Your incomes are pretty much the similar so it won't really matter whose name you get it in with the first one. I would suggest you only use 1 to reduce the risk – if something were to go wrong only 1 goes down instead of both.

If it works, then look a using a discretionary trust for the next one – again just using 1 person, keeping the other free. When you hit the borrowing limit start another trust with the 2nd person guaranteeing the loans.

You have plenty of equity so can get a fair few properties – but go slow and plan properly.

Actually, since the property is in your name let the husband guarantee or take the loans and therefore the risk. If he gets sued your house is separate so would probably be safe.

You have also got to get rid of those credit cards – if you mean you have $20k outstanding.
MAybe set up a small loan with the bank on a lower interest rate and pay this out asap. With no mortgage to pay you should be able to get rid of it in a year.

With the new property you should set up a LOC on the existing house and then use that for deposit and costs on the new one. Borrow the remaining 80% from a different bank.

LOC is a particlular product. Each bank has slight differences- could be that it has a cheque book included, not necessary to pay the interest each month (capitalise) etc.

There are also very important tax consequences between using a LOC and redraw or topping up an existing loan. You should neve do it if it will mix personal and investment debt.

The equity is 330,000-255,000
=$75,000

But you cannot use all of it. The banks will only lend a certain %. ie LVR.

They will generally lend 80% without paying LMI
or you can go up to 90% with LMI

Yes, never cross collateralise.  There are many reasons – but tax isn't one of them.

What you would do it to take out a separate loan on the first property and use that for deposit for the second.

eg. $100,000 House with $50,000 loan (Loan A)
80% value is $80,000
You you take out another loan for $30,000 (loan
Total loans = $80,000
LVR 80%

You then find property B
Use $20,000 deposit from loan B
and borrow the remaining $80,000 as a new loan, (loan C).

You have borrowed 100% for the second property but without cross collateralising the loans.
The interest on Loans B and C would be tax deductible as they have been used for investments.

A few years down teh track Property A has increased to $200,000 so you can take out loan D up to 80% less the existing loans = another $80,000.

repeat the process.

hi

I would think a discretionary trust is worth investigating further.

What I would do it to set up a LOC, or maybe 2 on the existing house (I assume it is paid off??). Use one for onlending to the trustee of the new trust for the 20% plus costs of the new puchase. The remaining 80% can come from a new stand alone loan.

As for the existing house you will have a few deductions for expenses such as rates and insurances etc. Instead of paying this with your cash you can borrow from the 2nd LOC and let the interest capitalise. This will slowly build up a debt related to the investment and the interest will be deductible and save you tax – although it will only be small, it all helps.

From there you should set up a 100% offset account on the new trust loan (the 80% one) and place all rents in there. You may even be able to lend the $60k cash you have to the trust at nil interest and this will save the trust interest on its loan and therefore  make a greater profit which you can then distribute tax effectively.

ie you will be deceasing your personal incomes and increasing the trusts which is more tax effecient.

Check this with your accountant.

no, they won't actually know. As long as you have held the ABN for 2 years at least and are registered for GST for 1 year at least.

They will generally treat you as self employed and all you need is the last 2 years tax returns.

You will need a conveyancer or solicitor to help with the transfer too.

Maybe you could think about buying him out?

hi Nico

Don't worry about paying down the loans at this stage. You first want to get rid of all personal debt. So paying down an investment loan will delay this and it will end up with you paying more tax.

Once you have paid down the PPOR loan and any other personal loans/credit cards etc then you could start paying PI for an investment. But even then i would not for a few reasons.

IO loans are only IO for an initial period of 5 or 10 years. So if you wait they will end up being paid off anyway.
Even if you keep newing the loan as IO you will have rising rents and the debt will be reduced in real terms by inflation.

eg imagine you had puchased a house in Sydney in 1960 for $16,000 and kept the loan IO for the past 50 years. You would be paying $960 per year in interest. You would probably be getting $20,000 pa in rent. So with a few weeks rent you could pay off the entire loan.

ALso think of the lower repayings of an IO compared to PI would mean you have more money available which could mean you can afford more investments.

Hi Wenever

You have heaps of equity so heaps of potential. The first thing you should consider is making both loans interest only. Set up a LOC on each property for the equity up to 80% LVR (this may not be easy in this climate).

Then you need some expert tax advice. You can structure the investment property in such a way that will pay off your home loan sooner. I roughly worked out that for every $100,000 in a LOC you can pay an extra $6,000 off your PPOR loan over and above what you are paying now. Your case may be much more.

At the same time you can also start investing in further properties (and making further savings).

You should look at setting up a discretionary trust. But you need to be careful on who you put where in it so as to maximise borrowing capacity. I would recomend 2 trusts with only one partner invovled in each. This will enable you to borrow more, ie increase long term serviceability.

You could buy in the SMSF, but I would suggest you don't because any equity developed there won't be accessible. Look at shares maybe.

Whether you should sell the child care centre would depend on if you think it is going to increase in value. Selling means CGT, and other costs, so it is only worth doing if it is underperforming.