[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

September 29, 2016 - 8:36 pm

Hi Mikey,

You’ve gotten some really good advice but I have a something to add regarding LVR.
Although 88% LVR is the “sweet spot”, my opinion is that you shouldn’t aim for it just because it is something that is available to you.

There are some advantages for borrowing more of “other peoples money” & increasing LVR however I believe that taking advantage of a higher risk loan (by borrowing more money) should only be done by the investors who can easily afford the 20% deposit (investors who elect to only use 12% of their money rather than 20%).

I don’t believe that it should be used by investors who cannot afford a higher deposit amount to buy a property. I’m sure my comments would sound counter intuitive to many on here but “that’s life”.

My Opinion: Look for the investment properties that suit your goals. Filter out which ones you can buy that you can cover 20% deposit with the funds you already have.

Find any? If so then that’s great. If not then ask yourself why you couldn’t find any? Is it that your tastes are too high, not looking in the right places for affordability or that you need to make some life changes that help increase your deposit $ …or something else?

Cover these questions before going for a loan of higher LVR because the investment needs to suit you, not you suit the investment. I cannot stop you from borrowing with a higher LVR but at least you can understand why you had to make that decision & felt that you had no other choice.

Cheers & more wealth to you mate.

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June 25, 2016 - 9:33 pm

Hi Nan,

Understandably, everyone with a loan wants to limit their interest expenses. I would NOT choose to fix my rate unless I couldn’t afford another interest rate increase. Are you trying to “time” when to fix interest rates because you cannot afford to pay more or because you are hoping to fluke some interest savings? I am thinking that you may just be looking for clever ways to make a saving. I admire that you are thinking of ways to increase your wealth. Your entry hints that you yourself may believe there to be another interest rate cut so your gut may be telling you to ‘pause’.

I know many who have lost a lot of money & options fixing rates (the rate decreased afterwards). Only the ones who fixed for “security” were still happy about it after the rates decreased. They fixed their rates as an insurance policy against their inability to pay out further loan expenses. They crystallized one expense payment by purchasing some peace of mind.
* Yearly interest payment: $25,000.
* Couldn’t possibly afford interest payments to be above $30,000 (annually – for the next 5 years).
* Fixed the rate at a figure below $30,000.

If you are thinking to fix your rate to insure against your inability of paying higher interest expenses, then please look at your overall expenses before you fix the rate. You may find substantial savings in other areas before taking this crucial step.

Cheers, more health & wealth to you.

• This reply was modified 7 years, 10 months ago by  Pimobpi.

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June 25, 2016 - 7:39 pm

Hi Ashley,

The City Council can give you this specific information (if you call).
They will not indicate who they prefer to work with but they will give you a list of the most frequently dealt with.
You can then interview all (or pick a few) & judge whether they suit your needs….or not.

Just on the topic of “thinking outside the box”. It is completely understandable that you are looking for such a consultant however you may find that the most extreme example will delay a permit (or not ever be able to obtain one). Why narrow down the options for yourself. Ask yourself what you need to do to get both attributes in the same consultant. Formulate your questions so that you can spot one that can give you clear examples of this & then talk to their clients – if you desire proof.

Although creativity should be a key feature, the fact you want to hire a town planning consultant is really because you know that you need to have some level of conformity as well. Town planning is like a negotiation – the goal is for both parties to come out winners.

You could interview & choose a consultant that gives you “outside of the box” options which can easily meta-morph into a more “mainstream” project but without losing original identity. Look for the TETHER between the “creativity” -&- “mainstream”.
I think that their ability to “tether” makes all the difference.

Good luck – more health & wealth to you.
Cheers,

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

June 18, 2016 - 5:12 pm

Benny wrote:

4. DON’T be in a hurry to “get into SOMETHING!” Spend some time getting educated before buying anything.

Hi,

As usual, I very much agree with Benny’s advice.

There is something worse than being a procrastinator & that is when one becomes a pre-crastinator instead.

A pre-crastinator is a loose term used for people who are afraid of being a procrastinator & therefore jump into situations “too early” just so that they can cross it off their mental list. It mostly ends up being a wasteful decision & sets up a losing situation as they have not given themselves time for education, time to digest the knowledge, not performed idea mental stress testing within different scenarios. They don’t give themselves the chance to take full advantage.

