Forum Replies Created
Hi alloti
Nice nest egg… believe it or not $100K cash is a good position to be in at the moment.
100K properties are out there I bought 2 in N.S.W in the last 6 mnths and will return you about $150 per week.
Better then a term deposit when you compare.. capital depreciation and the amount of tax payable on the gain , against the possible increase in house prices and the income you will receive if you buy an investment property now, not to mention that 80% (LVR )of the equity will available to put towards another investment property in the future.
keep it in the high yield bank account for now , but start looking for an investment property and get a big head start on making some wealth out of property investing. even if you take a year off to study( great move) and gain the benefit of a higher income after wards, the property will be there producing an income and increasing in value and it will be ready to use to buy more properties later down the track. Just save all the income to pay your holding costs Rates insurance etc and the balance save for the next deposit. if you do your laughing.
$100K house.. no loan… just income …its a positively geared investment … that's the way to get a big head start !
good luck !
.Thanks John
I think your probably right keeping the cash in the offset accounts and waiting a little while longer is probably the best thing at this time.
With the 49k its in an offset account on a 49k mortgage and if I was to pay it off and use the freed up I.p added to the one I own out right I would have 2 I.P's valued at 250K plus and my question was would it be better to stick with an interest only loan or go for the Principal and Int loan .
But I see your point holding it in 2 offset accounts and having the cash is better if along comes a very good deal, I can move on it quickly with a cash deposit and borrow on the I.P I own so still keeping the majority of my cash in the offset accounts
Is this what you meant ?
My fear is not using the cash and the one unencumbered I.P in the most advantageous way possible.
Hope this make sense..
Thanks
nucopiaHi G'Rich
I would not recommend ANZ either. I have 3 loans with them and fees on offset accounts is just one of the draw backs, poor service being another . Prefer client pack they offer is ok but you end up paying $340 per year for little gain. If I did not have 2 loans locked into a fixed interest rate, I would be shopping around for a better deal.
Borrowing money for such an important purchase needs a lot of thought and consideration, remember you may have to live with the decision for a number of years, so a little home work now can save a lot of head aches later on down the track.
Take a look at all of them and find the one that closely fits your needs etc
Take a look at St George I found them to have some good loan packs, but thats just my personal opinion..
Any way, good luck and if you find a good lender with a good deal, give us a heads up so we can all take a look at them as well.Nucopia
Hi Gabriel
"Some banks have savings accounts which pay 10% p.a paid mothly and also include some capital growth of between 5 and 8%p.a
Putting equity in there is probably better than doing nothing with it."
I tried this with a CMA with ANZ found I lost most in monthly resident tax i.e interest payment was 450 a month and the tax deducted by the bank was 200+. Why should I wait till tax time to get it back when I wanted it to make the monthly repayment on an investment loan … so I was better off to have the money in an interest off set account and get the benefits strait away."You could also buy clients off a broker or advisor and earn interest from the commissions. The rate of return could be 15-19% if you find a trusworthy proffessional"
Can you give me a more complete explanation for this please ..
thanks for your input …
NucopiaThanks John
Yes I agree, I would only draw down equity for investing in more I.Ps .
I have an I.P worth 125K with 100% equity and another worth 130K with 49K owing(interest only loan) fully offset.. I could pay this off with cash and use both to finance more I.P purchases, figure @ 80% I could use them to borrow 200K and would need maybe 35K cash to cover deposits and settlements. I would need to look at 2 houses in the 115k range I have my eye on a few places that fit this price range in Vic and a couple in N.S.W, The NSW ones are close enough that I can drive out to inspect if needed. Just not sure with the interest rate rises whats the best way to put this together and weather I should look at principal and interest loans now or stick with the int only .I think my cash flow is ok as is my borrowing capacity.
As you can gather from my posts I dont like debt for debts sake and the way things are going interest only payments are on the increase.
Thanks
to every one for your specific advice to my post…
much appreciatedThanks Gabriel
Sounds to good to be true…..L.A …no debt other then the investment loans.. Credit card is Paid in full on statement date, so 0% interest !. (love using their money but hate to pay interest !) I am holding all my cash surplus in 2 offset accounts linked to 2 variable interest only loans 50 k is over an I.P 128K is over my PPoR… I can pay the 50k out completely or the other significantly…
So the total monthly interest due is well below my cash in every month and the accrued surplus covers all the fixed expenses(rates insurance etc)
If I have a mortgage over the I.P or the PPoR (both R tax deductible) for investing it does not worry me, and its just a choice of which gives me the most advantage later when I do decide to draw down equity ..
I suppose I just don't like the feeling of doing nothing when I have untapped equity and cash coupled with my desire to acquire more i.Ps .
Its some thing I will have to get used to.
Thanks for the advice…Try
Peter Tersteeg [email protected] phone 03 98773000
I have dealt with him over the last 3 years , the guy is down to earth realistic and very capable in providing excelent personalised service.thanks F
I would have thought some one would venture an opinion by now ???
