Ok so i now have the courage to ask more questions on this forum.
First one.
If I have a home loan, and bought a cashflow positive investment property, approx $300 a month on top of loan repayments, rates, ins etc, I figure i would be better directing the excess onto my home loan offset account (reducing non-deductible debt and the interest payable), then withdrawing that excess of funds as a deposit on another property when a sufficient amount is available. Same with surplus funds (if there is such a thing) from my weekly wage.
Can i have your comments, suggestions, Pick this strategy to pieces if you want – all feedback is valuable to me.
Northy
PS sorry meant to post this post here originally instead of WrapsRUs forum – my apologies
Hi Northy,
Seems like a good idea to me. When it comes to purchasing your next property though you might like to consider channeling the surplus funds into a negatively geared investment property in a high growth area to balance your portfolio. A find a good mixture of cash positive and negatively geared property helps balance my portfolio. My principle investment philosophy is for capital growth, but then cash positive properties (which tend to have low growth) provide much needed income.
Incidentally, I find the best way of paying off a home loan is to focus on investments with high capital growth potential and then selling that property in future and using the equity to pay off the home loan.
Anthony
Hi Northy,
Great question with endless possibilities. Personally I would look at $300 a month extra income and say “not much you could do with that…I think I will need a bit more to achieve my goals” Keeping it in your mortgage (offset acc.) is a good place to have it while you wait for your next opportunity. Clearing credit card debt or high interest personal loans is another option. Another thought is to use the additional cash flow to borrow ($50-$60K), then invest in another property (perhaps a wrap or a JV with another investor), or some high interest yielding assets (solicitors funds / mezzanine lending etc) while you wait for the next opportunity. As Anthony points out the next big opportunity may be a property with higher capital growth potential. Of course you could always invest in your lifestyle – new car, holiday etc. It’s all good, it just depends what your goals are. Given I’d like to replace my current income generated from my job, I’d be inclinded to find another CFP property that returned another $300 per month or more.
Good luck and remember “to reach new lands you have to have the courage to leave the shore”
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