I am not saying to act on important decisions right up to the very last minute of a deadline eg: do nothing, do more of nothing, then decide to buy a property on the same day that it’s being auctioned. What I am saying is, committing to something prematurely will eliminate the chance for the Universe to offer you a more advantageous situation as the act of committing will end that time line for you.

My best example of this is: do not order fries (at a fast food restaurant) until you get to the counter. It allows for a better chance that a freshly cooked batch of fries is made available when your entire order is fulfilled. lol, I hope you got a laugh – I always use silly examples. It makes me laugh when I read back through my entries & feel embarrassed of what I’ve written. :) I hope you get my meaning though.

I am a believer that “inaction” is not “doing nothing”. Inaction is when you’ve educated yourself & feel like it is not the right time now to make a move. I like the expression “Invest as soon as you can”. Most people concentrate on the word “soon” & they think that it means to invest right NOW. I have to disagree. The emphasis of that expression should be on the word “you”. You are the one that has to be ready & once YOU are ready to buy then DO IT!

Keep well & heaps of wealth to you.

• This reply was modified 7 years, 10 months ago by  Pimobpi.

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May 10, 2016 - 5:47 pm

The confidence one has in their strategies, of returning back to wealth, if disaster was to strike – is what I would consider as being “Rich”.

Very similar to a “doomsday prepper” but without the camo gear & tonnes of baked beans………….OK. I lied about having too much baked beans, it’s probably best to keep stacking those tins. :)

“Those who fret the decline in gold price, don’t really understand gold.”
The above quote teaches us that it is not only personal loss that our strategies should be limited to.
As well as accumulating property, perhaps it is wise to remain relatively wealthy by owning gold, if / when global financial issues arise.

Cheers.

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May 7, 2016 - 12:11 am

Hi Brett,

I feel that if NG changes are made, it will be a loss for both:
a) the home buyer who became an investor &
b) the future hopeful home buyer.
I feel this way because there is at least one other dimension to this problem that is never discussed………………although its presence is not hidden from view & has always proved prosperous.

Changes to NG without seriously looking into all possible outcomes is very careless & irresponsible.

Policy tweaks may temporarily create a different outcome but tweaks also attract the “game changers” & encourage them to re-organise & snap the system back into its original momentum (which always ends up advantageous for the wealthy). The difference here is that the “wealthy” are not affected if NG changes are made or not. The only 2 affected groups are:
a) home owners, that have since became investors, that are now risking very much to become wealthy &
b) hopeful home buyers, that want a home & then most likely want to be an investor and take risks to hopefully one day become wealthy.

We are really the same group of people at different stages in our lives however there is resentment towards investors. It is an “us or them” mentality designed to give the illusion that only one or the other is to gain. The reality is that it is a closed circuit & both symbiont’s gain off each other. There are circuits everywhere – Renters are valued customers of property owners & those very same property owners are the valued customers of banks and so on.

Eventually the people/organisations that have the power to snap systems back into place which continually put the true wealthy at an advantage will do so accordingly (no matter what policy changes are made) & the ones who suffer the most from this “snap back” are the ones who are least able to bounce back from the initial strain & loss ie: group b) trying to buy their 1st home.

The rich get richer when – group a) is impacted & investing stops & therefore group b) cannot ever promote – the poor get poorer.

Remember, the wealthy are who hire & fire. They are neither good or bad, they are both & they never lose. Changing policy does not change this system for the better, it can only get worse.

I hope I’m not making people feel like I am referring to a conspiracy or anything weird like that. I just see this as an obvious truth to life that’s not discussed very much.

Cheers.

• This reply was modified 7 years, 12 months ago by  Pimobpi.

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

May 6, 2016 - 5:10 pm

Hi Benny,

Thank you for your kind words. I think that you are enlightened & very much deserve that accolade.

I agree, these seemingly useless skills are the throttles that help propel us in everything we do. I write “throttles” as they provide us with no clear direction, at the time the skill is learnt, but they become catalysts for future changes when applied. In your example of Steve Jobs, his Calligraphy skill remained unchanged whilst his application of it changed the rest of the world.