Thanks thornbird
Don
yes $246 per Ip in WA is cheap.
I just never expected the NSW ip would be so high considering I asked for the exact same cover as the WA ip's ..no contents insured apart from fixtures fittings etc…
I have a quote now with NRMA for $370 so I will most likely go with them unless I can find some one else…
Thanks Don I realised that location effected the premiums just did not expect it to be double .
live and learn
appreciate your info
thankssome one must have an idea … any thing ?
Nice question:
I think you have to approach the home owner very carefully.
Don't go around at an in opportune time when they are sitting down to eat Dinner but choose a time between 3;30 pm and 5:30 pm
maybe knock on the door and introduce your self , you could say I hope you don't mind but I have been driving past your lovely home and have admired the garden or some other feature compliment them and say you know I always wanted to have a house like this etc most home owners are house proud if you talk about things that they can easily relate to and especially things about the house they take pride in. To gain their trust you must be able to make a connection with them on an emotional level, and they need to feel you and they share some thing in common and if that's an admiration for their home they are more likely to open up to you. I remember stopping i guy in the street just after he parked is 1966 Ford Mustang … I said wow man I love your stang what is it a 66 must have a 286 in it etc etc the guy and I talk for about 20 minutes because that car was his pride and joy and he was getting is ego stoked….. home owners are the same if you know how to approach them….
Feel them out slowly and be a little descreet , don't be so forward that they feel your salivating over their home or your just a slick investor rubbing his hands together in anticipation of the great deal your going to make with their home if your sell it to you and you tear it down and carve it up…. .
remember most people have a lot of emotions invested in their homes and are more likely to sell to some one who they feel will appreciate the uniqueness of their home. you will know if you have said the right things by their reaction and their willingness to open up remember treat them with respect and show respect that will come across and be appreciated..
Great if you can approach them when they are in the front garden watering or doing some gardening activity. Its easy to strike up a conversation then.
good luck don't be disappointed if they refuse your suggestions but don't be surprised if the invite you in to see more, even if its just the to give you a drink of water its breaking the ice and being sociable, leave them with a very subtle thought like ' I know this sound crazy but I know my wife would love your house , I hope its ok if I drive her past one day to show her this is just the kind of house we both been dreaming of " or some thing like that….
any way nothing ventured nothing gained.
good luck and let us know how you go with this …Hi TysonBoss1
if I put my income , which is what every one puts if they work to earn a living. I scored 1775
I don't work so I put down my annual living expenses…scored 9999+
I receive a TPI pension and Service pension. index to rise with the CPI and average wages..I will receive them both till 6 weeks after death along with fee medical optical dental travel and other benefits for my wife and children ..carers payment education and other allowances…
The tool is based on a an assumption that if i had to sell all my assets I would have x amount of funds to live on for x amount of years. If you have no income ….
Its a good tool i agree and an indication of how things are and how things could be for most investors.
For me its not relevant as I have no way of inputting things to give an accurate score
its ok I'm just having a sook … been a bad day for me that's all
I have to agree with foundations observation. allot of the driving force behind the market correction in both the stock and property markets are the results of massive amounts of borrowed funds…
The same thing happened in Japan in the early 90's land went through the roof banks got greedy and gave out equity loans , land owners got on over inflated sense of wealth based on the value of the land they owner and borrowed amounts they could not pay back and when the bubble popped !
recession hit the fan ! This situation is not dissimilar.
look how many average Australian salary earners have borrowed way more then the could afford to pay back comfortably just like in the states sub prime market… people borrowed more then they could afford to pay back if things went pear shaped and they Did ! take a look at the credit statistics for consumer credit . average $9,000 on a credit card ! same with the stock market if you owned $50,000 in shares you would have $12,000 equity to buy more shares…
Greed over borrowing/Lending and 1000's upon 1,000' of fools that can't handle or don't want to learn how to handle debt in a responsible way .
What about the young newly wed couple who want a 3 bedroom 2 story house on a large block in a prime local and are willing to borrow a large amount (500,000 Plus ) to get it while both are working but when the first child is born and the repayments are more then the husbands salary they wing that the government/banks and every one else owes them a hand to get out of the mess.
Foundation is right greed stupidity and the easy access to credit beyond what people can afford to payback has fueled the corrections of the markets in U.S and Aust…
nice tool
but it is not a true reflection of my situation Ho Hum
mmmmmm
Sounds like a good deal if in 2 years time the value of the property will be more then the purchase price….
You would need a solicitor to make you an iron clad contract with the builder….covering every thing
Just hate to see you take out a large loan hand over the funds and the builder goes bust leaving you with a half finished house and a big mortgage over the property etc etc
The best advice is seek a competent property lawyer to advise you on this one.Wow $1200
we also pay $200…. I can't see how any accountant can justify charging 6 times our current fee with out giving 6 times the service and 6 times the tax savings we already get now…
hi Boshie
would you consider doing some joint venture projects ?
p.m me if your interested
