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Hi DB,
Yes perhaps I'm being a little ambitious when I say I want to sell our PPOR, and have sufficient funds from the sale to pay what's remaining on both IP loans and downsize to a smaller PPOR. Although while we're both still working we intend to focus on getting the IP loans paid down so I don't think this is unachievable. We will also have the proceeds from the sale of our acreage going off the IP loans.
How do I feel about renting out our proposed new downsized home while we travel? I don't have any problems doing this. With a bit of luck we'll find the right people. Also I can't think of any other alternative at the moment. I can't imagine going travelling for a year and just leaving our house sitting vacant. Would love to hear any other suggestions.
Last week we signed the contract on a property an hour from Brisbane. So the first part of our plan is underway.
Cheers,
SundanceThank you to everyone who has replied to my post. I am taking it all on board and trying to absorb everything.
Firstly, I'll clarify my situation. Yes Freckle, your summing up is pretty accurate. We will have enough in super to retire on if we want to work to age 65 – problem is that we'd like to retire in three years time instead. Am not completely new to investment properties. We bought one some years back by chance. We weren't looking to buy one but it was passed in at a mortgagee sale and the bank only wanted $80k for it, cheap even back then. We rented it out for seven years making an excellent profit when we sold. With the proceeds we were able to pay off the loan remaining on our PPOR and purchase our acreage. We borrowed for it principal and interest because we didn't know any better. When it sold we had just about paid the mortgage on it off anyway. Yes, I now realise we should have been paying the extra off our PPOR.
We also had a share portfolio and lost quite a sum of money in the crash so are not interested in going back down that track. My original plan was to buy two investment properties to rent out, sell our acreage paying half off each IP, then sell our PPOR, pay off both IP loans and downsize to a new PPOR. We then want to rent out all three properties while we go off travelling for awhile.
Come back, access our super but still have the two IP earning rent.Since my first posting I have been to see two financial planners – useless exercise. Both are only interested in getting us into shares, managed funds etc. As previously stated – not interested in going down that path. Have also spoken to our accountant who wasn't much help. Don't know where else to go to get the advice I'm after.
If we don't put our money into IP when we sell our acreage we'll have approx $230k left over. We could roll it into super but I still think that putting it into IP is a better idea.
I'm just looking to find someone who can advise if our plan is do-able and if so how to structure it. I am reading as much as I can on property investing in the meantime and trying to get a grasp on at least some of it.
I do appeciate the input I've been getting on this forum.
Cheers
Thanks for your advice Jamie.
Am still getting my head around a lot of the terminology used with property investing so bear with me. When you say not to "cross collaterise your unencumbered home with your investment property" are you saying not to use our PPOR as security on the loan to buy the investment property? When we got pre-approval from the bank for the investment loan we were told that our home wouldn't be used as security (will check this though).
When we purchased our acreage we borrowed the full amount and our PPOR wasn't used then as security. The loan for our acreage is interest only but we have the same amount as the loan sitting in the offset account so are only paying the $8 monthly fee on that loan.
You also suggested borrowing the deposit for the second investment property rather than using cash, that way the entire debt would be deductible. Would the alternative be to just leave all the proceeds from the sale of the acreage sitting in the offset account on the first investment property? My concern is that as we'd be borrowing approx $300k for each investment property, even taking into account the rent received we would still be quite significantly having to top up the loan repayments.
As you can probably tell I'm stumbling through all this at the moment. My original plan was to purchase two investment properties, try to get them paid down as quick as possible so that when we retired we would possibly own them outright and the rental income would boost our super income stream. But perhaps this isn't the right way to go?????