History lists many real examples of people pushing through this paradigm shift. “Fitting a square peg into a round hole” is what we commonly refer to as an advancement in “technology”. We no longer have the skills to build the pyramids but we are certainly able to land instruments on far away comets.

I don’t know if you’ve ever watched “Demolition man” with Sylvester Stallone – Stallone was infused with the skills of a seamstress……whilst his counterpart was infused with the most deadly warfare skills. Stallone uses his seamstress skills to win the final battle. Unrealistic? I say NOT! heheheh.

Cheers & many thanks.

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May 5, 2016 - 7:30 pm

Hi PeteJackie,

I loved your question, it’s been a few hours so I wanted to reply.
Pardon me if you wanted a quick reply, I hope mine is of some interest to you.

I am in IT & also in the Property Development business. I make mistakes all the time (in both industries) but I am quite successful in both too. Most of my failures are not disastrous ones because I pay people to do all the critical work in Development that requires strong Maths & English skills etc. I love science (cosmology mainly) so that knowledge/skill has not really been a cross-over skill that I can take advantage of…….until we all live on space stations. :) Most of my mistakes have been from not always figuring out what it takes for people to put my Development Project on their highest priority. I don’t have that issue much any-more, I’m better at looking for what interests people & I try to give them that very thing. (Sometimes it’s not about giving them more money, sometimes it’s genuinely about making them feel valued…….however giving people more money usually does the trick lol).

I consider Developing as “who I am” & it will always be part of my life (even when I can’t develop). Most people look at empty open spaces and see beauty there, I have to pretend that I see beauty in that open space because I’m actually feeling a different type of beauty. My mind is working at full speed thinking about what I would want to create in that location & why I don’t see it there already. I think that Development is mostly about people & the interaction with them. What subjects can your son choose in Yr11 & 12 that helps with that?

Subjects in beauty colleges can help people become good hair-dressers but which subjects teach these same hair-dressers to be great with clients & to listen to their client’s life issues when doing their hair? (maybe hair-dressers share some qualities with therapists). Would a future hair-dressing student pick a subject in year 11 or 12 that will lead them to be a therapist? Probably not. The therapy part of the job is not really the “job” for them at all, it’s about the hair – hairdressers would certainly not have the recognized credentials as “therapists” and yet hairdressers do it daily. This trait may help separates the good from the great hair-dressers. Is it measured & how is it learnt? I guess it’s measured in return business (thus “success” is the measurement & not the trait itself).

It seems that most of my time is taken up by looking/deciding on floor plans, reading through legal documentation etc but in reality (and after I purposely accounted for everything that I did during my day by writing it down & also recording it) it turned out that most of my time was spent discussing & establishing partnerships/networks with people. My mind just didn’t recognize all that time spent with other people as being categorized as “work”.

You, as parents may hate my next sentence: I agree with your son – he is right & he can be a Developer straight from school & I’m glad that he has that approach because it is a different approach to how most others would view it & he needs to think differently to most others. A bit like how Steve thinks differently to most others that are on this site. That difference probably explains why he is the creator, successful & writes the books etc.

Will your son be a Developer that buys, builds, creates, etc from the start of his career? No, he will not, that will come later….but when is a scientist a scientist? A scientist can be a person who, comes up with a theory through experimentation & observation. The Theory can improve over time but scientists are scientists because of their actions of “experimentation and observation” & not because they are experienced or not. A scientist knows what they are because of how they go about doing things. It can be the same for your son as he goes about doing things as a Developer. As you know (being Developers yourself) buying is not the only part to Development. The non experienced scientist has to overcome that they are competing with more experienced ones but that is the way of the world & in any career. Money or experience does not stop a developer being a developer. We all started with our 1st development.

Your son can start from the inside out & find a “fellow” Developer who is willing to mentor him (if cannot attract one then find out what service a Developer desperately needs & he should think about finding a way to provide that service to the developer). Your son can look at empty blocks (that are owned by developers) and figure out any advantages that they can pass on (free) to the developers. As you can see my recommendations are for him to branch out and find other Developers rather than to start Developing with his parents. My reasons are because he would then have the combination of all your skills & knowledge to work with when he is ready to Develop. (A much stronger position to be in for an up and coming Property Developer). Branching out improves many other skills too. Being too safe, can stunt our children’s ability to leap forward & surpass our own limitations. I think that this is because that very safety is usually used as a “net” to catch them when they fall as opposed to it being used as a “sling shot” aimed directly at capturing success. Offence sometimes being the best defense strategy.

