Hi James

You can move out and rent the place and claim all expenses associated with it. But if it is positive geared you will probably have to pay tax on the income – but you can also claim on-cash deductions such as depreciation of building and fittings, and borrowing costs. This may make the taxable income from the property negative.

For the new one you can use the equity in the first one. But I would suggest you set up another loan against the first one and use that money for deposit and costs on the second.

eg. IP 1. Val $400,000
Loan $100,000
Get a second loan to 80% of the value. $400,000 x 80% = $320,000. Less $100,000 current loan = $220,000

This $220,000 should be used to pay the 20% deposit and stamp duty and all associated costs with the second.

This will keep the 2 properties separate and not cross collateralised. You can even use different banks.

xya,

The vendor probably would want the money early, but their bank would want a few more days interest too. There could be reasons why they are not ready such as not getting a discharge form signed by the vendor, not getting valuations done quick enough if the vendor has other loans cross collateralised etc.

I have a couple of properties in Thailand.

There are various problems investing over there – economic crisises, frequent coups, airline crashes etc.

Investing in places like Phuket are very risky. The area is heavily dependent on tourism – which is very down at the moment. Not sure about there, but capital gains in Bangkok are not very good at the moment.  There is an oversupply of units nad foreign investors deserting the market with many finding it hard to sell.

Rental yields in Bangkok on units are about 7%. I would much rather invest there than in a island resort like Phuket which is heavily dependent on tourism. I would also not believe a rental guarantee or capital gains "up to" 15% (this would include -15%!).

buying income producing property may help you get a few more quicker, but if there is not capital growth, then there is no point in my opinion.  making $50 or even $200 per month is going to take a lot of properties for you to retire on.

But who knows if or when the capital growth will come back.

Thanks K, fair enough it is done with the purpose of trying to borrow more. I though because there may be a period of a month or so between settlement and getting a loan, then it would be enough distance.

Y

The lender is not basing their approval on the improvements. The property is only mortgaged after settlement. The valuer will do their own research and will not see the contract of sale. It will only work if the property is purchased cheap and under market value.

Narelle

Is it an actual bank or one of those mortgage managers like Yes Home Loans etc. The mortgage managers get the funds from a wholesaler and then ad their margin.

maybe.
sort of.

You could set up a hybrid trust or a unit trust and have the trustee own the property. The trustee could be a company for example. You could then borrow to buy units in the Hybrid trust or unit trust. If it was set up correctly, commercially viably, then you could personally claim the interest.

Problems:
– You have to be careful and have a cluey accountant.
– Tax. The trust has to be set up in a way that the unit hold must get the income and the capital gain. This makes it very unflexible compared to a discretionary trust.
– No asset protection. creditors could get their hands on your units.
– Banks don't like lending for these sorts of arrangements. They are afraid of third party lending – Someone other than the owner borrowing. It is still possible.

don't pay it into the loan, keeping it in the offset is ideal for the future PPOR>

Thanks again Eddie