me like you have a plan as to buying IPs.  You need a plan to achieve your financial goals – IPs are just part of the executin of the plan – not a goal in themselves.  Work out your actual goals and then what you need to get there and stuff will fall into place.

Cheers,

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August 3, 2007 - 7:14 am

blueheeler wrote:

Quote me if I'm wrong about the difference between shares and property, The difference are, risk and value. You can add value to property with a paint job or reno, but u cant with shares. You have control over your property, someone else has
control with your shares. What happens when your shares crash? The word "Crash" is, self explanatory. 

Just my thoughts between the two.

What is a crash?

Is a period of opportunity which soon passes as the market reaches a new high.

Any new arguments as to why I should stop creating wealth through shares?

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August 2, 2007 - 9:10 am

That's all true enough – as long as you don't occupy this property you will still be entitled to the grant when you duy buy your first home.

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August 2, 2007 - 12:28 am

You going to maintain it for the students too?

What about the tickets that come to the owner?  Who are you going to send them onto?

I reckon you are going to make life difficult for yourself.  You are in the business of IPs not car rental!

Good luck!

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August 1, 2007 - 6:35 am

philos3rd wrote:

It is highly recommended, as Simon said, to pay Interest Only, rather than P&I on your loan. Then setup an offset account which is linked to your loan – once you put extra savings and monies here, then you will immediately reduce the interest you pay on the loan. The advantage is that, when you wish to purchase an investment property in a few years, you can actually take that money out of your offset account and use it towards purchasing your new property – under a P&I arrangement you can't do that as easily since the principal that is paid off can't be used as redraw, which is where the offset account comes into its own. This is useful from a tax point of view, at least in Australia.

Nahh not that way mate

Use the offset account for personal use only.  Ideally save it for a deposit on a PPOR one day.

If you buy an income producing asset then use borrowed money only.  ie Top up the existing mortgage to fund a deposit then borrow 80% against the new IP.

This makes best sense taxwise and is explained in more detail elsewhere.

This is such a confusing aspect of investing that I am dedicating a whole chapter to it in my book.

Cheers,

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August 1, 2007 - 6:26 am

Things are'nt as black and white as this.

Many property investors also have a share portfolio and vice versa.  In fact most professional investors would have more than just one sector covered.

Of all major crashes in history – all have recovered to new highs.  Whilst a CRASH is a scary word a canny investor reads it as OPPORTUNITY.  A well managed portfolio is no more risky than a property one.

Higher leverage with property is a fallacy.  Shares can be leveraged easier than property and just as high.  There really is little difference except that shares have few outgoings and no repairs.

Evry so often this argument raises it's head – it is naive of anyone to ask which is better.  Even more naive is to suggest that one indeed is!

Is like me asking you which car should I buy??  Well which one?  Quick, answer me??

No sensible answer can be offered without taking several personal factors into account!

For all of you reading this who are convinced that shares are bad then you don't understand them properly.  I challenge you to go and learn something new and even make a purchase.  You will never regret learning something new about a whole new field of opportunity!

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July 31, 2007 - 11:34 pm

You don't declare anything when you start.  Just start declaring the income and claiming the expenses in the tax return that covers the year it is rented out.

You claim all your interest regardless of the type of loan.  You cannot claim the Principal amount on a P&I loan.

You will get a depreciation schedule done and that will give you a figure that you can start claiming on.

You will pay the same interest with a IO and P&I loan.  The difference is that as your principal decreases at the P&I loan then your interest bill will get lower.

If you intend buying several IPs then go IO on all loans.  I recommend this to real investors. 

Normal borrowers who reckon one IP is enough usually end up with P&I. 

With IO you never have to pay out the whole loan at the end.  It usually reverts back to P&I.  If you want you can reapply for a new 5 or 10 year IO period.

Hope this helps mate

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July 31, 2007 - 12:53 am

MY is one of the good guys in an industry full of cowboys.

Cheers,

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July 25, 2007 - 5:59 am

Sorry Cath but you cannot advertise for funds here.  Even this post is a veiled ad and will be removed later on.

However don't take this as being negative and we would love to see you posting on a regular basis.

Cheers,

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July 25, 2007 - 5:58 am

You really need to send a detailed email off to a broker who does this sort of thing.  there are a couple of good ones on this forum who have some commercial lending experience.  Not me of course – I am a ratbag!

These deals are not that standard and each situation needs to be shopped around by someone with access to a number of different lenders.

All the best,

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July 24, 2007 - 10:14 pm

DraconisV wrote:

Hello Tylon,

With the FHOG, you are saying that you will live in their in the first 12 months to get the FHOG, that is kinda true, you also need to satisfy that you have lived there for atleast 6 months out of the first 12 months to get the FHOG.

Almost right …

You need to live in the home for 6 months STARTING within the first 12 months.  Subtle but significant difference.

I would prefer to see you move straight in – this gives you the full CGT exemption for 6 years rather than losing the first bit – which could be significant if youy make decent capital improvements when you renovate.

I would also reconsider the 20 year old house.  Land is worth more than a structure and it will have more land than a unit.  Also being 20 years old it will give you more scope for capital improvement than a near new unit will.

Cheers,

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July 22, 2007 - 12:15 pm

A Discretionary Trust is what you might consider.

A Company offers little benefit.