The council, accountants, law firms don’t care & they don’t know that your son hasn’t started a development yet – they will give him the same answers as they give everyone. The more he talks with them the better he’ll be at asking the right questions & the more confident he will be at that. Also, he should take note at how he converses with everyone (not just professionals), take note of what works & does not. He should also listen to what he is telling himself. This skill (practiced early) will help him in future figure out what is preventing him from taking action or what’s making him take action without thinking through first. He can work on how to persuade people without manipulating them – that can be done in everyday life. Recognize, that it’s not a one person job.

All school subjects will help him to be a great Developer (English: for reading comprehension, Maths: to understand angles in plans etc, Legal Studies: to assist with contracts etc) but the thing that I think counts the most is to get the support from his friends & from his family. I can already see your support & I applaud you for that. No one can do it on their own – Developing is a business and needs to be run as such but remember that the business is run by humans so it’s going to have pleasure & pain. He needs to surround himself with people who will be successful by him becoming successful. Surrounding himself in this way is the first “networking” skill he should accomplish.

My suggestion is for him to study subjects that he naturally loves because they will not seem like an effort & school was not meant to be torturous. He should use whatever subject skill that he loves learning about to compliment his Development business. If he is good at Maths then he can help his Accountant etc. If he’s better at something else then apply that other skill. Remember, he may be better at Maths now but become interested and better in Design later on. It’s something to be left open so that he can grow into it. Drafting was very different when I first started my career. I had no interest in it back then….but now I enjoy some Drafting work. I’m sure that I may even someday be able to learn how to bake (my pavlovas always sink in the middle)!! My belly successfully develops after eating lots of Pav. *grin*

Lastly, (if you have read this far!) – don’t forget to tell your son to look up the many entries from “Benny” on this site. Everyone here are tremendously helpful but Benny goes even further than that, he is a master at finding tonnes of older replies (that are relevant to people’s situations) & then sends them the links so they are always one click away from their solutions. Priceless. (The benefit is like reading 100’s of books but only really needing to read a chapter or two from each book – how do you easily find what you want? That’s Benny’s skill – he is also the site moderator so I have to be nice to him. lol. My skill is keeping everyone’s mouse scroll wheel well oiled.

Cheers & more wealth to you & to your son.

• This reply was modified 7 years, 12 months ago by  Pimobpi.
• This reply was modified 7 years, 12 months ago by  Pimobpi.

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

May 3, 2016 - 10:35 pm

Hi mate, you can message me anytime you like – no problems.

I know what you mean about there being a bit of an information void with respect to the property industry – I think that this site does very well to help fill that void. Some replies may be lax in word count but those same replies usually make up for it in content accuracy. Some professionals answer in a very minimalist fashion but those same professionals are normally the first ones to reply to people needing quick replies & they are the ones who have contributed to thousands of entries. They are the ones who really write too much, not me!! That’s the argument that I will make to anyone that wants to silence me….hehehe.

To me, this site is a living, breathing library of wealth – everyone here (experienced or not) has a lot to teach & a lot to learn.
What I take from this site is getting a feel of the different mind-sets of investors/brokers/developers etc. Somehow it helps me to react better when I talk to bank staff, when I’m in an intense auction situation & it also helps me have a better marriage……….OK, I was joking about helping me in my marriage because my marriage is already perfect. I just wrote that for a laugh (in case my wife reads it). There needs to be some % of fun factor in every important decision in life (property stuff included) so hearing how others think & feel is exciting & fun for me.

I think that your approach to learning & getting closer to your dream job is a wonderful mind-set. I’m sure you will achieve that. You will learn heaps but will never learn it all before you start – some of the learning can only be done after you start.

Cheers & good luck.

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May 3, 2016 - 5:43 pm

Hi Bla,

It’s great to read that you are putting your money & your mind to good use. I’m pretty sure that I was playing with my Sega Dreamcast video game console at your age.

I tend to agree with you about Sunshine, it has done (and probably will continue to do) extremely well over the years.
There has been a big shift in attitudes regarding its prospects. I don’t think that it was easy to predict how well that property values have risen over there & in other locations.

I think most people thought that “empty nesters” would sell their homes and downsize closer into the CBD (live in cbd apartments), thus leaving their homes for new home buyers – but that did not happen for the most part. The cbd now seems over stocked, empty nesters are subdividing their larger blocks, still living in their dwellings & selling off a smaller parcel of land to other home buyers. Some empty nesters build a dwelling on subdivided land, others sell empty block(s).

Obviously I am generalizing but what it does show is that an investor/developer, that has been involved in the property industry for decades, has a similar chance as “the new comer” of becoming successful through property. But……this is not the case in reality, is it? Investors/developers with the experience & wisdom seem to succeed more often. There are many reasons why but one reason for this discrepancy may be because the empty nester bought their property before its value shot up & they have had an opportunity to capitalize on the back of that fact. They are creating wealth from thin air. They did nothing more than to give themselves that chance to succeed. Some are very smart & wise people – others are not. IQ does not matter very much – wealthy people just think differently, not necessarily smarter.

By your admission, your current place has had a value increase so it’s not something to let go of without being sure that you are going to better it. Are you able to buy in Sunshine & evaluate this 2nd property whilst still owning the currently owned property? If so, you will have a lot more power than always moving all of your eggs from one basket to another. If you cannot afford to own both, ask yourself “why” and work towards giving yourself a better chance to owning both…….& then owning more. I don’t mean for you to over leverage, or to over extend yourself with loans, I am saying that you should hold onto the success in your life. By all means, get rid of non-performing property – however you should accumulate “performing” property because that’s your end game. You are the only one to judge whether you have a “performing” property or not. Does it get you closer to your goals?

I can say that I’ve had properties that went up in value & then seemingly stagnated in value for 5 years & then went back up in value again. In reality these are false conclusions, property is not very liquid (thankfully) so my property could have lost in value (for a time) but I just didn’t know it. If I sold during the 1st “sideways” movement then I would have missed out on the biggest value increases to come afterwards. Like everyone, I love that property values increase but my next comment is going to sound very strange & many readers may raise an eyebrow or two after reading it……..: I also love the “sideways” movement with respect to property.

It is the sideways movement that makes the property affordable to an entirely new group of buyers. Then the property values shoot up after this new group buys & values again go into a sideways movement for another new group to catch-up & afford it.

Buying in suburbs that have already increased in value makes you one of the “new groups” that I am referring to. It just means that the most time has to pass for this new group to wait out for another value increase. If the “new group” buys & then sells before the property has a chance to increase in value then they could be setting up another identical situation of perpetually “missing out”.

Anyway, I think that I write too much & go way off topic with my replies but the members on this forum are super polite & have not kicked me off it yet. Apologies to everyone that prefer the simple / logical replies, they’ll have to skip my entries lol.

Keep well & good luck.

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

May 3, 2016 - 4:36 am

Hi bla,

Well done for looking to increase your wealth by looking for property in an area with subdivision potential.
I think that it is always a good idea to learn different ways of increasing knowledge. I wish I was thinking similar
to you when I was only 23 years old. I made a point to read some of your older posts so I know that the place you want
to sell is (or was) your PPOR.

You may have overlooked something important about your current circumstances (with the refinanced property).

You are thinking of selling the property because it has recently increased in value & you believe that its value
wont increase again for a long while. Do you have reasons why you think that the increase is slowing for you?

If you sell, you are thinking of buying in the suburb of Sunshine Victoria. Sunshine has also experienced a recent
property value increase. Can you see my point yet?

Buying in Sunshine (now that it has recently increased in value) means that you are also purchasing the inflated price.
Your property has recently increased in value & now you are selling to crystallise that increase. The Sunshine
seller will be thinking & doing the same to you. The wealth you make from one place is immediately spent in the other.
This is more of the mark of a property trader rather than a property investor.

Did you think about buying in Sunshine before the suburb increased in value? Answering that question now is not “wealth”, asking yourself that question 3 years ago, is “wealth”. Purposely deciding to (or deciding not to) invest in a product before it increases in value is my goal.

Buying a product that has had a recent value increase (before I bought it) means that it will have to increase in value again soon for me to make any money from it. I would hold onto a product that was purchased before its value increased because it has already proven to give me wealth (it increased in value after I bought it). If all we had to do was look for property that increased the most in value then we would all buy in Hawthorn & Toorak & we’d all be rich now – unfortunately NO.

Investing is knowing “why” you’re buying, “why” you’re selling or “why” deciding neither for the moment. Sometimes the suburbs with the largest value increase is followed by the largest stagnant trending values – & conversely, sometimes large increases are followed by even much larger ones. Some people sell-up too early and “slaughter their cash cow” which could leave the new owner/investor to milk most of the investment rewards instead.

You may want to live in Sunshine & that may be your purpose for selling up & buying there (your “why”). The decision to buy does not solely need to be money based. You asked for a financial planner, you will find out that a financial planner cannot answer your “why” but they will ask you to search deeply for it. Happy findings!

Wishing more wealth to you mate.

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March 20, 2016 - 4:08 pm

Hey Benny, thanks for assisting & for providing the useful link.

I must be giving out incorrect vibes. The “available equity” LVR subject was clear to me from the beginning. That is not where I wanted further assistance but I appreciate your reply about that topic. I understand that many property owners have equity but only 80% to 90% of that equity can be made available to the owners. Banks like/need to retain 10% – 20% of equity for their own protection purposes in case of defaults or whatever reason. Corey was alerting Liz to the fact that her equity may not necessarily be available for her to extract & to make sure it was available equity. All good there.

The clarification I seek is “could there be future tax problems if the extracted equity is deposited into her Offset account? (considering that her Offset account may be used for a mix of investment & for personal uses)”. My opinion is that tax issues can arise if Liz plans to deposit the funds into her offset account instead of using a LOC. I came to this understanding from the info below:

I have separate tax advice & there is also similar tax advice on this forum:
“it is possible for investors to borrow extra & to have the cash deposited into an Offset account but………better not to do this as investors will run into tax problems………Use a LOC instead”. And, “equity is better accessed through a LOC”.

Now, if LOC is a better way to access the equity……that is what prompted me to ask whether Liz should access her available equity by depositing money into her Offset account (using Offset is how she is planning to do it & she is asking whether that makes sense) or whether Liz should have be given advice to setup a LOC instead?

Liz asked whether it makes sense to increase her investment property loan & to leave that money in her Offset account. This is not my question, it is her question.

From the info & advice I provided above, I believe that Liz should have been advised not to place the extracted equity into her Offset account (unless she could prevent running into those future “tax problems”). She didn’t get that advice from Corey & I wanted to know why. He is obviously a specialist in his field & everything that I read from him is helpful, I respect him a lot. I just wanted to know if Liz should access her equity a better way.

Lastly, I appreciate your comment about it being good for me to ask questions whenever I need clarification. I would also like to say that I don’t mean to annoy any of the members with my questions. I’ll try to do more reading on the topics before I write entries.

Cheers & thanks.

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March 20, 2016 - 3:32 am

Hi D.Stonefield,

Your question: “Am I better off to put a deposit down of more than 20% to make the place cash flow positive. Or is it not worth it?”

I believe that anyone can artificially make any property “cash flow” positive by increasing the deposit outlay but that’s not what is really meant for an investment to stand alone as being cash flow positive. Eg: Have you also calculated the opportunity lost $ amount that the extra money could be earning if you parked it into an interest earning bank account rather than put it into the purchase deposit?

See what I mean, there are other factors to be considered. I think 20% deposit is a bench mark for many / all lenders to offer a loan so I would work from that. Is it still cash flow positive after calculating the expenses & deductions etc using 20% deposit? That’s how I would determine it. Others may determine it using 10% deposit & paying LMI – that’s still fine, LMI is seen as a cost of doing business.

Also, nothing stops you from parking the extra money into your loan offset account rather than enlarge your deposit. Remember, it’s difficult to get that money back from the bank once handed over and you will also be reducing your loan amount (if you supply a bigger deposit) thus limiting the potential amount that would be considered detectable.

On the flip side, let me also say that the cheapest way to buy property is with 100% cash. This also has it’s disadvantages, no tax concessions, lack of liquidity etc – I am making the point that you have to buy it your way. 10% deposit & paying LMI is great if you find the right property & only have 10% deposit. 20% deposit and avoid LMI means that you save LMI costs but you have also doubled your equity buffer if things go a little pear shaped early in your loan. You also have a little more breathing room.

There is nothing wrong with investing in suburbs near your place of residence but don’t just think of the easiness getting to and from it etc. It can be a good idea to buy close because you would know the area well, have more confidence & knowledge is power when its used correctly. It also has its disadvantages, your properties are close by so if there is a slump with one, it’s almost guaranteed that there will be a slump in the other. Is that a bad thing for you? Some people prefer to have some protection from that. Maybe you can find a place to buy that’s close enough to travel to but not so close that you share the same property cycles. I’ve purchased property 2 / 3 suburbs away from my home & it’s been fine. Your wife owns your PPOR because you are not putting all your eggs in the one basket for asset protection, it’s similar with buying in the one location – you have to decide to accept the risks or find some-place else.

I hope that I’ve assisted you.
Cheers & more wealth to you.

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March 20, 2016 - 2:31 am

Hi Corey,

Liz does not indicate how she uses her Offset account. Perhaps she only uses it for investment purposes. If so, I don’t see issues.

Are there issues if she used her Offset account for personal purposes? (Considering that the equity released funds are also located in that Offset account).

If Offset is used for personal, wouldn’t it be prudent for her to setup a LOC instead & not put the equity into the Offset? She could then use LOC whenever the purpose is for investment & use Offset whenever the purpose is personal. It will still release her equity (subject to LVR requirements that you have given).

I understand that accountants can work out the apportion calculations etc whenever there are mixed withdrawals however that takes time & money to complete. I also understand that LOC interest % are usually slightly higher than other investment loan interest %.

I apologize if I was again unable to clear up what I am getting at. It must be my current level (or lack of) understanding.

Cheers mate.

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

March 19, 2016 - 5:06 am

Welcome to this site Elizabeth. You’ve asked a fantastic question & many of us can learn from it.

Hi Corey, it is obvious that you have an in-depth knowledge – I’ve read many of your entries & am learning a lot from you.

Could it be that you believe Elizabeth is referring to a PPOR loan……..instead of referring to her investment property loan?

I am assuming that she would also use her Offset account for personal use (as well as a possible future investment property deposit).
Would increasing her investment property loan cause issues when calculating her interest deductions on that investment loan? (taking into account that she may use some of that money for personal use when spending from her Offset account). ie: Equity Loan purpose being tainted & that kind of stuff.

Would it be better for her to setup a separate LOC & not increase her investment property loan amount?
I can see that your reply would be OK if it was a PPOR loan but not for an investment property loan (as she states).

I’m probably mistaken – if so, I am missing something important & still have a lot to learn – all good.

Cheers & keep well.

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

March 13, 2016 - 7:03 pm

Hi Dwayne, welcome – I’m sure that this site will impress you.

I know that you are only asking for our ideas on best property types to start with etc. I want you to look at answering some different types of questions because our responses are what’s right for us and maybe not what’s right for you….although I like the first response that you received from “TheNewGuy” to look at the numbers because that is a great way to sift through potential investments…….or not to buy.

You say that you currently have limited savings & equity. Ask yourself why that is & what you can do to increase your savings / equity? There is no need for you to answer that question on this site, you’ll know the truth to that question & it could be for many reasons. (If you are a new starter & good with money then save & give yourself more time. If you are an over spender then live within your means & become wealthy forever rather than act wealthy temporarily). Once you identify why you don’t have savings yet, work on getting the savings & work on educating yourself on the advantages & disadvantages of owning a 1-2 bedroom unit compared to a standalone house (in context of you owning it).

Neither is better or worse, it depends on your situation and what you are looking for. They both have good & bad things. You can make a profit or lose money using either strategy. You need to discover yourself to know which investment is right for you. By the way, this learning never stops because you will always be changing & increasing your skills.

I know this reply is more about sole searching rather than opinions & I am sorry about that. I hope this info helps you.

Cheers & more wealth to you.

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

March 13, 2016 - 6:10 pm

Hi & welcome to the site. I am sure that you’ll learn heaps & be glad that you asked questions.

I’m in favor of being honest & transparent but an idea would be to call the council (or go there) & ask them for information on the very street / nearby street that you live in. Perhaps give them an example of a similar sized block.

If they ask, say that you like the area & are thinking of buying property there sometime in the future to knock down & develop etc. You want to know what you can or cannot do (you are performing due diligence & many investors / developers do exactly this before they buy). I’ve done this myself many times, act like an investor / developer.

Just use email or pick-up info by hand. Give them a friends or relatives mailing address if you really have to supply it (but I doubt it).

I don’t know how your council will treat non permit works on carport extensions (or whether they will look for unapproved modifications) but you don’t need to disclose your address yet – so don’t. Only put yourself in a risk situation if you really need to (that advice goes for everything, even situations that are non property related).

Engage a professional (builder, surveyor, town planner etc) once you need specific information about your particular property however……the planning team, at council, should give you a lot of good information for free. They will give you information on restrictions for all the suburbs under their jurisdiction – I think that info is of more value to you as it will help you with what may be the best thing to build on your block after you demolish the current dwelling. They should be able to give you examples of what others have done on nearby streets & that’ll open up more options for you to consider.

I hope that my reply helps you.
Cheers.

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

March 3, 2016 - 11:16 am

Thanks Benny, much appreciated.

It’s always a pleasure reading your posts – lots of respect for your experience & for your opinions.
You are a very wise person.

Well done for going through it all – that’s not an easy task during this fast-pace life.

Keep well.

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

March 3, 2016 - 10:14 am

Hi JT,

Great work discovering 2 properties that interest you.
Please excuse this very lengthy entry – I’ve always struggled to explain myself concisely. I guess that readers can choose to skip this reply – it’s only text.

Understandably (as this is your 1st IP) you are looking at acquiring just one property. It seems that you see independent advantages with both choices. One choice provides you with income immediately & the other provides you with possible future capital gains (I am guessing).

Have you asked yourself how you can have both properties & calculated the result? I think you should do that.

The reason I ask is that only acquiring Property 1 (from your view point of not owning any IP’s) leaves you with no spare cash & only acquiring Property 2 (from your view point of not owning any IP’s) will provide you with some extra money.
That linear attitude is fine but I think that you’ve left out at least one other important calculation / decision.
ie: What is your overall position if you acquire both? Does the total calculation result in your total investments being positive/negative/neutral etc? Do they meet your present & near future needs & wants? Can you afford them? Can you eliminate the option of buying both?

I’d also like to add that the only person that can decide which property is best for you to purchase is YOU
No one knows your circumstances & aspirations better than you do. You can ask a specialist & members to help you document & understand what it is that you desire from investing but everyone invests for different reasons.

The answer to a question like: which property is better to purchase will only get you an “entire spectrum” result……..the result will be that you get all possible answers to the question posed. Some say never buy property, others say always buy, some will say buy Property 1, others will say buy Property 2 etc. Doesn’t really help you narrow down & choose a property when you get all possible answers but that is the human condition – there is no “bad” or “good” buy for everyone together, if there was, the property market would be polarized & it is clearly not polarized.

I don’t mean to put you off or confuse you with this long reply. I don’t want to sway you into making a specific decision, just want to highlight that finding your answer is dependent on what the property provides & how that relates to you. (The exact same property may work well for someone but will cause financial issues for someone else). Learn what it is that you want / need & then choose properties that meet your need. Continually re-evaluate your position because your needs will change over time therefore you will sell/buy other properties to suit you.

I am sure that some members will agree with the above, others will completely disagree & others partially agree. Which opinion is correct? Probably the opinion that tells my to finally shut-up & wrap up this boring novel. lol.

The members & specialists on this site are great. You’ll find that the most experienced members will ask you questions about your circumstances before they give you their opinion on a matter of concern to you.

I believe that due diligence is looking at all the options, else it’s not due diligence. A “micro & macro” approach has to be far superior than only one or only the other.

Cheers & good luck. Wishing more wealth to you.

[PimobpiParticipant@pimobpiJoin Date: 2013Post Count: 60]

November 23, 2015 - 2:57 pm

Well written. Thanks again Terry.